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.



35 Comments

The FED hires economists in order to control the science of economics. I’ve read that 2/3s of all professional economists have worked at the FED during their career. Sorry don’t have the number documented.
I don’t know whether that number is true or not. It doesn’t matter. The economists the FED hires double as propagandists. That’s just politics.
Economics is a form of propaganda.
Counterpunch had an article about this a while back, I believe. Something about how most editors of economics journals, as one example, worked at the Fed.
Most of academia is heavily controlled, but especially economics.
I have a degree in business and ended up with a minor in economics. It is the most boring subject in the entire world. I thought I was going to burst out crying in some of those classes.
“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.”
Ok a couple of thoughts, you can ignore them if you please, But at any rate Ill still share them.
You pretty well established here that the economy is under human control. Which I agree with, I mean its basic logic That events caused by humans can also be controlled by humans. And that it would be also logical that the Government for the most part is the agent that applies the control. Seems a logical place to put that power (well unless the Government isnt controlled by the voting population). In that case the Government isnt a logical choice.
But then neither is industry or commerce, if the Government is a bad choice. So in this situation, I can see where it would seem logical to restructure the Government to give the voters more power over the economy. More democratic control is always good.
“By capitalism. “Greed is good.” “Flip this house!” “Look cool in this car and get laid, guaranteed!” This all goes back to advertising. Look how much money corporations spend every year, every day on your TV and radio, enticing people to buy! Buy! Buy! New and improved! In a non-capitalist society, or even in a Social Democracy, this would not have happened. The system would not have been allowed to go as far as it did, and safety nets would have guaranteed few if any would have wound up homeless.”
Ok Im still on the logic kick. You say that in a non-Capitalist society That ‘greed’, flipping houses, Social peer pressure, And big money advertising would not be allowed. That “safety nets” would make such a society impossible.
Heres the logic part. You described “safety nets” that failed. How would a non-capitalist society stop the behavior that caused the corruption that you explained? Those “safety nets” would be just as susceptible in any Government that has existed. Just look at the Netherlands for example in the last few years their safety nets have been failing. But then they still do have an Capitalist society, so maybe they are a bad example. And history doesnt show us an Socialist society without Capitalism, well not any relevant modern society.
The currant Communist countries also are very bad examples. Just look at China, one could though say that their safety nets failed but still a very bad example, too many perverted variables to be any good as an example.
So how does Socialism control greed? Seriously, it would take a major change to any society to control a human emotion to the point of eliminating it form being a major factor in society.
You could regulate advertising, keep multi-million dollar ad campaigns from existing. And so on, but would it change a society that for generations has enjoyed watching TV commercials? Youtube has many old commercials on its site. People chime in being all nostalgic about old advertising. People also collect ad’s from old magazines and certain beverage containers, service station signs, and place these items in the category Americana.
But ironically your advice and assertions in this diary entry for the most part mirror what my elders taught me when I was turning 18, and was wanting to vote. Your ideas here are by no means novel (yes i noticed that you sort of said that).
Economics is at best an art influenced by scientific methodologies.
markfromireland
Maybe I am not sufficiently caffeinated yet, but reading your reply was like trying to herd a bunch of cats who just rolled in catnip laced with crack cocaine.
IOW, you bring in snippets from at least a dozen of my other posts, churn them through some sort of linguistic cuisinart, and dump the contents out onto this page.
Addressing only those comments that appear to be relevant to this post: Yes, I know this idea I floated is not novel, in fact, it’s centuries if not millennia old. I DID mention Aristotle, after all.
The crux of my argument is that ALL economic decisions are ultimately political, and that everyone should go to at least yellow alert when someone tells them that a decision is being made because of the economy or the federal or state budget or for “just business” reasons. Your own elders apparently knew this. Good for them.
BTW, Happy Birthday!
Well said; and I agree. Sociology pertaining to trade.
“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.”
