Book Review: The Econocracy

By Cameron Murray, a professional economist with a background in property development, environmental economics research and economic regulation. Originally published at MacroBusiness

I have just read a fantastic economics book. In entertaining detail, it outlines many issues in the economics profession that I feel strongly about [1] Like the authors, I want my discipline to evolve into one that is much better than it is; more practical, humble, and diverse. So why did I finish the book feeling less than upbeat?

The book is called The Econocracy: The perils of leaving economics to the experts. It is about how the general population has been excluded from public policy debate by an inward-looking economics profession. More than this, the profession is fundamentally failing, having grown in the past three decades to become nothing more than ideology masquerading as science.

Econocracy is written for people with some economics training, or with a keen interest in economics. Or perhaps even someone who is simply concerned about public policy debates being hijacked by economists and their jargon would appreciate it, and I can imagine there are many such people!

I would summarise the main story of the book as follows

  1. Economics is now the default method of analysis in serious social and political debate, undermining the legitimacy of other modes of analysis, making anyone who doesn’t understand economics and its jargon unable to participate in the major political debates of our time.
  2. Despite the great power granted to economists, the discipline has become nothing more than a narrow ideology, with that last defining theoretical battles happening back in the 1970s, and little openness to criticism or new ideas since.
  3. Changes in how economists and their discipline function could benefit democracy. These changes are 
a) economists training their next generation in a more pluralist way, giving them exposure to many methods of analysis to avoid the ideological indoctrination that is economics education and 
b) economists being less insular by reaching out to the public to promote a culture of “citizen economists”, who have sufficient understanding and confidence to bring their groups to the table and participate effectively in policy debate.

I will admit my bias upfront and say I needed no convincing of the first two points. Let me see which part doesn’t quite inspire me as much as I expected.

What is an Econocracy?

In the words of authors – Joe Earle, Cahal Moran and Zach Ward-Perkins (EMW) – an econocracy is

A society in which political goals are defined in terms of their effect on the economy, which believed to be a distinct system with its own logic that requires experts to manage it.

I am totally on board here. Making policy in order to nurture a thing called an economy is bizarre, bordering on meaningless. The slightest scrutiny reveals that the economy is whatever economists assume it to be.

When we think of Gross Domestic Product, probably the main measure of the ethereal thing we call the economy, we are actually thinking of a measure whose definition has changed dozens of times. The latest change of note is the inclusion of illegal drugs and prostitution in the European Union offical GDP statistics. So is crime now part of the economy? And if so, is it good or bad to have more of it?

Examples like this are common, yet routinely ignored. They reveal that when you define an economy, you are making moral judgements about what is good or bad for society. Economic growth is only good if you agree with the hidden moral judgements that sneak in when you define the economy.

Bringing insights like this to the surface can connect economics to a broader audience. Many people want to put forward their views in political debates about what constitutes a good, and just, society, but are bamboozled by economics jargon, which seems to leave no place for them. Cloaking policy debates in economic jargon limits participation from those who simply want to express their valid moral judgements about how society should be run.

Not only is the economy now the exclusive subject matter for experts who hide their moral judgements, these experts often hide their financial interests as well. If you have seen the 2010 film Inside Job, you would know how prevalent this is, particularly in the economics profession. I can personally attest to the troubles of even getting economists to recognise that they may have ethical obligations. But perhaps that is because their training was so narrow and uncritical.

Fixing a Failing Discipline

The decline of critical thinking in economics is beautifully told in the chapter entitled Economics as Indoctrination. For anyone considering studying economics, and for its many of teachers, this chapter will resonate.

EMW make their case that economics courses are best described as indoctrination by presenting the results of a curriculum review they conducted covering 174 economics modules at seven Russell Group universities. Their data is revealing, and provides indisputable evidence that the discipline trains its newcomers in a narrow, uncritical, and unrealistic way.

As a teacher of economics their survey results were fascinating, but not surprising. Multi-choice questions and lack of critical thinking seem to dominate assessment at the two universities I have taught at, while neoclassical methods of optimising representative agent models are the default, and sometimes only, approach taught. If anything, this chapter is a call-to-arms for teachers of economics everywhere.

EMW propose that teaching in a more pluralist and critical way is the answer. Many of the core parts of an economics course would be kept, and some replaced with a more diverse set of ideas and methods. No longer would material be presented uncritically as religious icons to be believed, not challenged, but each idea would be pulled apart and rigorously scrutinised.

However, the battle for change in teaching cannot be underestimated. Just look at the profession’s reaction to the efforts of EMW and their allies at the Post-Crash Economics student group.

