The bang-your-head-against-a-wall theory of economic policy

I’m in the middle of writing a paper on Classical Economic Theory which has as its central theme how near impossible for someone educated within one school of economic thought to understand another. My own belief is that one can only understand an economic theory if one actually has at some stage thought it was valid.

But on the larger question whether economic theory can help us understand what to do, it is an unambiguous yes, if it’s classical economic theory, and for the most part if it’s Austrian. Otherwise, forget it. Modern economics is basically a bang-your-head-against-a-wall-theory because it feels so good when you stop.

This book, that has just come to my attention, because of a presentation next week by Alex Millmow which might be of interest if you are in the neighbourhood. I have, however, highlighted two bits from the ad for the book which make me very suspicious that she might really be able to help out any of us with much of anything at all.


(1) What do the ideas of Karl Marx tell us about the likely future for the Chinese economy?

(2) With globalization in trouble, what can we learn about handling Brexit and Trumpism?


(1) The more they pay attention to Marx, the worse their economic outcomes will be.

(2) If you are wondering how to “handle” Brexit and the economics of Donald Trump, you are already demonstrably incapable of understanding their natures or how and why they will improve things.

Anyway, here is the ad for the book and below is the ad for Alex’s presentation.

Front Cover
Since the days of Adam Smith, economists have grappled with a series of familiar problems – but often their ideas are hard to digest, even before we try to apply them to today’s issues. Linda Yueh is renowned for her combination of erudition, as an accomplished economist herself, and accessibility, as a leading writer and broadcaster in this field. In The Great Economists she explains the key thoughts of history’s greatest economists, how our lives have been influenced by their ideas and how they could help us with the policy challenges that we face today.

In the light of current economic problems, and in particular growth, Yueh explores the thoughts of economists from Adam Smith and David Ricardo to recent academics Douglass North and Robert Solow. She asks, for example, what do the ideas of Karl Marx tell us about the likely future for the Chinese economy? How do the ideas of John Maynard Keynes, who argued for government spending to create full employment, help us think about state intervention? And with globalization in trouble, what can we learn about handling Brexit and Trumpism?

Alex Millmow – Policy in the Pub: The Great Economists – Can their ideas can help us today?

Smith, Ricardo, Marx, Marshall, Hayek & Keynes. Just a few of the illustrious names from the history of economics but what can the ideas of history’s greatest economists tell us about the most important issues of our time? Join us for October’s Policy in the Pub to hear from Associate Professor Alex Millmow of Federation University and the President of the History of Thought Society of Australia (HETSA), who will discuss what (if anything) we can learn from the Great Economists. The title for this talk comes from a recent book by Linda Yueh “The Great Economists: How their ideas can help us today” and the talk will include a reflection and commentary on the issues it raises.

Event details: The evening is being held at 5.30pm Wednesday, 17 October 2018 at the Kelvin Club 14-30 Melbourne Place, just off Russell St. There will be drinks and nibbles from 5pm for those who can get there a bit earlier.

As always, to plan for numbers, please register.

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9 Responses to The bang-your-head-against-a-wall theory of economic policy

  1. It actually sounds like a good evening and i know Lady Jugulum would enjoy herself, unfortunately we won’t be visiting Oz then.

    But i will keep an eye out for the literature above.

  2. .

    Modern economics is basically a bang-your-head-against-a-wall-theory because it feels so good when you stop.

    That was undergrad for me.

  3. Jim Rose

    Millnow is a crank who thinks Milton Friedman converted all of Australia’s macroeconomists to his way of thinking in one flying visit and a Monday conference interview.

    Joan Robinson was certainly ruling the roost in the late 1980s when I was sitting on the next test to the monetary policy section and the prime minister’s department. Friedman was never mentioned in my undergraduate or graduate education, and at job interviews if you ever wanted to kill your chances of a job, you mentioned Milton Friedman’s name

  4. Roger

    So, could an economy function without economists?

  5. Bad Samaritan

    Here’s a hypothetical situation……

    I have developed a perfect counterfeiting process and have got access to the list of bank-note serial numbers. I now start printing an exact duplicate run of Australia’s $50 banknotes and have a few billion dollars stashed away in the basement.

    Now I approach my 1000 best friends, who all live in Brisbane, and tell them one by one that I’ve recently won a big overseas lottery and that I want to share it with them . I tell each person I’ll give them a hundred grand, and that if they keep my (and their) good fortune to themselves, there’ll be more to come on a regular basis. I tell each of them them they are my bestest and that I do not want others hounding me, and if that happens and I’m forced to split the dough they (the one I am a telling this to at that time) will not get any more, or at best, have to share it. I also note that flashy spending may well give the game away, so discretion when buying stuff, and extreme discretion with the details, will be the key to their future cash instalments from my purported windfall.

    So, now I gradually release billions into the local economy (a hundred million at a time). No-one knows it’s billions because each truly believes they are the only one getting a hundred grand each time, and they keep quiet out of self interest…

    How do Cats believe this will pan out. Will there be price inflation? Will the local economy be stimulated? Etc. Especially; how will the fact that no goods or services have been produced prior to the cash (money….purchasing power) being created be handled by the market?

    In effect this is demand side economics where the supply side is absent (at least at the beginning) but no-one actually knows that a cash stimulus is in play.

    C’mon. Let’s have some thoughtful replies based on your theories. Thanks.

  6. John Constantine

    Already happening in Australia.

    Outcome is that the exchange rate of the ‘housing currency’ versus the corrupted cash currency reveals that it now takes a pile of Aussie dollars five times as thick to buy the same house.

  7. Titch

    Millmow is still around? Too mean to die probably. This is a person who physically lived in his office all week, slept in it, showered in student facilities, only ate one meal a day lunching at the Uni cafe, and cadged lifts into town on Friday afternoon to catch the train from Wagga back to Melbourne, as he was too mean to pay the Uni bus fare. He was the standing joke around the campus. What credibility does he have now?

  8. .

    Interesting Titch.

    That does not sound like a fellow who believes in underconsumption – rather, he is a conspicuous practitioner.

  9. .


    The effects will take notice. There will be an effect on consumption, saving and so on. Inflation is not predicated on public knowledge of monetary shenanigans. That helps to form expectations, that is all.

    Even with discretion and over time, there will be aggregate effects.

    It does not matter if you don’t know what the supply side is doing. There is still a market clearing level for the prices at given quantities. It makes it hard to simultaneously estimate supply and demand in a statistical model, but there is still a price effect.

    There will be an effect on the credit market, personal consumption and the like.

    Because you are creating currency the effects will be strong as they will be subject to the bank multiplier. It could even see credit being artificially cheap.

    Eventually, I think forensic accounting of money credit aggregates might even detect/suggest a level of counterfeiting.

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