The Death of Mainstream Economics?
A few years ago it was pretty clear we were seeing a global movement to discredit democracy – and justifiably so. Over the course of time it became pretty clear that democracy moved from something we thought was a savior to simply the only process we understood, and that it was not something universally desirable or achievable.
The rate at which mainstream economics is finally being discredited within the mindset of leading thinkers is pretty interesting to observe. There is now a fairly open dialog going on, to the effect that the entire academic profession is engaged in a more modern version of phlogiston theory.
Now, personally, I think it’s great that mainstream economics is dead, because it’s pretty obvious that we’re teaching nonsense in academia simply to make something testable that weak professors can teach. And it’s pretty clear that the deep philosophical thinkers have been saying that mainstream economics is a logically impossible research program for a very long time.
We have given quiet a few people Nobel prizes that, in fact, just as some of us said, were ridiculous. So not only is the academic profession living in a fantasy world, but so is the Swedish Academy. And it does not take any great leap of reasoning or effort of analytical rigor to figure out why they’re biased. Nor is it terribly difficult to figure out why the academic standards bodies are input-biased rather than output-biased.1
So our universities are filled with people teaching quantitative economics (which amounts to phlogiston theory), and our accreditation process is testing inputs rather than outputs, and our government is trying to be secular and rely not on religious tradition but on economic conditions as justification for their employment and political office, when, in fact, it is relying upon a large number of people practicing a phlogiston theory. That phlogiston theory was invented by people trying to increase employment in order to fulfill Marxist or socialist doctrines in democratic countries where the government’s legitimacy was determined by popular vote.
So, in essence, we have an entire society built on processes that are inadequate for the job. Or, at least, they are inadequate for the purposes we intended to use them.
Democracy never has existed. It can’t. Whenever it’s been tried, it has failed. While it was invented in order to make decisions among the powerful property holders so that the transfer of power, or the accumulation of power, in the sense that power was the ability to make and enforce laws, in practice, when enfranchisement is distributed very widely, democracy function as a form of Communism that uses the power of the vote and political office as class warfare. Since no fair means of redistribution is knowable, and it is not knowable because no one can know the diversity of possible worlds to choose from among the options available, then everyone fights for the maximum, no matter what class, and the political class benefits from this conflict that they themselves, by virtue of their existence, generated.
Modern mainstream economics, despite its desire to be secular, is no better than democracy, largely because, as democratic governments attempted to build increasing empires and resolve conflicts by scientific rather than traditional means, economic benefit and equality became the justification for government itself, and economic efficiency became the means of trying to coordinate people under a common cause that seemed class-neutral.
And the problem with the psychological school, and the Austrian school, is that while they can tell you what not to do, they have not been able to tell you what to do. They are by their nature a remnant of both Christian and republican thinking. In other words, they are a theory of the middle class, assuming that the middle class takes care of everything.
Now, this isn’t wrong, it’s simply insufficient. It’s insufficient because it is not a prescription for a social order that is sufficiently explanatory, so that a body of people will adopt it. It’s all well and good for businessmen to concentrate capital and say that they and market magic will take care of it. But it’s no better than the nobility or the peasantry saying the same thing. No man restrains his violence, or his breeding, or his opportunities, without some compensation, or expected compensation for it. No man acts, respects property, constrains his breeding, his immigration, or creates opportunities, and fairly exchanges property for them without compensation.
Austrian theory only considers half of this process because to do otherwise would mean a decrease in control for them, and a constraint to their freedom. At the same time, they ask that another man constrain his violence and respect property. The Austrian says that this is for the common good, and this is just as faulty as the man who says that Communism or totalitarianism is for the common good.
Mainstream economics is just an offshoot of positivism. Positivism and Marxism are an offshoot of democracy. Democracy and Marxism are simply another form of totalitarianism. Totalitarianism is an error because it assumes that humans can calculate what they cannot. Therefore totalitarianism in any division of knowledge and labor is simply murder by other means.
I’m glad mainstream economics is dead so that academia and politicians can stop trying to destroy our civilization.
Now, there is very little virtue in criticizing something without a solution. That’s just whining. The problem is to create an alternate theory. If you discredit something in the political sphere that people use in order to act, then you have to replace it with an alternative theory. Otherwise people have nothing to replace the existing system with. And they will keep investing in the existing system until that replacement is visible to them
The theorists of the Great Depression failed. They failed because they were far too interested in money. Economists in general have been far too interested in money. Money isn’t the problem. Money is a solution to a problem. The problem is politics, and the use of economics in politics.
And our problem with economics is that the positivists won the war for a while. Now we know they’re wrong.
Of course, what will happen now is that people will try to put in place political systems that rely on human decision-making instead of markets, which has been part of the human script for a couple thousand years. And it will fail.
But they didn’t have a choice until now. They used the tools at their disposal.
Our job is to give them better tools, better tools to allow cooperation and the generation of prosperity while avoiding class warfare, encouraging the development of wealth, and redistributing that wealth.
But no human being can understand this process.
We have to have tools to do it.
It turns out we have them.
We might have been able to do it two hundred years ago, but I think the world was not complicated enough at the time, and it would have been too expensive. But we should have done it one hundred years ago. And we could have.
We could have if we hadn’t been trying to battle the Marxist movement’s attempt to put back into power decision-making by political means.
But we can do it now. It’s better late than never.
Input-biased is when you rate an institution based upon what it has as assets, while output-biased focuses on what is the outcome for its students, after you isolate the advantages and disadvantages of students prior to entry into the university. Under that analysis you will be much more successful in life if you go to a small liberal arts university and avoid large research universities, because large research universities exist to fund researchers, not to teach students. ↩