Rules of economics

Posted: 28 November 2015 in Uncategorized
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Every time someone like David Leonhardt [ht: ja] writes a review of economic ideas and texts, I realize how narrow their conception of economics truly is—and how, once again, I and many of my friends and colleagues are simply defined out of the discussion.

In the beginning, for Leonhardt, there was Adam Smith. Then, somewhat later, we have the classical liberalism of the Chicago school and the flexible models of Dani Rodrick (who, in his book, refers to Milton Friedman as “one of the twentieth century’s greatest economists”). All three the New York Times writer distinguishes from the contemporary economists Lanny Ebenstein refers as the “utopians working toward and often living in a mythical land, ‘Libertania’”—the contemporary right-wing libertarians.

For writers like Leonhardt, that’s pretty much the beginning and end of economics, the limits of the discipline and of the debate. Everything and everyone else fall outside the walls he and many economists are so intent on erecting and policing.

It’s a view of economic theory focused entirely on markets, as if there are no other ways human beings, now and historically, have organized economic life. It’s a view of economic policy that celebrates markets, with a modicum of government intervention, as if more free-market and more government-regulated forms of capitalism are the limits of the debate of the possible.

That’s the narrow definition of economics that emerges from Ebenstein’s and Rodrick’s books and from Leonhardt’s approving review of those books. Ultimately, it amounts to a call for moderation—in theory and policy—which reduces the relevant debate to one or another version of mainstream (neoclassical and Keynesian) economics.

What Leonhardt and Co. refuse to acknowledge is that mainstream economic theory and policy are what got us into the current mess in the first place, and that mainstream economists have had no answer to the current crises of capitalism—except to impose even more suffering on workers and the vast majority of people in order to attempt to engineer their particular notion of recovery.

In the end, mainstream economists are the real utopians, who imagine that capitalism works (or can be made to work) by being modeled in and through the correct economic theories, which they alone possess.

  1. I agree and I tend to think that markets, in some form, exist in every phase of society, pre-class included, from the pot latch, through Greek and Roman slave-holding times, on into land-based feudalism,and of course capitalism. But what has always defined the economy in each of these systems, including modern times, is what group of people dictate how the economic life of society is organized; i.e. who is the ruling class. So the focus on markets is not only myopic, but takes mainstream economists away from focusing on the economics of the organizers of the economy; the economics of the the owners of capital, the capitalists, and the dynamic of their motivating impulse with regards to the increase of capital. That, to me, is the essence of Marxist/Marxian economics, focusing on the organization of the economy and not so much its finer details and minutiae (as valuable as some of the research in those areas have been).

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