Philip Pilkington: The Degenerating Discourse of Mainstream Economics

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

The blogoshpere includes quite a few mainstream academic economic blogs. Most of the “debate” on these blogs, together with that in the mainstream academic departments that they mirror, focuses issues of aggregation; issues that have become central to the research paradigm of mainstream economics, which has been falling to ever new lows since the 1970s Rational Expectations “Revolution”. “How,” they ask each other, “do we ensure that our macroeconomic models contain and accommodate perfectly rational agents optimising their utility?” The questions of, for example: what relevance this might have; of whether agents are actually rational in reality; indeed, of what the term “rational” means beyond “acting as economists think people should act” are rarely raised and are thought crude by the mainstream academics. This discourse resembles less a gathering of scientists actively engaged in discovery of new and interesting truths and more a collection of theologians debating logically consistent stupidities founded on imaginary constructions.

Here we look at a post, “How Effective is Fiscal Policy?” at Crooked Timber by one Robert Farmer, a professor of economics at UCLA. The title is misleading because the post is mostly concerned with broadly different approaches to macroeconomics and less concerned with the actual effectiveness of fiscal policy – which, of course, is an empirical question.

A Farmer and a Strawman

Let us start with seems to be the first requirement of orthodox economic discourse: to completely misrepresent a classic work of macroeconomics. The victim is usually John Maynard Keynes and our present post is no different. Farmer writes:

[T]he General Theory does not contain an explanation of unemployment that is consistent with rational behavior by profit seeking firms in the labor market. There is no coherent theory of unemployment in the General Theory; there is simply an assertion that households are not on their labor supply curves.

There is no need to bore the reader too much with the details here, but this is an oft made criticism of the General Theory made by mainstream economists during and after the 1970s and the so-called Rational Expectations Revolution. It is not remotely true.

In Chapter 19 of the General Theory, Keynes lays out a number of reasons why effective demand might remain at an insufficient level to support full employment. Indeed, the whole purpose of this chapter, absolutely central to Keynes’ argument, is to show that “perfect markets” – i.e. flexible wages and prices – are not sufficient to ensure full employment. Here are five of the maybe six or seven reasons given by Keynes in this chapter for the interested reader to consider:

1. If wages falls the marginal propensity to consume will also fall because this, for Keynes, is dependent on nominal, not real, income. Even if prices adjust downwards, workers will save more relative to their income because, assuming a level of realism ignored by modern economists, they make calculations about saving and consumption based on their nominal wage. If investment is not increased to make up the gap – and there is no reason to assume that it will be – aggregate demand will fall by the same amount.

2. As wages and prices fall, total real indebtedness rises. This may result in bankruptcies and otherwise put strains on companies’ balance-sheets. Today this has become known as “debt deflation”, but it was already present in Chapter 19 of the General Theory.

3. Expectations are important and if wages/prices are expected to fall further entrepreneurs will postpone investing in new capital goods in order to avail of the lower future prices.

4. Likewise, price instability will make it very difficult for entrepreneurs to make business calculations going forward which may induce them to invest less.

5. If wages and prices fall, those in society with more savings – i.e. the wealthier members of society – will hold more of the wealth, as the real value of the stock of savings increases. Since wealthier people have a lower propensity to consume, total aggregate demand will likely fall.

Some of these points are subject to the absurd “rational expectations” critiques that the mainstream economists peddle – i.e. they are not consistent with the actions of agents who, for all intents and purposes, know the future. Some of them are not. But regardless, the point is clear: Keynes does give very clear reasons why unemployment might remain despite wage-price adjustments. If some do not like these reasons and reject them due to their own apriori beliefs about “human rationality” that they build into their work, this is their own choice, but that does not justify dismissing Keynes by falsely claiming he didn’t deal with the issue of unemployment.

Filling in Imaginary Holes

After trying to airbrush out critical parts of economic classics, the next step in what passes for economic debate in mainstream academia is to fill in the gaps that result. This is done through reference to logical constructions that exist elsewhere in the profession, usually built or sanctioned by its key players. In the case of our present discussion the model referenced is the Dynamic Stochastic General Equilibrium model (DSGE) – we will not get into this model here as it is neither interesting nor useful.

The strange thing about our present case, however, is that the author seems to have a fair grasp of the history of the development of these ideas – despite his contextual reading of this history being somewhat perverse. In addition to criticising Keynes based on the author’s own methodological demands (and, we should note, getting this largely wrong), the author goes on to criticise the neoclassical-Keynesians for not getting Keynes “right”.

The author raises the issue, which so many heterodox economists insist on time and again, that the neoclassical Keynesians after WWII had perverted Keynes’ overarching message in the General Theory. He mentions the names of Joan Robinson and Axel Leijonhufvud, two economists that played a very prominent role in criticising not only a certain type of “Keynesian” economics that arose after the war, but also a certain style of economic theorising of which the present author is most definitely a part. Unfortunately, the author, echoing these criticisms as mere historical sound bites rather than substantive critiques, completely scrambles what these critics were trying to say.

Both of these authors were, in actual fact and in contrast to what the author alludes to, trying to show that Keynes’ style of economic theorising was dynamic, practical and based in historical rather than logical time. In short, these authors tried to rescue the tradition that Keynes handed down of actual dealing with historical change and dynamic processes rather than building castles in the sky. For Keynes and these authors the purpose of economics was not to construct toy-models of the economy that, while logically consistent, were completely useless, but to explain actual historical processes as they happened. Joan Robinson especially thought that economics was a tool to study the process of historical change and development in all its contradictions and ambiguities, rather than to construct models based on what she called “metaphysical” or “apriori” reasoning – rational expectations and rational agent models which have no basis in empirical reality being a prime example of this.

Such a tradition of realism and practical engagement was also, as Robinson and Leijonhufvud tirelessly pointed out, what Keynes himself tried to promote. Robinson in particular often pointed to the following quote from the General Theory that seems completely lost on Farmer and his cloistered colleagues:

The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organised and orderly method of thinking out particular problems; and, after we have reached a provisional conclusion by isolating the complicating factors one by one, we then have to go back on ourselves and allow, as well as we can, for the probable interactions of the factors amongst themselves. This is the nature of economic thinking. Any other way of applying our formal principles of thought (without which, however, we shall be lost in the wood) will lead us into error. It is a great fault of symbolic pseudo-mathematical methods of formalising a system of economic analysis that they expressly assume strict independence between the factors involved and lose all their cogency and authority if this hypothesis is disallowed; whereas, in ordinary discourse, where we are not blindly manipulating but know all the time what we are doing and what the words mean, we can keep “at the back of our heads” the necessary reserves and qualifications and the adjustments which we shall have to make later on, in a way in which we cannot keep complicated partial differentials “at the back” of several pages of algebra which assume that they all vanish. Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.