Your statement above caused me to flash back to the days when the corporate media and most of the TARP supporters tried to turn bull shit into some scientific explation as to why we the tax payers should turn over Billons (3 trillion if you count the toxic assets)
to the domestic and foreign crooks on wall street. People I knew personally who worked in business and finance (like the media) tried to run the “it’s too complex for your average person to comprehend, but trust us” line. They told us if we the tax payer did not fork over the money (TARP) the sky would fall. One guy went so far as to tell me that some kind of mathematical genus worked out the basis for the credit default swaps and we mere mortals could never hope to ever completely understand it all, so just hand over the money and move on. I agree; they use the prestige of science to hide a two bit con game that has destroyed the lives of billions.
NOGOD a.k.a FFA;
“But then they still do have an Capitalist society, so maybe they are a bad example. And history doesnt show us an Socialist society without Capitalism, well not any relevant modern society.”
Question; can you point to any “relevant” Capitalist society that is without Socialist components?
I think it’s interesting that things that do have a real scientific basis, like evolution and climate change are denied while non-science is elevated.
Your definition of economics as a social science is right on the money. Economics with a strongly political bias like supply side, trickle down, Struassian, Chicago School, or Objectivist/Randian/Libertarian is all the ragetoday with our corporate masters and their visions are pushed while the Paul Krugman and the Robert Reichs are shoved aside and ignored.
No one seems willing to answer simple questions like – if tax cuts for the wealthy create jobs, why haven’t they?
The wealthy investor class knows exactly what economics is: a scorched-earth financial war against the superfluous general population.
Economics is currently a mathematical fantasy. It could be a science of biological systems (all ecosystems are an economy, we are biological beings, and our economy is really just a very sophisticated ecosystem in a state of disequilibrium). I am convinced that biology and ecology are the primary model for economics and behavior only plays a secondary role within that system.
You’re right, of course. True believers in any number of things will deny science and, if pushed, will ultimately say they do so because of their religion or faith in something, be it God or Adam Smith’s Invisible Hand of the marketplace.
Sure, things like “trickle-down” economics(I think George HW Bush had it right when he called it “voodoo economics) are proclaimed by their supporters as “scientific” while their critics’ sanity is questioned. But it’s not just capitalist apologists who do it, the Communists do the same thing. Some socialists and libertarians do the same thing. My point is that ANYONE who says their favorite economic theory is “scientific” is just propagandizing.
As NoGod, or whatever his name is now, pointed out, I’m a Socialist. At least I admit that the political economic system I would like to see IS a political system because it conforms with what I believe to be a just society. Anyone can argue with me over politics, but I will not let them say that their favorite economic system is scientific, because it’s not. All of them have political and ideological elements.
I’ll answer your last question: because they were never intended to do so.
I admit I was confused by all of the claims being bandied about at the time of the bailout. That’s why I started paying more attention.
“…they use the prestige of science to hide a two bit con game that has destroyed the lives of billions.”
Heh!. An concise and accurate analysis, IMO.
Interesting. Why are you so convinced? Clearly any political and economic system that does not take biology and ecology into account is doomed to failure–look what happened to the Mayans–but IS there a current economic theory that really takes those things into account? Both capitalism and socialism have a tendency to believe in unlimited natural resources, which is obviously false.
I see no such system being proposed, but I’m not omniscient. What I see is the political manipulation of behavior.
I am convinced because it recognizes reality as it is. We tend to think of ourselves as independent from the rest of natures. That is an artificial distinction.
People are biological animals. We create very sophisticated ecosystems and call them economies. We happen to have the capacity for self-aware reflection which most animals don’t (some do to a limited degree) and have much more advanced ability to develop tools and technologies (some animals do this also in a rudimentary way) but we are not categorically different than animals.
If you google Biological Economics you will find a few results. It is even more obscure than Behavioral Economics but is the only model that actually reflects the real world as it is and takes into account the full breadth of what interdependencies in an economy. Here is one place to start: Why Develop Biological Economics?
Economics is becoming a religion
The koch suckers are the twin popes of the church of the golden calf
Not really becoming. Economics has been a religion for 40 years now.
I tend to think that much of the world’s present condition stems from trying to understand and profit from economic theory, all the while actively ignoring the topic of economic justice.
We have a sick world economy because we’re ignoring one of the most important topics that the study of economics can and should illuminate.
In fact, I can’t imagine studying economics without immediately confronting the issue of economic justice.