The main reaction as has been “change without change”. A group of alternative reformers agree with EMW that the teaching of economics is poor (though in the quality of the teaching, not the content), and have endeavoured to fix it with better teaching materials, producing an updated textbook for the 21st century called Core Economics. Unfortunately this group missed EMW’s central critique – the content should also change!

EMW respond to the Core Economics project in their book. But I don’t think they quite see it as the defensive strategy of a powerful group that it is in reality. To me, this reaction is a signal of the political and financial power of the status quo in economics, and the enormous challenge ahead.

There are other problems I see with their pluralist solution. Teaching a pluralist curriculum requires teachers who actually understand alternative non-neoclassical approaches to economics in all their nitty-gritty detail, so they can be equally taught in a thoughtful and critical manner. There are very few of them.

And to make space for this type of pluralist teaching means dropping parts of the current core economics modules. Which ones should go? Egos will be damaged in this process.

I have personally tried to improve my teaching multiple times, only to find that dropping particular materials and including other new material, combined with more critical and reflective assessment pieces, has been frowned upon by others in the school. Particularly if they are teaching modules later in the course that build on the material that I chose to drop. Some kind of collective choice needs to be made about what topics to drop, and what to keep. And it is inescapable that such a choice will signal to many professors in positions of power that their careers have been wasted on things the discipline now considers to be nonsense, and not worth teaching.

Having an academic tribe that conforms to the same approach gives that tribe power. Notice the book is not called “sociologocracy” or “political science-ocracy”. Disciplines that do teach a variety of methods in a pluralist way typically end up losing credibility to outsiders because of the infighting within the discipline about fundamental issues.

I would recommend the book Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards, by Norbert Häring, which explains how neoclassical economists and their methods become powerful because of a feedback loop between the theories they created, and the support of the political classes who benefited from those theories. Economics as a discipline is now very powerful, and its uniformity maintains its power.

These incentives mean that change needs a grand coalition, rather than a slow evolution of improving the curriculum one module at at time. Past efforts of student groups have sought similar reforms in economics for nearly thirty years without success. I don’t think EMW see the sheer size of the political challenge their proposed reforms face. I do. And that’s probably why it is hard for me to get too excited.

Reaching Out

To shift society away from an econocracy to a democracy, EMW also see benefits from economists as a group reaching out to the public to make accessible the technocratic analysis of themselves and their peers. A survey the authors conducted of 1,500 adults across the UK found very low levels of economic literacy in the general public, meaning the economic jargon being sprouted by politicians and the media each day is not actually communication useful information to voters.

I agree whole-heartedly with this proposal. It only takes a few economists to reach out and teach active community groups to be savvy about, rather than intimidated by, economic analysis. And if such efforts result in greater participation from community groups in all spheres of life, it may undermine the demand for bogus economic analysis by vested interests who use it as a shield against criticism.

This idea has promise because it generates change outside the discipline. I simply do not see a way for economics to reform itself from the inside. The only way to change, that I see, is for the rebels and reformers to form a new discipline. Perhaps reaching out to the public is the start of that, which will develop a network of ‘citizen economists’ who are able to share knowledge, and through their networks and organisations, create a demand for work of people trained in this new discipline.

Call this new disciple something catchy, then agree broadly on its scope, some guiding philosophies, then add in some ethical standards. Get the major institutions of the country involved, like the Bank of England, to give it credibility. With some luck this rebel group will soon develop a reputation as being the superior discipline to economics, or what would soon become known “out-dated economics”.

Anyone who has studied powerful informal groups and networks knows that radical change usually comes from outside, while insiders go down clinging to their old beliefs and denying that reform is necessary. The book itself the work of three outsiders; students from Manchester who were able to see the tribe with clear eyes, and a clear head.

I can only hope that with such bright and critical minds as theirs entering the discipline, that the time may be ripe for change, either from within the discipline, or with new leaders rising up to change it from outside. Whatever the case, while I finished the book a little glum, I have finished this review much more upbeat, ready to push for change wherever I can.

fn [1]. I have a PhD in economics, teach graduate economics courses at The University of Queensland, and consult widely for non-profit groups to help them participate in policy development. An important disclaimer is that I have also been peripherally involved with Rethinking Economics, a group very much aligned with the reform efforts of the authors and their student group Post-Crash Economics. The authors provided me a complimentary copy of the book.

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  1. Karen

    I completed my PhD in economics at a bastion of neoliberal thinking & theoretical purism, Stanford University. I can confirm that the arrogance of the economics establishment is both breathtaking and suffocating. With one exception: John Taylor, who is a gem.

    1. Warpig

      Hi Karen,
      I would love to hear more on your experiences at Stanford. I went to The New School for IA and got a positive impression of the economics department there. Could you flesh out your views from your time at Stanford?

      1. Karen

        There’s not too much to say; it was the late 1980s, at the height of the profession’s devotion to rational expectations. Empirical studies were given short shrift, policy issues even less attention. My field was development economics (I did a joint major in macroeconomics), which was beyond the pale. My department, the Food Research Institute, had a storied history in production economics and increasing returns with Brian Arthur, not to mention some juicy endowed money. When they saw their opportunity, the Econ department swallowed it up, with the blessing of Condi Rice. No more development economics or public policy analysis.

        It’s probably better now; the profession has taken much greater interest in these topics in recent years, although I don’t see many signs of enlightenment, much less humility.

    2. Arizona Slim

      I got my bachelor’s degree in economics at the University of Michigan. While I was pleasantly surprised by the openness and availability of the professors, something seemed off about the discipline itself.

      Four decades later, I am just beginning to be able to put that “off-ness” into words.

    3. sgt_doom

      The ONLY economics thinkers I pay attention to are Prof. Michael Hudson, Prof. Michael Perelman, Samir Amin and Steve Keen. That’s it.

      Although from time to time I read something about those charlatans and clowns like Paul Krugman, Robert Reich and Stiglitz, I would never take those lightweights seriously.

      1. different clue

        Why not Herman Daly?

        Why not Frederick Soddy?

        Why not Charles Walters Jr. ?

        Why not some other Raw Materials Economists referred to at the National Organization for Raw Materials? Such people as Thayne Cozart, Fred Lundgren, Jerome Friemel, Charles Walters (again), Carl Wilken, etc.?

        Why not indeed? My suspicion is because you have not heard of them. And I think that is because of the highly effective cone of silence which has been kept over them for decades. They are too outside the mainstream to be considered safely “ortho-heterodox”. But now you have heard of them. Just now. They await your interest and study if and when you decide to look at them at some point in the future.

  2. Disturbed Voter

    Economics or political-economics?
    Description or prescription?
    Servant of power or speaking truth to power?

    We have to decide what we want this discipline to be.

    1. PKMKII

      Most centrally, the field needs to stop thinking of itself as being akin to physics, but with money, and instead see itself as an applied subset of sociology, maybe with a touch of anthropology for good measure. Descriptive or prescriptive, if economists don’t see themselves as analyzing and/or providing solutions to society as a whole and instead cling to their role as facilitators of the elite financial and political classes, the field will continue to be a big-money joke.

  3. Superduperdave

    I’ve not read the book, but I would argue that most of the glaring weaknesses in the teaching of economics could be overcome by adding a significant requirement that students learn economic HISTORY. How many economics majors have even heard of the Enclosure Movement? The Opium Wars, the “opening” of Japan, the colonization of Asia, Africa and the New World, slavery, the annihilation of entire species on land and at sea – requiring that these things be dissected in the light of the economic thinking of their times would go a long way toward showing students the ephemerality of the perspective they’re getting.

    1. Vatch

      You have an excellent point. One of the virtues of works by Thomas Piketty and Ha-Joon Chang is their deep investigation of economic history.

      1. HopeLB

        Mrs.G, AP History teacher at our Catholic H.S,. used the book only as a guide to direct our investigation of the underlying economic reasons for all events. We would have to actually make use of our city’s fine main library to uncover the political/economic truths and write research papers over the summer.
        Good times! And it made all of us into critical thinkers.

    2. Dead Dog

      I studied at the ANU in mid 80s.

      All the usual guff was there ISLM models, comparative advantage and trade, money supply, rational agents…

      Fuck it was depressing, but I slogged through, and it opened the door to a rewarding finance career, now over.

      Yes, little in way of history to back up the theories. And, in the absence of being able to prove how the models stack up to what we observe? I reckon 70% of it was bullshit and the professors of today? Most would have received the same indoctrination I did in the 80s and 90s.

      There are a growing number of heterdox economists and it sounds like the authors are in that group. Good on them and pleasing to see their work getting traction.

    3. animalogic

      You are quite right (Superduperdave). The excellent examples you give demonstrate that (at least) at a macro-level, economics can simply not be understood outside its wider political (sociological etc) context.
      There is a place for “pure” economics, an economics based on math, statistics etc, however, it’s a limited place.
      A history of economics course should be a BARE minimum in a tertiary economics education.

  4. Oaf

    Oaf like that…*Change without Change*…. Will that be the mission statement for our newly implemented governmental representatives? Or the epitaph on our society’s grave?

  5. craazyman

    This is a dangerous undertaking with great risk to the mind. The case of MIT mathematical economist Ed Bucks should be instructive and a warning for all.

    Dr. Bucks was similarly disenchanted with what he called the “falsity of economic reason” and over a series of months became increasingly agitated. He argued with colleagues and lost his temper. He called them “frauds and charlatans who should be embarrased by the cesspool of lunacy they work like sharecroppers work a cotton field, but they pick nothing but their intellectual noses”.

    You can see why he became a marginalized and then shunned member of the department. So he took off in a minvan for the New Hampshire woods where he sat in a tree to watch deer through binoculars, looking for what he called “the face of God”. His ambition was to find a set of equations that could explain human interactions without reference to any idea of money, drawing directly from animal nature, and then he thought he’d introduce money only as one of potentially many approaches to quantification. While sitting up in the tree eating cold beans and beef jerkey for 7 weeks staring at deer throough binoculars, he created a set of differential equations that he though would explain everything. They would spiral around in some cases with imagniary eigenvectors and reach steady states in others where the eigevalue were under 1 and sometimes they wouldd go to infinity as time went to infinity. He even came up with a few Markov Matrices that reached steady states across 17 or in one case, 45 variables. He had variables with names like “urge to power”, “imagination” (it was unclear how deer had imagination,but anyway, this was Ed at work), “instinct”, “hunger”, “procreation”, “rest” and “benevolence”.

    One of the few economist who’d still speak with him got worried after about a month and a half and went to check him out, five mile hike into the woods. And found him in the tree almost incapacitated. He couldn’t frame one clear sentence and had lost 15 pouonds, he hadn’t washed himself and he was frankly in prett bad shape. Pages of incomprehensible equations were stuffed in his pockets with curse words written on them.

    The police and came and got him out of the tree and took him to a pysch ward. After a month he’d recovered enough to go back to MIT where everybody pretended he’d been on vacation. IT’s OK as long as he doeesn’t criticize anybody and as long as nobody mentions “Ed’s vacation”. Now he’s back to the DSGE and grant money — a chastened man.

    1. different clue

      Is there any evidence that Prof. Bucks ever heard of Frederick Soddy? Was the name Frederick Soddy even so much as mentioned even one time anywhere in all of Prof. Bucks’s papers?

  6. fresno dan

    February 13, 2017 at 7:55 am

    Sounds like utility maximization gone awry…..(NO, NO, NOT sitting in the tree….going back to MIT – poor man….poorly incentived )

  7. Norb

    A new form of thinking is needed. Currently, the powerful are focused on making profit from the hardship and chaos of life. It is an ideology of cynical opportunism. In many ways, it can be described as a cult of death. How else to describe the .01% and the inability to address the need to organize human society in a way that reduces suffering instead of increasing it? The current economics profession has become a tool to mask this injustice. Profit form suffering is their creed, whether they are willing to openly admit it or not. GDP growth based on drug use, growing healthcare costs, and the MIIC are all your need to know.

    These new outside forces must be in 180 degree opposition to the current order. It must be a cult of life. It is by definition an outside movement.

    1. craazyman

      That is very well put. So true. But it’s not just “the powerful”. It’s a dialectice embedded in the very ideas of supply, demand, price and scarcity — where these innocuous ideas become abstractions and then become free market “laws” that implicitly contain their own moral justification for universal application, while losing all grounding in any sense of a transcendent ethical order.

      1. akaPaul LaFargue

        Agreed. But what is the strategy? For me a new ethical order, or whatever you want to call it, must begin in the everyday and that means how do we define our efforts to satisfy our potential (as we define it in specifics) within the social dynamic (or what some call “society”). I start with a critical appraisal of our collective enslavement – Jobs. e.g. – For a society without jobs.

  8. JEHR

    Re: . . . The Econocracy

    I did a double take when I read this regarding how the GDP is calculated:

    The latest change of note is the inclusion of illegal drugs and prostitution in the European Union offical GDP statistics. So is crime now part of the economy?

    What could be more damning of our present economics than that?

    1. Enquiring Mind

      There are plenty of examples about problems in economics. One of my favorites is Externalities”, here highlighted for emphasis. Those are brushed aside due to various reasons including lack of (consistent?) data, inadequate ‘modelability’, and lack of interest in bucking the orthodox system. That contributes to the perception of economists as ostriches with their heads in the sand, or fill in your favorite descriptor.

      1. Minnie Mouse

        Crank up the furnace in the winter with the windows open and blame the heating bill on the price of fuel. Gee, the weather outside must be an Externality, so that is why nothing works.

    2. cnchal

      The fact that economists sit on their throne at the policy table and will never give it up, is about as damning as possible, and dwarfs the inclusion of peasant crime into Euro GDP statistics.

      Drug dealing and consumption is wealth creating, in the same vein as production of commodities for consumption. Of interest is whether prostitution is a wealth creating activity or wealth trading activity.

      My intuition is that prostitution is a wealth trading activity and can be used to represent the service sector and that drug dealing is a wealth generating activity and can be used to represent the manufacturing sector. Put plainly, the service sector depends on the wealth generated by the manufacturing sector for it’s prosperity.

    3. Mel

      It’s a problem. If you want an accurate account of what society is doing with its money, then you may have to count criminal business. The more crime, the less accurate your accounts if you leave crime out. John Kenneth Galbraith himself created the term “The Bezzle” to refer to the money that wasn’t being used the way everybody said it was being used.
      But then for prescribing policy … I hate the term “groaf”. I think it’s smug and cutesy, but people have been using it to name the kind of growth that comes of optimizing crime and perfecting destruction. I guess I’ll change my ways.

      1. different clue


        I thought “groaf” also refers to making a lightbulb that burns out once every year so that 50 of them have to get made and sold and bought and thrown away in 50 years . . . as against making a lightbulb that burns out every 50 years.

        Planned self-destructolescence is a part of groaf without invoking any crime at all.

        1. Mel

          OK. I did not know that. I could try to weasel it in as “perfecting destruction”, but I’ll also change my ways a little bit more.

    4. bob

      I’d argue than in MOST countries, the black market is BIGGER than what they’re calling “legal” and then measuring with GDP. Sales tax avoidance being the number one cause.

      Just and error, not consequential. Sure.

  9. integer

    Call this new discipl[in]e something catchy, then agree broadly on its scope, some guiding philosophies, then add in some ethical standards.

    Perhaps this new discipline could be named something along the lines of sentient economics. Also, for added contrast, practitioners of sentient economics could make a point of always referring to economics as it is currently practiced as exploitative economics.

  10. John Wright

    If economics were reformed, would not another system spring forth to justify the actions of the world’s powerful?

    As the review points out, the economic profession functions, in the USA at least, to give intellectual cover for the government’s actions.

    Where are economists and the financial industry when it comes to doing assessments of the value of US wars/military actions/foreign interventions to the USA and the world in general?

    We have one, Joseph Stiglitz, first estimating the financial cost of 3 trillion for the Iraq war, now updated to 5-7 trillion.

    But usually economists are missing in action in the service of the great unwashed as they are agnostic about the sources of demand in the economy.

    And Obama finally found something he believed in enough to fight for, the TPP, with most economists providing him “anything nominally for free trade is good” cover..

    The Economics profession illustrates the “Golden Rule” as in “He who has the gold makes the rules”

  11. Benedict@Large

    2. Despite the great power granted to economists, the discipline has become nothing more than a narrow ideology, with that last defining theoretical battles happening back in the 1970s, and little openness to criticism or new ideas since.

    People look at me like I’m crazy when I try to tell them this. They ask why they should believe me, a non-economist, over 40 years of PhDs. And yet it’s right there in almost every graph you look at that spans the pre-70s to the post-70s. Before the 70s, things were generally getting better for the majority of people, while since the 70s, things have been getting worse.

    And this much is implied (but not directly spelled out) by the statement above: Whatever it was that was the last thing decided back in the 70s, IT WAS WRONG.

    1. craazyman

      I think disco music and Saturday Night Fever — with John Tavolta as the Disco King of Bensonhurst Brooklyn while Studio 54 raged in Manhattan — marked the top. It’s not completely clear if that was the apex of achievment for the era that was ending, or the catalyst for its collapse.,

  12. Hemang

    In the jungle of Social Sciences, Economics is the king among mumbo jumbo.An old joke is: Even if you put all Economists in a row, they will not reach a conclusion. The common folks never pretended to listen to the Economists; only of late they have started showering affection on Populists.Of course we live in pathetic times and the surest sign of the times is how unreadable (and un- understandable) the Bhagwatis; the Sens; the Deatons; the Krugmans; the Stiglizes of the world actually are! These gentlemen must learn some style of the written word from Lord Maynard Keynes first and foremost. That done, we shall converse about the theories of gains and the lyrics of loss in next incarnation. Also, it is not ‘ a failing discipline’ ; it is a failed attempt at creating a discipline out of shop-keeping and arithmetic.

  13. blucollarAl

    Adam Smith, good Scots philosopher that he was, was still operating under the framework of Aristotle’s moral and political philosophy when he argued that a functioning “free” market in the transaction of economic goods and services is better able to improve the material conditions necessary for a fully flourishing human life (what Aristotle called “eudaimonia”, often and misleadingly translated as “happiness”).

    Smith is a pivotal figure in that he is a kind of transition point between the older understanding of politics and political activity as oriented toward pursuit of the “common” or “public” good(s), the general social conditions that benefit living-together-in-society to the greatest possible extent (given the specifics of time and place), and the newer, “modern” understanding of politics as a procedure for mediating strictly private group and individual interests (“passions” in the language of the early philosophers of modernity).

    Increasingly, with and after Smith, the common/public good, the object of political thinking and statesmanship, began to be defined more and more solely in terms material well-being, the provision first of material necessities and then increasingly luxuries to greater numbers of citizen-consumers. With this went the redefinition of what it means to be a “good citizen” from someone who is able to actively participate in deliberation and debate about how to achieve ends that directly or indirectly contribute to the public good of the society in which one lives, to a life of bourgeois contentment based on having commodities in sufficient amount to make life “easier”. Political society begins to get understood as “commercial society”, with the realm of the “free market” gradually absorbing more and more areas of human life.

    Nevertheless, Smith was enough of a traditional thinker to recognize that while (in his opinion) the functioning of the Market best takes place without the interference of the statesmen (“legislators” is his term), this does not mean that politics does not stand above and “rule” the new science of “economics”. Smith knew that, however necessary economics and market-thinking was to increase material well-being, human-living-in-community (political life broadly speaking) involves much more than material well-being. There is much more to life and politics than maintaining a thriving Market, much more to living a human life than having a bunch of things.

    Henceforth, after Smith, the role and place of Market and the presuppositions contained in Market (e.g., the kind of character fostered by commercial values, the kinds of passions it promoted and suppressed, the hierarchies of human goals and goods required by it, the various ways to increase production of goods and services at lower prices, etc.) is increasingly debated. One such question is this: If being a “good citizen” and “happy human being” encompass more than being a successful acquirer of material goods and the money needed to acquire these goods, what institutions in addition to the Market are necessary? Can the Market be relied upon to enable these non-Market institutions to flourish? Is Market-thinking (economics) sufficient to deliberate about these things? Or is the kind of thinking (Aristotle called it “prudence”, “phronesis” in Greek) required to deliberate about these larger questions antithetical to more calculative and shallower economic thinking that by its very nature remains within parameters set by Market values alone?

    Both the European conservative tradition (Arnold, Burke, etc.) and the radical Marxian tradition were concerned about the same thing: society, politics, human life, increasingly becoming defined by “Market-Man” with the inability to think outside the sphere of the “Economy” and its implicit values and ideals.

    To give just one contemporary example: what if Market-thinking (the rule of the economist) leads to cheaper “things” while simultaneously causing the widespread destruction of local economies, small and medium locally based services, interesting and walkable downtowns, regional supply chains that keep capital within local communities? What if unfettered international trade and the unencumbered ability to relocate nodes of production in the cheapest labor markets results in widespread rural and small town poverty, mass relocation of working age people, the geographic dissolution of families, and expanding national inequality? What if the cheap commodities supplied in greater amounts leads to a homogenized and crapified bunch of junk? What, in short, if Walmartification destroys small town America as a viable way of life, and Disneyfication destroys the past as anything more than another commodity to be planned, packaged, and mass fed to an increasingly passive population of consumers?

    Is modern economic thinking not prevented by its very world-view, the glasses through which it views the world and that it consequently does not examine or question, from asking, much less answering these kinds of question?

    1. Hemang

      Thanks for remembering the ‘good Scots philosopher, Adam Smith’ here. I am afraid that Adam Smith is always misquoted and his ideas as he intended always have been represented incorrectly by the money-managers and their tribe, especially by the Economists. Adam Smith said that if you want to grow wealth, do free trade as it is an efficient system of capitalism but ALWAYS UNDER THE SUPERVISION OF THE STATE and after you have grown reasonable quantity of wealth, SPREAD IT AROUND. Of course this second part is forgotten by the policy makers, from the U.S. to Russia and from Brazil to India resulting in increasing chaos. Smith never said that “Grow wealth and bury large amounts in your own house and spend on houses for your family in each continent and then invest in Derivatives of Derivatives of Derivatives of Insurance of Derivatives”! Economists and Policy makers are directly responsible for the arrival of populist leaders on the thrones of power- let us hope that our new masters (who should count on the blessings of a poor Brahmin like me surviving on 3 dollars a day) show common sense and immediately sack all Economists from all positions of decision-making.

      1. Berit

        The current General Secretary of NATO, former PM of Norway, Jens Stoltenberg, is an economist, still prominent member of the social democratic Arbeiderpartiet ie Labour Party…

        1. Hemang

          I opined on Economics and its Applications by the State; I am not interested in War. A prominent member of the Norwegian labour party having been an economist may be a good thing but NATO is a bogus and cheating twentieths century war party and the good man should not grace a war machine.

        2. Hemang

          The 28 member organisation wedded to ‘democracy’ is clearly in an existential crisis not only because the Cold War is over but :”NATO is obsolete”-President Donald J. Trump. The days to pontificate and edification of non-NATO world are over, no?

  14. agkaiser

    If Dr. Bucks had let his mind clear then became receptive to new thoughts, instead of doubling down on the insanity/baggage he brought into the wild, he might have had a more profitable experience.

    Sadly, the hardest thing to do is let go of the bad ideas with which we’ve been indoctrinated in order to see the reality that’s been so occluded. Get clean! See what’s really there. Then work on it. Doing the same thing over and over and expecting a different result …

  15. Sluggeaux

    History is replete with “mystery” cults in which high priests confer divine right to those who have already taken power and wealth through brute force. The cult of economics as practiced in contemporary academia is no different. I found the reviewer’s reference to Inside Job to be most apt — listening to Charles Ferguson ripping on Mishkin and the other high priests was something out of a Monte Python religion sketch. Human activity can never be reduced to mathematical formulae; people aren’t just diverse, they’re perverse. The only thing about their interaction that is predictable is that it is unpredictable! This is especially true when their material security is rendered precarious.

    I’ve always loved the phrase “theoclassical” that I learned here — I live in a university town and my wife works with the faculty. They’re a bunch of charlatans in vestments stroking their beards and nodding at one another’s readings of goat entrails…

  16. Chauncey Gardiner

    Those who choose to enter this profession are also subjected to a healthy measure of “discipline” the verb if they choose to ignore the carrots offered to perpetuate the controlling ideology.

    Those who fund university chairs, think tank and consulting employment; vet candidates for university teaching, central bank and government positions; control submissions to professional journals; and fund politicians who oversee public university budgets; etc. are driving the bus.

    I agree with Cameron Murray that change will most likely need to come from outside the network of gatekeepers.

  17. skippy

    The 7 Deadly Innocent Frauds of Economic Policy

    The term ‘innocent fraud’ was introduced by Professor John Kenneth Galbraith in ‘The Economics of Innocent Fraud’, which was the last book he wrote before he died. He used the term to describe fraudulent concepts that were being sustained by the ‘conventional wisdom’ (a term he created in a previous book). The presumption of innocence by those perpetrating the frauds is characteristic of Professor Galbraith’s cynically gracious approach.

    This book reviews 7 ‘innocent frauds’ that I suggest are THE most embedded obstacles to national prosperity. The first 4 concern the federal government budget deficit, the 5th addresses social security, the 6th international trade, and the 7th savings and investment.

    I begin with the innocent frauds of the budget deficit, because they are the most pervasive and most damaging to both the US and the rest of the world’s standard of living. – snip

  18. Sound of the Suburbs

    Let’s look at the big picture.

    “All for ourselves, and nothing for other people seems, in every age of the world, to have been the vile maxim of the masters of mankind.” Adam Smith, The Wealth of Nations

    Mankind first started to produce a surplus with early agriculture.

    It wasn’t long before the elites learnt how to read the skies, the sun and the stars, to predict the coming seasons to the amazed masses and collect tribute.

    They soon made the most of the opportunity and removed themselves from any hard work to concentrate on “spiritual matters”, i.e. any hocus-pocus they could come up with to elevate them from the masses, e.g. rituals, fertility rights, offering to the gods …. etc and to turn the initially small tributes, into extracting all the surplus created by the hard work of the rest.

    The elites became the representatives of the gods and they were responsible for the bounty of the earth and the harvests. As long as all the surplus was handed over, all would be well.

    Later elites came up with money.

    We pay you to do the work and you give it back to us when you buy things, you live a bare subsistence existence and we take the rest. There would be just enough there to keep everyone on board and those at the top could skim off nearly all the surplus to live in luxury.

    The money scam for extracting the surplus forms the basis of capitalism and quite a few early companies had a company shop where wages had to be spent to ensure there was no leakage into the pockets of others.

    The UK’s aristocracy has seen feudalism, early capitalism and modern capitalism; they all fulfil the primary function of human society, keeping them in luxury and ease while others do all the work.

    Until the early 19th Century the poor lived in squalor and the rich lived in luxury, the 5,000 years of human civilisation.

    Then this awful chap Marx comes along with an idea of organised labour movements and those at the bottom start to get a larger slice of the pie. The threat of Communism means the masters of mankind need to be a bit more generous in the Keynesian era.

    As memories of the Russian Revolution fade the elites start planning and come up with neo-liberalism.

    They give it some early trials in South America, the rich get richer and the poor get poorer. It’s perfect.

    The Berlin Wall falls and it’s time to roll it out globally.

    Underlying neo-liberalism, is neoclassical economics, 1920s economics, but it has now developed a language of its own and mathematics that makes it impenetrable.

