The quiet disaster of modern economic theory

Quite an interesting article with the title The quiet triumph of economics which takes the contrary view to my own view which thinks of economics as having almost entirely sold its soul to the left. So what is the case for?

Economic science has long settled what in his time was the most pressing empirical issue: whether a system of production coordinated and planned from the top could yield better outcomes than the independent actions of individual people guided by the price system.

Today, there is no serious intellectual case for the planned economy. That proponents of more central planning — through, for example, industrial policy — wrap their arguments in vague language about “long-term strategy” and “mission-oriented directionality” is a testament to the lack of economic credibility such views command.

What has actually settled the score has been the irrefutable empirical evidence provided by the Soviet Union, Maoist China, Cuba and now Venezuela. Not that there aren’t still plenty of economists who will still tell you about the benefits of socialism, and if you think a modern Keynesian model, with its C+I+G, is the very essence of a free market sentiment then have a look at the way our economies are now managed. The only element that still survives are the entrepreneurially-managed firms that the dismal record of regulation and taxation have not quite managed to kill off. We live in a crony capitalist state, not that different from the mercantilist system Adam Smith was writing about in 1776.

And if you want a sense of how out to lunch this chap is, hard to beat this for stupidity:

Whereas John Stuart Mill, Karl Marx and John Maynard Keynes championed, when they didn’t themselves lead, such causes as women’s rights, revolution and post-war reconciliation (respectively), today’s economic scribblers largely speak to their own tribe in a language increasingly bewildering to the layperson.

Yet, Mill, Marx and Keynes were much more than practicing economists. They were eminent public intellectuals of their time, so using their trajectory as a benchmark for today’s average economist is like asking any small business owner to measure up to Henry Ford.

Mention of Keynes is bad enough, but Marx! The quiet disaster of modern economic theory goes on apace.

 

This entry was posted in Economics and economy. Bookmark the permalink.

23 Responses to The quiet disaster of modern economic theory

  1. struth

    As they get braver and feel like they are winning they start to drop Marx into the conversation more and more.

    That they feel this confident when he’s been their hero since the millions were being killed , but kept it in their own circles and education , truly is an indication of the shit we are in.

  2. Confused Old Misfit

    so using their trajectory as a benchmark for today’s average economist is like asking any small business owner to measure up to Henry Ford.

    Who the hell is asking anyone to do that? Although they ought to be. Today’s “average economist”, because most of them cling to Keynes more desperately than Obama imagined his bitter clingers clung to their guns & bibles, needs to be challenged on their every utterance.
    If it was an economist who come up with the idea that “government debt doesn’t matter because we’re only borrowing the money form ourselves” then the whole trade should be outlawed.

  3. struth

    The worst thing for an economy is to take advice from an economist.

  4. Rusty of Qld

    If economists are so mart and have the answers, why are in such a mess?

  5. Dr Fred Lenin

    This talk about Narx surely they are Ecommunists ? Though the failed socialist states never seemed to have budget problems , still they controlled all the money and industry ,and if people complained they had ways of persuading them they were wrong , even Ecommunists were not imune. Narxism does not tolerate criticism.

  6. Bruce of Newcastle

    We’re living in the Age of Obscurantism where things that work are ignored and things that fail are pushed as the answer in the face of empirical evidence.

    Economics has Keynesianism and socialism, science has climate change and sex-is-interchangeable, society has radical feminism and country shoppers, law has lawlessness and BLM. None work yet they are unchallengeable.

    The latest I heard in the lunchtime news is the Labor Party in the NT has voted to ban fracking. There is nothing to demonstrate that fracking is at all harmful, and reams of studies which say it is effectively harmless. So why is Labor rejecting something which has made the US rich?

    Madness is inflicting our entire society.

  7. DrBeauGan

    Madness is inflicting our entire society.

    True. Sanity is unfashionable.

  8. RobK

    BoN,
    I couldn’t have said it better.

  9. struth

    it surely is madness.
    But is it paid for madness?

    China, the UN the Saudis?

    Our politicians are bought and paid for.
    It seems clearer to me by the day.
    We are at war, under attack and if we wakeup to it, our attackers will be screwed.
    We must attack the source of our problems and you can’t do that when you don’t know where it is.

  10. manalive

    We do, on the other hand, have plenty of modern-day economists who fit the mould of earlier luminaries. Paul Krugman …

    Krugman by Dilbert.