We do not merely point this out to show that Farmer’s grasp of the history of ideas is rather watery, but also to show that the methodology which he advocates is completely irrelevant to approaching real economic questions. Farmer, and all those in academia and on the “sophisticated” blogs that write and speak like him, are not really interested in the real world. They prefer to construct, as Keynes called them, “a maze of pretentious and unhelpful symbols… as imprecise as the initial assumptions they rest on” which they can then study in the candlelight, bouncing their shadows off the wall until they finally emerge from their caves as Philosopher Kings with ready-made answers to hand down to the finite, temporal mortals who live, breathe and trade in the open air.


The inevitable result is that the pronouncements that these academics make are completely arbitrary and idiosyncratic as they will be dependent upon whatever the author has, due to personal taste, decided to be the most important aspect of a given model. Because they do not study real economic data and trends without an intellectual filter (a model), they have no scientific standard by which to eliminate useless information and keep relevant information. So, instead they simply focus on one aspect of the economic scene – usually arbitrary and often peripheral to the flow of real events – and elevate it above all else.

Farmer does exactly that. He claims that fiscal policy, of any level that he deems acceptable, only provides a short-term boost to the economy and ignores structural problem. Again, for rationalist believers in the scientific method this is largely an empirical question and can be examined with reference to the great government spending programs of the past. But let us for a moment take a look at this issue of structural problems, which certainly do exist in real economies today, but which do not seem to be what Farmer and his colleagues are pontificating about from behind the altar of rational expectations.

The structural issues of Farmer and his colleagues do not refer to, for example: trade deficits due to international currency arrangements and capital flows; growing wealth inequality due to a decline in the wage-bargaining power of workers; or a bloated and out-of-control financial sector that has basically taken control over the political process in Farmer’s own native land. No, Farmer and his colleagues generally mean something to do with insufficient incentives for private firms – sorry, we should say: rational private firms (in an otherwise nicely balanced economy with no nasty antagonisms that is full of rational people living in perfect harmony with one another). Farmer, for example, after alluding to these problems with incentives which he has plucked out of his models and elevated to the status of deus ex machina concludes that the central bank, and I quote, should adopt “the goal of influencing the relative price of assets, with the goal of boosting real aggregate demand”. Yes, you read that right: Farmer wants the central banks to reflate asset prices to boost spending in the economy.

Frankly, it seems likely that most educated people who read the newspapers are more in touch with the economic realities of the last few years than Farmer appears to be. So, rather than discussing the gigantic and well-documented asset price bubbles that inflated across the world over the past two decades, sustained sufficient effective demand to maintain high employment for a short period and finally burst, leading to economic chaos and turmoil, I will allow readers to judge that conclusion for themselves.

But they should consider that it is this style of economic thinking, one that I hope to have thrown some light on in the preceding paragraphs, that has led to what can only be called a complete perversion of rationality, reason and even common sense among intelligent and educated people. With that, one more quote from Farmer who, speaking of those who claim that given the present unemployment crisis the government should spend more to support demand and employment, writes that such solutions “smack of religion; not science”. Sometimes, perhaps, it is best to let irony ring in the ears only of those that can hear it rather than trying to force on the deaf.

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  1. censoredagain

    “such solutions smack of religion; not science”

    The State is the God of Atheists, and like all Gods, it exists only in the minds of its deluded acolytes. Admittedly, there are a lot of these people, but that doesn’t make them right.

    This is Phil’s religion, and like all whose indoctrination has been lifelong, there really isn’t much hope of brushing the scales from his eyes, unless he chooses to do so for himself. And, like all religious fundamentalists, Phil’s doctrine is nonsensical and self-contradictory, relying on psuedo-intellectual economic double-speak that is used to mask the fact that, underneath it all, violent coercion is used to enforce these ridiculous and arbitrary economic rules upon us all, much to humanity’s detriment.

        1. skippy

          Stefan Molyneux

          Stefan Molyneux (born 24 September 1966) is a Canadian philosopher, blogger, essayist, author, and host of the Freedomain Radio[1] series of podcasts, living in Mississauga, Canada. He has written numerous articles and smaller essays which have been published on libertarian websites such as, and Strike The Root[2], recorded over 1700 podcasts, produced over 500 videos, and written numerous books which are all self-published except for his first, which was published by Publish America. In 2006 Stefan Molyneux quit his previous job in the field of computer software and works full-time on Freedomain Radio, a philosophical community website which is funded through voluntary donations.

          Freedomain Radio


          Freedomain Radio is primarily an online podcast, however Molyneux also uses essays, videos, books, articles, interviews, and public speaking to deliver his content. The regular content of the show covers topics such as anarchism, ethics, Austrian economics, atheism, religion, education, family, and politics. Each Sunday Molyneux conducts a call-in show where listeners can talk with him about either a set topic of discussion, or their own. Freedomain Radio also has an online community message board for listeners to discuss Molyneux’s content as well as related topics.


          Stefan Molyneux is the author of several non-fiction books. He has written On Truth, Universally Preferable Behaviour, Real-Time Relationships, Everyday Anarchy, Practical Anarchy, Achieving Freedom[3], and Against The Gods?. Molyneux has also written two fictional books, The God of Atheists and Revolutions.


          Stefan Molyneux has conducted interviews with people such as Nathaniel Branden[4], Max Keiser[5][6], Peter Schiff[7], Stephan Kinsella[8][9], Mary Ruwart[10], Alison Gopnik[11], Marc Faber[12], David Lindorff[13], Greg J. Siegle[14], Stuart Shankar[15], and several other figures in the fields of education, academia, psychology, politics, and economics.

          Public Speaking

          Stefan Molyneux was the closing speaker for the 2009 New Hampshire Liberty Forum on March 8.[16][17] The position was taken by Ron Paul in 2008 and John Stossel in 2007. Molyneux debated with 2004 US Presidential Candidate Michael Badnarik at Drexel University on July 5, 2009.[18][19] Molyneux was the opening speaker for PorcFest 2010 on June 24[20][21], the annual liberty festival organized by the Free State Project. Molyneux spoke at the Students For Liberty Mid-Atlantic Regional Conference hosted at Drexel University on October 9, 2010.[22][23][24] Molyneux spoke at Libertopia[25] on October 14–15, 2010. Molyneux spoke at the Ontario Libertarian Party Annual Liberty Seminar at Toronto on November 6, 2010.[26][27]


          *Warning! Stefan Molyneux is a “cult” leader*


          Therapist who told podcast listeners to shun their families reprimanded

          Five years ago, a Mississauga therapist named Christina Papadopoulos took part in an online podcast with her husband and described how one day she cut off contact with her parents, whose company she found phony and stifling.

          Ms. Papadopoulos also said she was worried her online musings about shunning her relatives might land her in trouble with “the psychology community.”


          How do I stand up to my family?
          Should I stay with my girlfriend, or sow my wild oats first?
          WORKPLACE MENTAL HEALTH Companies challenged to make workplaces psychologically safe
          Her fears came true this week when, in an unprecedented disciplinary case, the College of Psychologists of Ontario found her guilty of professional misconduct because she used the Internet to counsel people to emulate her and sever ties with their families.

          A disciplinary panel of the college heard Tuesday that Ms. Papadopoulos, a psychological associate, gave improper advice on a number podcasts made with her husband, Stefan Molyneux.

          A self-described Internet philosopher, Mr. Molyneux is behind hundreds of posts, podcasts and videos on his website, Freedomain Radio, that discuss a range of topics from a libertarian mindset. “Stef and I, we have the capacity to help the world,” Ms. Papadopoulos says in one podcast.

          The couple has garnered little attention in Canada, but several parents from Britain and the United States have told The Globe and Mail that their children consulted Freedomain Radio, then became estranged from their families.

          At Tuesday’s hearing, Mr. Osborne said, the perception of Ms. Papadopoulos’s objectivity was compromised because her husband’s website solicits donations.

          Ms. Papadopoulos works as clinical director at Mississauga’s Meadowvale Psychological Services. The college reviewed 10 records from her practice and found she had not recommended deFOOing to her clients, Mr. Osborne said.

          Ms. Papadopoulos didn‘t speak at the hearing, except to enter her plea. In the statement of facts, she said “she was, with the benefit of hindsight, naive about the use and possible misuse of information distributed via the Internet.”

          As part of the penalty, she accepted a reprimand and pledged not to give more online psychological advice. She will have to complete a course of studies and will have a peer mentor her for a year, at her expense. She will be suspended for six months if she doesn’t meet all the requirements by Dec. 31, 2013.

          Skippy… Piss off scam artist scum bag and your little dog too!

    1. AK

      “The State is the God of Atheists, and like all Gods, it exists only in the minds of its deluded acolytes.”

      Atheism is typically defined as the rejection of the belief in the existence of supernatural deity. What does that have to do with worshipping the State? What, precisely, is meant by worship of the State?

      “This is Phil’s religion,”

      From where do you extract that implication?

      “and like all whose indoctrination has been lifelong, there really isn’t much hope of brushing the scales from his eyes, unless he chooses to do so for himself.”

      Brushing what scales? Can you be specific and not write in vague idioms?

      “And, like all religious fundamentalists, Phil’s doctrine is nonsensical and self-contradictory,”

      Point out the contradictions.

      “relying on psuedo-intellectual economic double-speak”

      Please cite instances of Phil using imprecise terms, contradictory definitions, euphemisms, or anything else you believe to be “double-speak”.

      “…that is used to mask the fact that, underneath it all, violent coercion is used to enforce these ridiculous and arbitrary economic rules upon us all, much to humanity’s detriment.”

      Please cite an enforceable law of the state (economic or otherwise) which does not employ the threat of violence as the ultimate means to coerce compliance;
      please state which economic rules you are referring to, and why they are ridiculous and detrimental to humanity;
      please describe an alternative social contract based on something other than violent compliance, and also outline how an economy would function under this alternative society.

      1. censoredagain

        The State is the God of Atheists, and like all Gods, it exists only in the minds of its deluded acolytes.

        “Atheism is typically defined as the rejection of the belief in the existence of supernatural deity. What does that have to do with worshipping the State? What, precisely, is meant by worship of the State?”

        I didn’t say anything about worship; I merely said that the state does not exist outside of the minds of those who believe in it. It’s a shared delusion, perpetuated by those (like Phil) who benefit from it.

        This is Phil’s religion,

        “From where do you extract that implication?”

        This is not an implication, but a statement of fact. To clarify, what I’m saying is that Phil’s belief in the existence, benevolence, and necessity of the state is similar to religious acolytes’ belief in the existence, benevolence, and necessity of a God. Neither exist in the real world, but rather are ideas that must be reinforced through indoctrination and social pressure from a very early age.

        and like all whose indoctrination has been lifelong, there really isn’t much hope of brushing the scales from his eyes, unless he chooses to do so for himself.

        “Brushing what scales? Can you be specific and not write in vague idioms?”

        The scales I refer to are the misguided belief in the necessity and virtue of the use of violence to solve social problems. Since this belief has been inculcated in Phil (and most people today) since birth, it is a journey that can only be realized when motivated by self-discovery and a desire to know the truth, and cannot be forced on one externally. It is a deeply-held, even fundamental belief that is impervious to rational debate.

        And, like all religious fundamentalists, Phil’s doctrine is nonsensical and self-contradictory,

        “Point out the contradictions.”

        The main contradiction is that everything that Phil writes about and advocates – whether it be his MMT government-fiat paradise or our current system – is discussed as if it were some necessary, voluntary, virtuous system of commerce, when the fact of the matter is that the whole system is underpinned by violent coercion. This is the contradiction; that the threat of violence in enforcing monetary rules can in any way shape or form lead to positive and virtuous outcomes.

        relying on psuedo-intellectual economic double-speak

        “Please cite instances of Phil using imprecise terms, contradictory definitions, euphemisms, or anything else you believe to be “double-speak”.”

        I would cite everything that Phil wrote above. Pure, 100% grade-A sophistry. Once you bring the gun into the discussion, you are no longer having a rational conversation.

        …that is used to mask the fact that, underneath it all, violent coercion is used to enforce these ridiculous and arbitrary economic rules upon us all, much to humanity’s detriment.

        “Please cite an enforceable law of the state (economic or otherwise) which does not employ the threat of violence as the ultimate means to coerce compliance;”

        Why? All laws are just opinions with a gun. What’s your point? It doesn’t change the fact that violent coercion is 100% evil, unless inexplicably you’re lucky enough to be wearing the right costume.

        “please state which economic rules you are referring to, and why they are ridiculous and detrimental to humanity;”

        Uh, pointing guns at people and telling them what they may or may not use as money? You might want to do some research on Mr. Von NotHaus. Or how about stealing a good chunk of all productive citizens labor? We used to call that slavery. Ask Mr. Snipes about that one. Or how about counterfeiting money and centrally planning interest rates? Precious metals confiscation? Do you really not see how fundamental money is to an economy, and how controlling the volume and interest rate of money allow them to control, well… everything? And why interfering in free markets is detrimental to humanity… well, as much as I’d love to give you a full re-education in the history of free markets and the terrible tragedy of coercive, centrally-planned “markets”, I really don’t have the time. I’d recommend you read the wonderful short story “I, Pencil” to get an idea of what I’m talking about.

        “please describe an alternative social contract based on something other than violent compliance, and also outline how an economy would function under this alternative society”

        You know what? No. Use your own damn imagination. Do you know who you sound like? All the people who said we couldn’t free the slaves because “who would pick the cotton?” Lack of imagination is not a reason to perpetuate slavery, now or in the past. The answer to those ignoramuses back then would’ve been “Well see, we’re going to invent these machines, right, and they’ll run on the liquefied remains of dinosaur fossils, right, and there will be this space-based global positioning system that will allow for these machines to” etc. etc.

        I’m so sorry that a decade in government schools has left you bereft of an imagination capable of envisioning a world without tyrannical governments, but don’t let your failure of imagination consign us all to the fate of free-range human livestock as we are today. I can accept that for myself, but I cannot accept that for my children.

        1. LucyLulu

          Criticism of others’ ideas is so much easier, and safer, than laying out one’s own ideas, no?

          1. censoredagain

            The whole point of what I’m trying to say is that it is not for me, or any one person, to lay out how a free society should or could work. I’m saying we need to get rid of coercion-based central planning, and you’re asking me to centrally plan the results. You want to know how society will work? The answer is, however people want it to.

            If you’re really interested in some ideas as to how to potentially solve the problems that are currently supposedly, but are usually absolutely NOT, being solved by the government, I’d recommend Molyneux’s Practical Anarchy. Here, you can read it for free:


            I sincerely hope that addresses your comment and induces you to learn more about this stuff, even if it may call into question everything that you believe.

            The truth is worth it (usually…)

          2. censoredagain

            Also, I wonder if maybe you didn’t take my suggestion and check out the essay, I, Pencil? Here’s a link:


            I have faith in a free people to make the right decisions. I also have reason to believe that violence begets violence. Are these concepts to hard to understand and sympathize with?

          3. James

            Irrelevant to the discussion. The value or lack thereof of a criticism is whether it is true or not, and not whether it is easier or harder than something else. You are introducing a moral note into an intellectual discussion.

            If I tell you your house is burning, do you reject that information if I have no way of putting the fire out? It is typical of the “degeneration of mainstream discourse” that these kinds of subjectivisms intrude upon what could and should be an impartial and disinterested discussion.

        2. Ben Johannson

          If tou want to enslave yourself, feel free. We aren’t following you into Libertopian Fascism but wish you well.

          1. Jose Guilherme

            The State is the God of Atheists”

            It certainly is not the God of Keynesians.

            Say we increase public spending by $1 billion while cutting taxes by $1.5 billion.

            A Keynesian stimulus package has been implemented. Yet the state sector got smaller, not larger, as a result.

        3. skippy

          A Suicide Caused by Stefan Molyneux and Christina Papadopoulos and FreeDomainRadio

          I am a father of one fewer children than I had before. My son was stolen from me by wolves in sheep’s clothing—wolves named Stefan Molyneux and Christina Papadopoulos. Together these two and their destructive worldview warped my son’s heart and stole everything he held dear, until he found himself isolated and hopeless. My son killed himself as a result of their destructive influence on his life.
          We’ll call my son Sam. Sam was in his young adulthood, only three years into life on his own, with his own job, own car, an apartment with a buddy, and enjoying life. His childhood was idyllic—safe environment, loving family, raised in Christian love yet given freedom to think for himself, and not abused in any way. After graduation he joined the Army—a childhood dream of his—and was living in the south. While away he maintained strong ties with family and many friends in several states. He kept in contact with them regularly and even visited numerous times despite being half a continent away. He even drove across the country for his mom’s birthday!

          Within a two month period, that all changed. He went from, “I’ll be praying for you” or “I can’t wait to see what God has in store for me”, to “I have no faith” and a total excommunication of Christian family and friends. He even shunned and quit communicating with his three siblings, whom he loved dearly.
          Many of us tried to find out what was going on in Sam’s life. The one thing he mentioned was studying the teachings of Stefan Molyneux, Christina Papadopoulos and their blog minions at FreeDomainRadio. While this organization has some appealing features and draws people in with their fresh and exciting podcasts and blogs on politics and philosophy, under the surface is a worldview that is destructive to those who become immersed. Sam was swept up by it.

          The worldview preached by the Molyneux cult is a combination of extreme libertarian politics, atheistic religion, and a warped psychology that believes parents are the root cause of all a person’s problems. In their view, there is no such thing as a good parent. They clearly counseled Sam to distance himself early from parents and Christians. It initially started with a lack of the usual responsive communication, then to “de-friending” on Facebook, to “leave me alone,” and finally to a scathing “goodbye-forever” letter, all within the period of a few months. The letter is too painful to quote from, filled with crazy jargon and phrases, evidence of brainwashing by the Molyneux wolves.
          We saw that coming. We did our research on the Molyneux cult and learned of other families that had been ripped apart by the infamous “DeFOO”—Departing the Family Of Origin. That’s exactly what Sam did to us, and then some. He completely burned his family and Christian friend bridges. Not only didn’t it solve his problems but rather contributed to his self-destruction.

          There is much written elsewhere about the religion of atheism versus following Jesus Christ or any other deity. It might seem an oxymoron, but atheism is actually a religion too—that of the self being the only high authority in life, a sort of self-worship. As one gets to know oneself more, however, he comes to the realization that focus on self is a short, dead-end trail that leaves one utterly disappointed. I believe Sam reached the end of that trail, and in his mind he had no family and support structure to turn back to, even though we would have welcomed him home with open arms and a party of the grandest designs.
          After finishing his service to the Army—less than six months after the DeFOO–Sam set off on his own to find a new career, new home, a new identity as a free man. Only seven days into his journey he found himself sitting alone in the car he lived in, with no one to turn to who could see the root cause of his suffering and offer him help, and no hope in his heart for redemption by a loving and forgiving God. Sam shot himself in the head and died instantly.

          We all hurt for Sam, for ourselves, and for those who also miss him. It was painful enough to lose him as a result of DeFOO, but we thought there would come a day when he would come back to us. There was always hope of his return. Now Sam has been ripped away forever, and the wound is deeper than before. We will never on this earth have a chance to tell him again how much we love him, grow closer as he matures, or play with the children he never had.

          Chalk one up to Molyneux and Papadopoulos, The Destroyers. May it never happen again.

          Skippy… ahhh the Mr and Misses Jim Jones of Libertopia… nice~

          1. LucyLulu

            Yeah, I started reading some of Practical Anarchy by Molyneux and it wasn’t long before the number of logical fallacies and assumptions he had used made Davidson look like Socrates.

          2. skippy


            Its hard to believe some make Televangelism look legit, in comparison, wife and husband teams a theme with regards to this rubbish.

            skippy… lead pipes and bike chains are to good for these destroyers of life!

        4. Paul Tioxon

          Dude, you totally must have been up so early on this holiday to cathch Beyonce sing at the inaugural. She is so totally the Babe-raham Lincoln of Babes!

        5. AK

          “You know what? No. Use your own damn imagination… I’m so sorry that a decade in government schools has left you bereft of an imagination capable of envisioning a world without tyrannical governments”

          Unable, unwilling, or simply not intellectually competent enough to invest the time to study the large body of empirical economic data necessary to generate coherent scientific thought, you have retreated into the deceiving simplicity of the neo-liberal economic tradition of non-thought, obediently shouting “government is tyranny!” when prompted, thereby fulfilling your role as the lackey of the 0.01%, who evidently have done a thorough job in convincing you that careful consideration of ways in which collective planning can succesfully improve your life is the road to serfdom.

    2. different clue

      Atheism is the faith that there is no god or gods. “State” or not has nothing to do with the Atheist Religion’s beLIEF in the non existence of any god or gods.

  2. Hugh

    The primary feature of all modern economies is that they are structured to maximize the looting of the many by the few. Few if any economic theories acknowledge this, let alone focus on it, either because most modern economics serves as an obfuscating intellectual cover for looting or else because Establishment pressures and/or loyalties prevent economists from calling out the charlatans with whom they work and often who control their budgets and careers.

    The flimflam that is modern economics is increasingly being exposed as such. But more than this, it is being superseded by the work of many of us. We are long past waiting around to see if Krugman or Stiglitz or the MMTers are going to get their acts together and come up with a coherent new theory of kleptocracy and what could replace it. Their ideas remain a mash of the old and new. They will chase their tails until they die. If they were going to change they would have done so by now. So it is really up to us to study and analyze the economy, to understand how it works, and what we need to do to change it so that it will reflect the needs, desires, and aspirations of the many. We are, whether we wish it or not, the new economists.

    1. jake chase

      I think you are right about economists, apart from Keynes and Veblen, each of whom did their best and were only silenced by death. Father Time remains undefeated.

      Keynes actually saved capitalism from itself, and his fix might have worked had it not been sabotaged by a generation of careerist “Keynesians” (or post-Keynesians), dedicated to academic sinecures and building mathematical monuments to themselves, while secure in the knowledge that The General Theory would remain the greatest unread book in intellectual history.

      A society whose foundation is private property will never organize itself, except for the benefit of property owners and policemen and corrupt politicians and propagandists and celebrities and criminals and licensed professionals. Have I omitted anyone of importance?

      That doesn’t mean you cannot have private property. It does mean you must limit its accumulation and its transmission and its enthusiasm for doing socially destructive things in the name of profit. All this is so obvious as to be tiresome to reiterate, but I expect this comment to be moderated, in which case it will not bore anybody.

      1. ambrit

        Dear jake;
        C’mon now, don’t set yourself up as a martyr. Father Time, and Mother Time too, the truth be told, will enact the final Moderation upon us all.
        As for it being, “so obvious as to be tiresome,” well, the point here is to reach as many people as possible, and enlighten them. Or at least, offer them the path to enlightenment. Silence is the status quos’ greatest weapon. So, keep up the work. Commenting here and there, even at the risk of humiliation and obloquy, is worthwhile, and eventually rewarding. What if we had to stand up physically against the ‘Forces’ in the street and risk being damaged or destroyed? Now that would be Moderation.

  3. Gaylord

    I think the worst failure of mainstream economists is their inability to predict the external diseconomies of policy measures (i.e. repeal of Glass-Steagall) and technology developments (i.e. Fracking). Further, their obstinate refusal to do so when these are reliably known to threaten long-term stability (i.e. Climate Change; poverty & child hunger, and the list goes on) is a calculated political ploy to appease the investor class, which helps keep the university coffers filled.

    The “rising tide lifts all boats” myth that many of them promoted has turned out to be a cruel misapprehension, because now millions of us are actually sinking or barely able to stay afloat. At the root level is the monetary system which depends on growth and debt, with bankers exponentially increasing their over-leveraged gambling and bubble making. Economists who question that artificial construct that they realize is doomed to fail, typically are the ones that are shut out of conventional media or labeled “kooks”.

    What all this means is that rationality has a marginalized place in our capitalistic system. The solutions are evident. People with foresight are developing cooperative movements and clusters of alternative economic activity, while many educated young people are rejecting the conventional wisdom that is endlessly spouted through the mouthpieces of the elite. Get this, professors: they don’t want your stinkin’ education if they’ll end up paying an arm and a leg for it and if they don’t any faith that a good-paying job awaits them.

  4. Gaylord

    In the last paragraph I meant to say, intelligent young people with limited means… Internet sites like this one serve to educate many of us in the massive failures and gross inequities of the system. Thank you for all you do — if I can get my hands on some $$ I will chip in.

  5. The Dork of Cork.

    Italian M3

    Look at the pointless rise (all wasted on grot) during the euro years /tears

    Yet they call it a fiscal crisis in Italy……………… was a free banking crisis just as everywhere else in Euroland – even Greece.

    All that bank credit production extracted from the capital base. (increased the $ price of oil post 1998)

    This is in fact the greatest free banking crisis in the history of free banking crisis (and thats saying something)

    Made worse by the banks issuing money /credit in the governments unit of account.
    Europe is obviously the nexus for this vast criminal syndicate.

    Italy not only has a lost decade , it a lost 2 decades………….

    The Fiscal austerity of the mid /late 1990s acheived nothing other then a transfer of the declining wealth base.

    Meanwhile the Irish media (check out the funny papers yesterday) continue to do their comedy act.
    Again with the bank debt , if we could just fix the bank debt………….

    No – this is a physical world breakdown caused by bank credit which destroyed the real capital base.
    Its not metaphysical anymore…….in the real world this extraction operation never was.

  6. OMF

    At this stage, I think it would be a good idea to simply ban economists from entry into most Government buildings, and for Universities to simply close their economics departments. The profession has surpassed disrepute and become in fact malignant.

    1. Sufferin' Succotash

      I was thinking of forcing academic economists to study economic history, but that might fall into the category of cruel & unusual punishment.

  7. The Dork of Cork.

    If you look back at Italian M3 to 1990 you can see the fiscal austerity stuff was all about driving whatever surplus was available into the free banks……..

    The banks upon euro entry then wasted this surplus on credit grot………..
    They now wish to engage in another bout of more intensive fiscal austerity to claw back their malinvestments from the now second world type population ………… that they can waste another surplus and recapture it….again and again and again until there is no capital remaining.

    It never ends until it ends.
    Its a vast criminal syndicate.
    No need to do the Embroidery thingy.
    This is not a academic argument that can be taken seriously.

    They just rob little old ladies in plain sight.

  8. The Dork of Cork.

    I believe the Italian Mafia is simply awe struck by this banking criminal syndicate……

    They bankers seem to have completely destroyed their base of operations in Sicily ( by subtracting the money supply from their clients & customers) and yet they don’t get any horse heads in the bed……
    Incredible , simply Incredible.

    These guys are untouchable it seems.

    Palermo looks real badddddddd

    I think the world needs a new breed of honest criminal bankers & their fellow travelling economists with some sense of honour at least – then perhaps we can move on.

