All of my life, I have been taught and told that economics is a science, like biology, chemistry, or physics. There are the laws of supply and demand, rational self-interest, inflation, deflation, and all of their eminently logical corollaries.
It is interesting that different ideologies have different laws of economics. Forgive me if I oversimplify here, but I really am leading up to a point. Free market advocates, be they classical liberal, neoliberal, or libertarian, all preach that if the market is left to its own devices, that everything will balance out and the best results will be obtained. Communists preach that once capitalism is overthrown, the dictatorship of the proletariat will arise and everyone will live each according to his means and his needs, but in the meantime the State must plan all production to insure that everyone’s needs are met. Social Democrats shoot for a “third way” between those two models, seeking ways to utilize the power of the market for production and inventiveness, yet strongly regulating that same market to guarantee that every citizen enjoys his or her fair share of the wealth of the society.
Now, just exactly what is scientific about any of these economic systems? Are hypotheses made and then tested by rigorous scientific method? Are objective observations made, analyzed, and confirmed?
Respectively, the answers are nothing, no, and never.
Economics is nothing but the study of human behavior as it relates to trade. At its very core, that’s all it is. If economics is a science, it’s a social science like history or political science or humanities or psychology. It is not a hard science like physics.
In the history of humanity, trading systems have always had rules. Who makes the rules? People do. Organizations do. Governments do. On what basis are these rule-making decisions made? Usually by the interests or the ideology of those who are making the decisions. People advocate for the decisions they want. They try to persuade others to their own points of view. Aristotle once defined politics as the art of persuading others to do what you want them to do.
I think old Aristotle had a pretty good definition there. Assuming he’s right, then economics is just another branch of politics. It’s the politics of trade and exchange. And trade and exchange can give some people great power.
So I reject the inference that the economy is some natural force like climate or the weather. The economy is created, guided, and ruled by political decisions. It was a political decision that barred the combination of commercial and investment banks. It was a political decision that allowed them to merge. It was a political decision that allowed the creation of the housing bubble. It was a political decision to bail out those who caused said housing bubble after it went bust. It was a political decision to lower tariffs. It was a political decision to allow the outsourcing of American jobs. It was a political decision to allow the importation of goods from low wage countries. It was a political decision to allow unions, and it was a political decision to bust them.
There are many more examples, but these are some of the ones that are kicking Americans in their collective butt.
Yet, if you tune into the M$M, be it the broadcast networks or cable, you will hear a constant refrain that economics is this objective science. Why? Because if it’s an objective science, the rules enacted by the decisionmakers can then be labeled “scientific,” and if one questions scientific conclusions, one is probably mentally ill.
Stalin sent many of his political opponents to mental hospitals on the grounds that anyone who opposed his scientific Communist decisions had to be mentally ill. That doesn’t happen in America, but anyone who questions the economic decisions being made will have their sanity questioned by those who benefit from those same decisions.
So I ask you to give the following a try. Look at all economic decisions as political ones. Who makes the money? Who gains more power and control? Who do YOU want to make the money and gain more power and control?
I have found that looking at economics this way helps me to identify who my friends, allies, and enemies really are. And the illusion of regarding economics as a hard science prevents many of my natural political allies from realizing that I am really on their side, not the politicians who they now support.
It is no coincidence that the first economists said they were engaged in the study of political economy. All of us, especially progressives of all stripes, need to bring that term back into the public lexicon.