    A technocrat elite ensure the days of 1920s inequality are back with a vengeance and its diktats are beyond question.

    The economics isn’t very good but the idea is more similar to the earlier elites, it’s just some hocus-pocus to justify extracting all the surplus produced globally. The Central Bankers are the high priests of the new religion, neoliberalism.

    2014 – “85 richest people as wealthy as poorest half of the world”
    2016 – “Richest 62 people as wealthy as half of world’s population”
    2017 – Richest 8 people as wealthy as half of world’s population

    Nearly there.

  19. Barry

    Our department was being audited. At issue was why we had not yet laid off our full-time custodial staff and replaced them with a service company owned by an alum and friend of one of the members of the board. When our directors spoke to the auditor of things like the quality of interaction with our staff and the dormitory residents who got to know them by name, the cost of living in our area, entrusting a person with keys to a residence hall, etc. the auditor would smack the palm of one hand with the back of the other and snap, “Those are merely values!”.

    This to me is emblematic of the trick that the economics profession has played on us all: pretending that their areas of concern are not values or morals or sentiment or politics but something above and far more essential than those things. This claim is itself of course a value-laden statement. As such it is worthy of the same scrutiny and challenge as any other.

    1. Barry

      Yes, I know an auditor is not necessarily an economist; but I was getting the same thing from the economic books I was reading at the time, and friends who were majoring in economics and heaping scorn on my sociology/organizational behavior degree. Economics was SCIENCE and sociology was pretend science, because math.

      1. Hemang

        Get over it- all of them Social Sciences are mumbo jumbo. Sociology is a laughable discipline but Economics in a lethal cocktail with the Theory of Numbers triggers my laughter that will shake the universe. The pretence and confusion and its mis-application in the real world has heralded DJT. It is kind of late but President Trump, welcome at any rate!

  20. George S

    Sounds a lot like one of the themes in Jeff Madrick’s “Seven Bad Ideas,” a core point of which is the insularity of neoliberal economists and their internally consistent models, which in turn do not touch down in the real world. As for enclosure, Peter Linebaugh is a good read.

  21. b1daly

    I majored in Econ at Dartmouth in the mid 80s. In my memory, most of the professors I had seemed humble, to the point of sheepishness, about the woeful inadequacy of the theories they were teaching. They were taught as more of, these are the foundational basics of the field, so you need to know them, but they don’t actually work. We never really got to the point when the class subjects dealt with what they really thought. At the time I assumed more of the current research was part of the curriculum at the graduate level.

    I went in a different direction after college, and have only kept a casual interest in the field. I’ve often wondered if the undergraduate curriculum has changed.

    One thing I came away with was a paradox that has puzzled me to this day. The concept of “value” was a vexing subject, and my interpretation at the time was that economics used money/prices as a proxy for wealth/value/. Since it was already numerically based, it leant itself to mathematical models.

    There are many problematic issues that fall out of this choice. Military spending was the one that I never got my mind around. Our society spends a lot of resources on the military. There are the raw inputs, then the “value” added by labor and design. Since companies get paid to provide armaments, and pay their owners and workers, clearly this activity should be counted in the GDP.

    But if you take a cruise missle that costs millions, and misfire it, that “value” has evaporated, and this does not provide something “of value” to my mind. It’s sort of taking a pile of money, and setting it on fire.

    Suppose the missile fires correctly, and achieves its military objective of blowing up a building, and killing its occupants. Now you’ve burned two large piles of money, and killed other human beings.

    This activity comes under the rubric of “security.” Security does sound like a good thing. Something people would value, and want to pay for. But it’s very hard to quantify this value. If nothing bad happens, no wars fought, then you’ve succeeded, by taking your pile of money and locking it up, to be burned later.

    The value of “security” is also highly based on the subjective state of the subject. This leads to expending resources on “security theater.” (IMO things like Trumps travel ban are quintisential security theater.) This is very strange. For example, a corrupt government can propose a “missile defense system,” which has proved to provide no value in actual testing. The government pushes it through anyway. The people are pleased. Money Well Spent!

    But since the missile defense system doesn’t work, the corrupt leaders could just build a much cheaper “dummy” version, and pocket the money. Subjectively, the people have exactly the same amount of “value,” as long as the fraud is kept secret.

    Then the corrupt rulers could spend their ill gotten gains on “real things,” houses, cars, boats. These definitely are counted in the GDP. So the “value” obtained by the initial disbursement has been magically multiplied, by fraud?

    So the concept of “value” is very problematic. Using money/price does provide a way of quantifying subjective value, but it’s a slippery subject.

  22. Bob Haugen

    Any economists working on developing a better economic system, in line with what Norb and craazyman want? That would seem useful. Re-describing the death spiral we got, not so much anymore.


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