  9. Titus Pullo

    Rehashing an earlier post:

    An economy is forged by two factors: psychology (the animal spirit of the free market) and economics (political determinism of monetary policy); and while some might argue that both of these factors can rely upon extensive use of controlled experiments and mathematical modelling – neither factor is centered on objectivity.

    Predicting (learning) the outcomes of economic participant and monetary policy events is, by its very nature, more complex than, say physical sciences – as economic activity and monetary policy are more likely to intersect everyday, with an infinite number of subjective experiences of the economy’s participants prior to, during and post outcome such that, under the same set of conditions and intersections, no future outcomes will be the same for any individual participant.

    As such, for better or worse (usually both simultaneously) the process of objectively reviewing economics (and economists) is inherently corrupt; politicians and their economists –acolytes view economic events and their outcomes from a perspective that best justifies their particular brand of economic determinism. As a result, both right and left wing economics theories (and economists) suffer a lack of objectivity; for as much as they might agree on the principles they cannot measure (because it’s impossible?) either the concomitant psychological or political outcomes and their interpretation
    That’s not to say it’s impossible to have predictable outcomes in certain areas of economics simply that to-date, as a discipline, economics has not coherently and universally delivered analytic factors and methods (that can, objectively, be agree upon) for predicting outcomes– and, if it weren’t the case, then with every economic policy statement issued by the government would result in more efficient discovery of prices within a standard period.

    And, maybe that’s the problem – generally, science and scientist wants to discover objective facts and, as such, seek to falsify (ref Popper) their truths; politicians and their economist want to perpetuate subjective “facts” and prove their truths.

    1. different clue

      You left out a third forging factor. The biophysical substrate-territory in/upon which the humans involved in the body political-economic play out their economic behaviors. Try having an “economy” in the center of Antarctica, for example.

  10. theblamee

    No mainstream economic theory, either macro or micro, the Keynesian manifesto included, properly incorporates the human element, like greed and avarice into its core critical thesis. We all know this to be true. Why isn’t anybody saying anything? We have TBTF and now TBTJ, and still the so-called jury is out? All economic theory is morally neutered. How about an economic theory based on reality? Yet, still it’s the talk, talk, talk; the blah, blah, blah.

    1. different clue

      Frederick Soddy tried writing about his reality-based economic theory efforts in the book Wealth,Virtual Wealth, and Debt: The Solution of the Economic Paradox.

      Charles Walters wrote a reality-based economic history of modern (up to his time) America called Unforgiven. He also wrote a reality-based book about economics called Raw Materials Economics. The people at National Organization For Raw Materials are explaining their reality-based theories of economics to whatever small audience they can reach. Here’s a little example of what they do.

      Herman Daly and other “ecological economists” are making an effort to put economics on a reality-based basis.

      Ernest Schumacher tried some of that from his end.

      1. different clue

        These people all need a catchy nickname by which they might be shorthand-remembered. The Daylyists have their nickname “steady state economists”. Soddy,Walters,Pfingsten,Paulson,Cozart etc. etc. etc. might be called the Lost Future economists or the Dry Land economists or whatever nickname sounds catchy.

  11. reason

    I don’t think you needed to post on this here. Farmer, got a licking on crooked timber, which has a much more persuasive readership than this blog does. He did contribute to the comments initially, but I had the feeling he gave up completely eventually. Not one of his answers stood up to scrutiny.
    But you are right – he misrepresents Keynes. Merely pointing to stickiness in labour market searches is not sufficient when there are 10 unemployed for every job opening.

    1. diptherio

      Yeah, the Crooked Timber folks took him down big time. Commenter Bruce Wilder did an especially good job. It was good to see that nobody was buying what RF was selling.

    2. YankeeFrank

      Actually, he does, because this blog receives a much wider readership than crookedtimber. And of course that means it also attracts more loons to the comment section like our “freedomain” fellow above. But its vital to spread this type of information as far and wide as possible. Thank you Phil for this and all of your other critiques and analyses of the neoclassical rubbish.

  12. The Dork of Cork.

    “A distressed mortgage market: Could a fiscal stimulus help?

    This is funny ………really it is.

    The debate should be “how can we farm the fiat on a sustainable basis”

    Physical life support systems are breaking down and yet bankers only wish to talk about a metaphysical bank credit dependent market.

    Bankers should be kept away from anything to do with physical systems i.e. from everything.

    They are a pox.
    They are closing down post offices so that more surplus can flow into their credit waste projectile vomit and yet we allow them to continue these entropy games.

    The mortgage “asset” is but a rentiers conduit.
    It has no real utility unlike a post office in a central walkable locaction.

  13. The Dork of Cork.

    The entire debate in Ireland , including fiscal stimulus orbits the question of all the dead credit concrete.

    Its painful stuff.

    What is this place ?

    No need for anything fiscal in the real physical economy………just produce greenbacks.

  14. jsmith

    An nice overview of the what passes for mainstream economic thought nowadays vis a vis the Nobel Prize and other inanities.

    “Participants in the Capital Debates knew better, of course. For instance, Edwin Burmeister writes:

    It is important, for the record, to recognize that key participants in the debate openly admitted their mistakes. Samuelson’s seventh edition of Economics was purged of errors. Levhari and Samuelson published a paper which began, ‘We wish to make it clear for the record that the nonreswitching theorem associated with us is definitely false. We are grateful to Dr. Pasinetti…’ (Levhari and Samuelson 1966). Leland Yeager and I jointly published a note acknowledging his earlier error and attempting to resolve the conflict between our theoretical perspectives. (Burmeister and Yeager, 1978). However, the damage had been done, and Cambridge, UK, ‘declared victory’: Levhari was wrong, Samuelson was wrong, Solow was wrong, MIT was wrong and therefore neoclassical economics was wrong. As a result there are some groups of economists who have abandoned neoclassical economics for their own refinements of classical economics. In the United States, on the other hand, mainstream economics goes on as if the controversy had never occurred. Macroeconomics textbooks discuss ‘capital’ as if it were a well-defined concept — which it is not, except in a very special one-capital-good world (or under other unrealistically restrictive conditions). The problems of heterogeneous capital goods have also been ignored in the ‘rational expectations revolution’ and in virtually all econometric work. (Burmeister, 2000, “The Capital Theory Controversy”, in Critical Essays on Piero Sraffa’s Legacy in Economics.)”

  15. JGordon

    “This discourse resembles less a gathering of scientists actively engaged in discovery of new and interesting truths and more a collection of theologians debating logically consistent stupidities founded on imaginary constructions.”

    Well damn, that’s just about the best description of seen of economics I’ve seen yet.

    1. different clue

      Soddy, Walters, and etc. might deserve your attention as the kind of reality-based economists who don’t have the power to get any mention in schools of economics or in governmental churches of economics.

  16. Ignacio

    These guys stick to their models like superglue. If real data point to outcomes that differ from those predicted by the models, it it the reality what is wrong. Not enough rational I suppose they think. If austerity does not create confidence and employment, what we need is more of the same, they believe. The only important question is how much pain has to be inflicted until we reach the boiling point.