  11. Stimpson J. Cat

    Madness is inflicting our entire society.

    No no no no no.
    You don’t get to blame it on us this time you high and mighty sane clever clogs chaps.
    It’s not a terrorist attack.
    It’s on all of you.
    This is all your f$cking fault.
    Yours and no one else’s.
    Sort your f$cking selves out and stop making excuses for your complete and utter abject failures to preserve, sustain, and nurture Western Civilization across every level of society.

  12. RobK

    You don’t get to blame it on us this time you high and mighty sane clever clogs chaps.
    But…but….we are saying we are being out done. The ever bouyant idealists and utopians saw the going was pretty good, now they want to jump a few steps closer to utopia without fully knowing what underpins economic progress. They are prepared to throw it all away, thinking someone else will somehow pay.

  13. manalive

    The writer notes that most PhD economists are employed be governments or universities so they naturally seek “ to expand the remit of government action, or to persuade other ivory tower occupants of the validity of their model”.
    He says they should rather be working for private firms where their advice would tested in market.
    In this respect academic and treasury economists and their precious mathematical models sound like climate practitioners, the climate system and the world of human activities in producing consuming and trading are both too complex and chaotic to be reduced to simple causal relationship models.

  14. 2dogs

    Today, there is no serious intellectual case for the planned economy.

    I hear from a lot of commies these days that they are also opposed to central planning. They become very incoherent when queried as to how, for example, prices are set.

  15. Bruce of Newcastle
    #2709841, posted on May 13, 2018 at 1:41 pm

    Madness is inflicting our entire society.

    Yes, modern day socialism has taken on so many more attributes than the socialism of the beginning of last century.

  16. Percy Porcelain

    There is no such thing as “economic theory”, FFS.

    Go and look up the Scientific Method. Sheesh.

  17. Percy Porcelain

    And economics is not a “science”, FFS.

    97% of it is unadulterated horse manure and the other 3% is basic common sense.

  18. BorisG

    I have to tell a Soviet-time joke. I dad asks his son who is an economist. The son responds: my mom? NO dad says, Marx was an economist. Your mom is a senior economist.

  19. nerblnob

    It’s the way you tell em, Boris.

    A bloke does in from the outback and says, “ban fracking” and the media, particularly the ABC obediently reports this as considered, informed opinion.

    As if what happens at thousands of metres down at the bottom of an 8-1/2″ or 6″ diameter hole is understood by any of these people.

  20. Mark A

    Percy Porcelain
    #2710034, posted on May 13, 2018 at 7:10 pm

    And economics is not a “science”, FFS.

    97% of it is unadulterated horse manure and the other 3% is basic common sense.

    Which you lose upon receiving your degree.

  21. egg_

    The writer notes that most PhD economists are employed be governments or universities so they naturally seek “ to expand the remit of government action, or to persuade other ivory tower occupants of the validity of their model”.
    He says they should rather be working for private firms where their advice would tested in market.
    In this respect academic and treasury economists and their precious mathematical models sound like climate practitioners, the climate system and the world of human activities in producing consuming and trading are both too complex and chaotic to be reduced to simple causal relationship models.

    They’re part of the scam – Garnaut Report ring a bell?

  22. BorisG

    A bloke does in from the outback and says, “ban fracking” and the media, particularly the ABC obediently reports this as considered, informed opinion.

    yeh but then if it is ‘the people’… the great unwashed…

  23. Tel

    If you want to get a deep feeling for modern self deception in academic economics, try this interview:

    https://ricochet.com/podcast/money-politics/obamanomics/

    Jason Furman was one of President Obama’s top economists, from the start of his campaign through the end of his presidency, and served as chairman of the Council of Economic Advisers from 2013 through 2017. He joined me on the podcast to discuss his time in the White House, how he views the recession and subsequent recovery, and his forecast for economic growth going forward. We also cover America’s productivity challenge, the pros and cons of the Big Tech firms, and a host of other questions from Twitter in a rapid-fire finale.

    Now out of government, Jason Furman is currently a professor at the Harvard Kennedy School and a senior fellow at the Peterson Institute for International Economics.

    If enough people can be bothered listening through, I’m happy to grind through details. Dunno if Kates does a lot of long drives or long walks. 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *