A simply brilliant piece on economics by Peter Radford in Real World Economics:
“Because it is pointless adding to an already over stuffed vacuum.
Economics as currently construed is a discussion about a small percentage of all economic activity. It is therefore incapable of making a contribution to improve the daily lives and/or prosperity of people whose lives are not totally included within the purview of its theorized domain.
Herbert Simon estimated that approximately 80% of all economic activity takes place outside of anything resembling the markets that economics talks about. The vast majority of transacting and economic interaction takes place either in the home or at work. These two places are where people come across economic activity more frequently than in markets. They are also two territories that economists rarely, if ever, explore.
And when people do enter a space that looks like a market they do so more often than not as a complete price taker. When was the last time you haggled over the price of toothpaste?
So the stylized markets that so besot economists are merely the edge of economic reality, not the center.
So the level of charge and counter-charge as economists engage in what I assume they think of as constructive debate is out of proportion to the importance of the subject, and certainly out of proportion to its relevance.
Frankly I am tired of arguing about which flavor of Keynesianism is the “pure” version. Does it really matter that much? And I am frustrated by the perpetual insertion of old and debunked ideas into conversation as if they were the latest and brightest new thing.
The perspective of history is so sorely missing from economics that it is almost painful to watch. So much of the accumulation of economic ideas is contextual – perhaps all of it? – that an evaluation of current context seems to the the most obvious and sensible first step in the application of those ideas. Instead we are supposed to pretend that they are immutable or eternal laws. Were they I think we would have landed on common acceptance of a theory long ago. Is this not a conclusion that a science that lauds incentives would have arrived at? That we have not arrived at such agreement suggests there is nothing law-like about the laws, they are simply made up to fit a particular time and place or to solve a particular political problem. They are temporary explanations to be discarded when the context shifts.
No. Economics is mainly ideological posturing nowadays dressed in mathematics to make it look different from politics.
How else to explain the persistence of asymmetrical emphasis? Is the economy demand driven or is it supply driven? Who cares? They are codependent. They cannot exist without each other. They are two sides of a great cycle of creativity and entropy. The input of energy to create and maintain form in the face of inevitable decay is essential to life. Theorizing about an economy without acknowledging energy as a key factor thus seems shallow, if not implausible. Then again economics ignores so much. Resource costs are magically dealt with. And the entire cognitive core of economics seems to me, at least, to be a twisted and very weak replica of some long forgotten nineteenth century pop culture version of psychology. The reason that supply or demand may be insufficient periodically and thus need preeminence in policy is that an economy processes information poorly. There simply isn’t enough bandwidth to process all the information out there, nor is it possible to identify all the information needed to process.
We know this because economics has had to insert all sorts of supernatural assumptions to model those processes satisfactorily.
Worse: as economies mutate they tend to grow more complex, thus rendering yesterday’s supernatural assumptions too limited to keep up. So we need even more absurd and ever more magical assumptions. We call such reaches into the air “sky hooks” – they are devices on which we hang theories midair and allow us to assume those theories stand on the ground rather than dangle precariously aloft where all but the cognoscenti can see their lack of reality.
But it all does keep economists employed. Which, I suppose, is good.
Society deserves more than theories held up by magic. And it deserves more than academic bun fights over the parsing of the words of long dead thinkers. It deserves socially beneficial policy advice delivered by a profession ethically bound to obey Wittgenstein’s dictum:
“Whereof one cannot speak, thereof one must be silent.”
How I wish economists would obey that rule!