  17. Brooklin Bridge

    Mainstream economists would appear to ignore economic disparity in much the same way mainstream weather forecasters ignore global warming.

  18. The Black Swan

    Just started taking Macroeconomics at the local Community College. It is painful. Been reading this site for a few years. Hard to have a clear view of the real world and then delve into the fake world of economic study. The textbook reads more like the rulebook for a RPG than anything supposedly related to the world I live in. My favorite qoute: “In this chapter, we assume that markets are perfectly competitive.” I understand that it is impossible to realistically model our world. Too many variables. So you need a simplified system of thought to try and explain complex ideas. The problem with economics is that all the variables they had simplified are done so in a completely false way. The whole system of study is built on lies. It devalues (do not mean this in a monetary fashion) my education knowing that economics is allowed onto the school campus. Even better than the above quote is the short section written by Larry Summers. One of the architects of worldwide economic destruction, being highlighted for his brilliance in an eCONomics textbook. Wonderful :)

    One of the only things that gives me hope is this quote (it is also partially why I am subjecting myself to the filth of macroeconomics) :
    “The apparatus of our enslavement is the tool of our liberation.”

    1. fairleft

      “So you need a simplified system of thought to try and explain complex ideas.” I don’t think the ‘simplify it’ approach works; ‘it’ is just too complicated and ranges far outside ‘official’ economics. Studying political and economic history, and then making systematic comparisons — still subjective and not at all ‘scientific’ — seems the best way to arrive at smart economic thinking. My guess is that the best ‘economists’ are really politically knowledgeable economic historians in disguise.

      1. NotTimothyGeithner

        John Maynard Keynes, despite his flaws, he might be considered a mix-study major in America.

    2. ex-PFC Chuck

      Take a close look at Debunking Economics – Revised and Expanded Edition: The Naked Emperor Dethroned?, [] by Steve Keen. The author is a soon-to-be ex-professor of economics at the University of Western Sydney, in Australia. Because the neoclassical school so completely controls the journals, papers by mavericks like Keen often don’t even get circulated for peer review if there is any hint of apostasy in the text. Thus an outside-the-box guy like him ends up at a place that has a research reputation comparable with that of Slippery Rock State. A month or so ago UWS announced that they’ll no longer be offering a major in economics so Keen is looking for another perch. Furthermore, they’re trying to kick him in the ass on the way out the door with some trumped up “Misconduct” charge, which makes one wonder if there’s more to this than just a re-purposing of UWS’s mission.

      On second thought maybe you shouldn’t look at Keen’s book until you’ve passed the course. Asking too many well-informed questions might not do your grade any good.

    3. Glenn Condell

      Poor you. Still, I guess you need to know thy enemy thoroughly if you are to work from within the ‘profession’ to change it for the good – and that means reading its bullshit with eyes peeled.

      Maybe this book, comic really, by a bloke who immersed himself in Adam Smith’s actual writings rather than those of his self-serving acolytes, would be a good ‘anti-primer’ primer for you:

  19. F. Beard

    2. As wages and prices fall, total real indebtedness rises. JM Keynes via Phil P

    Yep. This is the fatal flaw. If nominal prices and wages are supposed to be allowed to fall then nominal debt should crammed down to comnpensate.

      1. Susan the other

        This is why the Fed is supporting “asset” prices with infusions of multiple trillions and keeping interest at zirp. Right? All we are lacking is the hub of the logic: jobs. Good luck on that one.

  20. Jim

    Philip argued “For Keynes and these authors the purpose of economics was not to construct toy models of the economy that, while logically consistent, were completely useless, but to explain actual historical processes as they happened.”

    Philip, What if the economic historian are engaged in the same type of logic as the model builder?

    Philip, What if historical analysis can also be understood as a normative vision of human life and not just a purely descriptive one?

    Philip, What if, in order to construct a unified historical picture, there must be a normative dimension?

    Philip, What if, there is no independent criterion of historical authenticity?

    Philip, What if the materials out of which economic historians generate coherence acquire their character as relevant material through the same type of antecedent judgments as the model builders?

    Philip, What if “objective” truth is needed in order to support power( in both history and economics) and what you label as a dreaded relativism is indeed dangerous for the present social order?

  21. James

    The primary difficulty of economics is that it is inextricably interwoven with politics, therefore not only with ideological biases, mythological narraives, and the like, but also with philosophical ideas, and often with religion; with the inherent limitations of our reality, both social and natural (often unrecognized or ignored), and finally also with all the host of special interests and human desires and passions with which all politics grapples. Economics–and economic life–is bound up with government, like it or not, and whether the society is simple, as with a band of Bushmen, or incredibly complex, as with modern industrial societies comprising populations of tens or hundreds of millions.

    As for MMT, it is important to distinguish two principal aspects in it: the descriptive and the prescriptive. The former is pretty much invariable across the main scholars and writers of it; the latter is a function partly of your philosophy, your politics, your religion, etc.

  22. James

    Traditional theories of government were based on the analogy of the microcosm and the macrocosm. Just as a person needs to govern himself to be able to survive and flourish in a given context, so too a society must be able to be ordered or fall into chaos–the victim, as with the individual person, of the lower passions and other vices. Both Plato and the Bhagavad Gita use the analogy of the charioteer and the chariot to illustrate.

  23. Jim


    If you have followed the debate between MMT scholars and MMR supporters(especially Cullen Roche and JKH) over the past two years, you might be persuaded that MMT is not purely descriptive,

    For example, here are a few brief points (of many) which could be presented:

    Quoting Cullen Roche in “How is Monetary Realism Different Than Modern Monetary Theory?”
    “The bottom line is, MMT is an “inherently progressive theory of the monetary system that requires overhauls (combining Fed and Treasury, eliminating bond sales, making fiscal policy the primary lever creating a nation Job Guarantee etc.) to be a completely accurate description of the actual monetary system we have have…It should not be described as a pure description of the current monetary construct.”

    Second: MMT as well as any other framework, (including my own) chooses to start its analysis at a point in history which is most conducive to its ideological bias, and to give its analysis an air of objectivity—in the case of MMT, by focusing on state money and largely ignoring the role and history of money before governments.

    Third, MMT theorists ignore the role of conceptualization in formulating their so-called description of our present monetary system. You will note (for example) that there is a choice involved in where to start their historical discussion of money. This choice had to do with where to cut their conceptual horizon of analysis (before or after the emergence of State money). This means that their historical description of money does not transparently reflect a situation that exists independent of their conceptualization.

    All of us seem to end up engaging in acts of conceptual slicing that support our normative stance.

    There seems to be no description without prescription.

    1. YankeeFrank

      There is little reason to go back to the time of gold or other precious metal moneys to analyse modern economies. Government money has been the lay of the land for several hundred years, and while new modes are coming online (like bitcoin), for the important purpose of government’s role in providing a floor below which the citizenry will not be allowed to fall, then the analysis of the current system of government money is crucial. And MMT’s role in describing that system and then calling for certain obvious and just remedies for the ills that surround us is a practical enterprise. It does not require a world-encompassing philosophy as you seem to demand, its a practical effort aimed at making our world a better place for the people as a whole.

    2. James

      Yes, Jim. The world is full of argumentative people. I stick to my contention. Cullen does not argue about the operational descriptions. He had in view primarily the job guarantee: that is a prescription, not a description, and the discussion was whether it followed strictly or not from the other MMT ideas. The description of banking operations under a fiat regime are the core of MMT. Read Mosler’s “mandatory readings,” to be convinced of this. Also, Scott Fullwiler wrote an essay on MMT in which he says precisely that MMT has two main aspects, the descriptive and the prescriptive.

    3. lambert strether

      Roche’s site slogan is “Economics without politics.” What that means is economics without the sort of politics he doesn’t like. There’s no such thing as economics without politics, at least if you allow history and relations between people into the equation. And the neo-classicals tried that.

  24. jsmith

    Although personally I am coming to think of MMT as a tool by which we could effectively usher a viable post-capitalist world – with a Marxist understanding of politics at its base – the discussion from a year ago at Lambert’s blog are instructive as to the MMR/MMT job debate goes.

    Joe Firestone commment:

    But I’d probably also say that Cullen, Mike, and Carlos are probably looking for an MMT-like narrative that makes it harder for people to label them as “radical leftists,” “socialists,” “communists” or other nonsense names. I think they have heavy “political” and “marketing” concerns, and believe that the American political system is highly resistant to change, and that the corporate order will hardly be dented by OWS and other movements of dissatisfaction with the present system.

    I’m not sure they’d restrict themselves only to payroll tax cut policy. One or two or maybe all of the founding three may well be very happy with state revenue sharing, and lots of infrastructure and innovation/ technology stimulus money as well. Also, they all may be interested in paying off the national debt using proof platinum coin seigniorage. Carlos Mucha brought this idea to all of us. But all three have been opposed to my extension of it to $60 T coins that would, essentially, fill the public purse and pressure Congress to spend money on progressive things much more easily.

    Nor do I think they want to lose 10% of the employable population to the UE buffer stock. I think they’re probably thinking that a vigorous stimulus program could lower the U3 UE rate, and maybe even the U6 rate to 5% or less without recourse to a JG. At that point they’d probably write-off the millions who’d still be without full-time employment as an acceptable cost to avoid putting too much pressure on ideas like “individualism”, the “free market,” calvinism,” and other such bunkum.

  25. Jim

    The point I am trying to make(apparently not very well) by focusing primarily on the process of conceptualization (which, in my opinion is what really caused the split between MMR and MMT–with JKH conceptualizing our monetary system in a different way then Scott F.–monetary issuer vs. monetary user rather than vertical(State money) vs. largely ignored horizontal(private banking).

    We tend to choose our conceptual frame based on our preferred ideological bias (the State for MMT and a greater appreciation of private banking or the market for MMR).

    Both schools claim they are being descriptive–with the key prescriptive dimension being inherent and often hidden in the choosing of different horizons of analysis.

    These processes of conceptualization involve different conceptual slicing maneuvers which are usually geared to the preferred normative stance(biased toward State or Market) of the particular theorist involved.

    Thus, from my perspective, all of our knowledge tends to be circular despite all of our best efforts to make it not appear that way.

    I tend to become suspicious of frameworks which don’t attempt to grapple with this issue.

    One possible way out of such a mess is to conceive of theory as largely negative–something which is satisfied with exploring the limitations of reason rather than trying to formulate a positive content(like MMT) that is supposedly uncontestable.

    1. Hugh

      It is a valid point. MMT has neoliberal elements (that is neoliberal as practised, not theory) in it which has been slow to acknowledge and excise. It is why I continue to push for MMTers to do a basic rethink of theory. It won’t solve everything but it would make it more robust.

      1. ShMagus

        I’m afraid I don’t quite follow. From my limited understanding, MMT appears to be an attempt to look at historical economic trends and apply them today, with the view that the factors interact with each other, which seems to be true to real economic transactions. This is done by comparison, instead of applying a mathematical model.

        What about this needs to be rethought?

  26. James

    Well, Jim, to reason about anything whatsoever you have to start with data. Reason cannot operate in a void. If I describe an internal combution engine, there is firstly the data concerning what it is, how it actually operates. There is no room for opinion in doing so; your description is either accurate or it is not. There is no circular conceptualization involved at all. To describe the essential banking operations–what people and machines actually do in given situations is also a descriptive process. This is the core of MMT.

    Again, one should start by reading Mosler, in my opinion.

  27. James

    Some people seem to have difficulty in accepting the descriptive aspects of MMT. They feel that it is crypto-statism of one stripe or another. In fact one should view MMT in quite a neutral manner, as one would the mechanics manual for your car. Now, how you are going to drive the car, where you are going to take it, who you are going to let ride in it, these are all different issues. How fast you should drive it on given types of roads, would involve reasoning based on the characteristics of the car. So, we have descriptions; reasonings based on objective characteristics, and then we have subjective factors of choice regarding the operations.

    People think that MMTers “like” the fiat system, therefore they “like” government intervention, and so on. In fact, this is all perfectly irrelevant as regards the description of a currency and banking system. Mosler actually “dislikes” the financial system. That doesn’t affect his ability to describe its operations accurately.

  28. Jim

    Well James, then how do you explain JKHs different description of our present monetary system–weren’t they both using the same data-set?

    1. James


      All I’m saying is that MMT is based on the empirically verifiable observations of the operational facts concerning the fiat currency regime. For example, that the deficit is the spending of government into private accounts by way of computer strokes creating credits in private banks; that interest on the “national debt” is paid likewise with computer keystrokes and thus by ajusting balances on a spreadsheet, so that the system is essentially a spreadsheet accounting system. Etc.

      Interpretations and extrapolations are another issue.

      Please read “7 Deadly Innocent Frauds” and “Soft Currency Economics.”

  29. James

    Needless to say, the facts I mentioned are very simplified. This blog is not meant for writing what can and should be studied in the serious literature.

    You are right in that MMT proponents often argue that certain prescriptions result strictly from the theory.

    At the same time, Cullen himself, in describing “the system” says this: “At times, MR will discuss options that a government can use to benefit from this understanding of the modern monetary system, but one of our primary goals will be to distinctly differentiate policy prescriptions from descriptive aspects of the monetary system.While we might provide policy prescriptions at times, our primary goal here is to offer the reader a better understanding of the ways our monetary system operates. Any policy ideas are entirely peripheral to the core understanding of the monetary system.”

    At least he apparently thinks that one can distinguish description from prescription.

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