But it does matter.
It matters because the Fed has a stranglehold on the entire economic profession. The problem goes well beyond the limited number of economists directly on the Fed’s payroll.
This HuffPost research article gives a reasonable description of what has been going on:
http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html
Yup, it’s difficult/impossible to have an academic career if you cannot get your work published in academic journals.
“Question; can you point to any “relevant” Capitalist society that is without Socialist components?”
Define what exactly an Socialist component is first.
Hers why i am asking you for the definition. An element in any invention may be made of elements that already existed. Defining which elements were recycled from history narrows down Socialism to an unique concept made of recycled elements of previous systems.
But It might be good for you to make an diary entry of your own asking those questions.
I did say that you may ignore me. It was not necessary to bring out the catnip crack cocaine metaphor. But I guess you werent done with your personal attack yet. Maybe I deserved it but oh well.
Relevancy is in the eye of the beholder, I suppose. Subject matter is not separated by invisible walls.
Political decisions guide the economy like you have pointed out. But that is only one element of the equation. All economies need certain elements to be an economy. Economies are created by the people in that economy. A Government attempts to control the people in order to control the economy. Not a problem in a democratic nation, as long as those safety nets remain functional.
I dispute as you may have noticed that “ALL economic decisions are ultimately political”. Many economic decisions are made by the people that truly control the economy, the common people in that economic region. We still have to obey the politicians in order for their political decision to have any real effect.
This fact should be obvious to you. Its the same concept that the labor force has the real power over production.
BTW thanx. And off to to have fun with my day.
“You’re right, of course. True believers in any number of things will deny science and, if pushed, will ultimately say they do so because of their religion or faith in something, be it God or Adam Smith’s Invisible Hand of the marketplace.”
Or Socialism?
let me point out again, that i have never supported corrupted Capitalism. You keep trying to say (like all Socialists) that my support for Capitalism equals support for the corrupted version.
Like I pointed out before that those assertions mirror the same attitude as McCarthyists. What I am saying (since you close your ears as soon as I say anything about Socialism, and start just assuming the play between Rightwingers and Leftwingers) is that representing Capitalism by expounding a perverted version is the same as talking about Socialism as if its the same as leninism .
matthhewj: Although I agree with Gringo’s post your statement below
gave me pause:
“It could be a science of biological systems (all ecosystems are an economy, we are biological beings, and our economy is really just a very sophisticated ecosystem in a state of disequilibrium). I am convinced that biology and ecology are the primary model for economics and behavior only plays a secondary role within that system.”
A good friend of mind who is deep into (an engineer) have an on going argument concerning what is “man made” and what is “natural.” He (Ed) buys into the standard view of if human made it, it is man made; everything else is of nature. I, being me, have always had a problem with this idea. It smells of our arrogance that we humans could think that we could make anything that was not “natural.” After all even our thought process
(biol-electrical -chemical) is natural. Your statement seems akin to this idea.
vector56, I’m not quite understanding what gave you pause and how you’re relating your friend’s argument with my statement. Can you clarify?
Remember I am using Aristotle’s definition of politics–the art of persuading other people to do what you want them to do. It is very broad but, I think, accurate. In that context, the first successful sale of a beer was a political act as well as an economic one, for the seller got the buyer to buy his beer. The buyer got a beer. Both probably thought they had gotten the other to do what they wanted them to do.
Socialists are as subject to the same critique in this particular post of mine as capitalists are. I’m saying that all economic decisions are also political.
As far as left wing versus right wing goes, your allegation against me is an outright lie, and you know it. I consistently talk about upper vs middle vs lower, not left v right. And any political and economic system is subject to corruption so long as they are run by human beings. I don’t believe that a perfect system exists, for the creators are necessarily imperfect, at least on this planet.
I do think that capitalism is more subject to corruption than socialism, since capitalism’s goal is by definition the accumulation of more capital, and it, by itself, doesn’t question the means. Socialism’s goal, OTOH, is to improve the quality of life for all members of a society. Society-Social-Socialism, get it? Is it perfect? By no means. Is it better than capitalism for me and mine? Absolutely.
So, you can never have uncorrupted capitalism any more than you can ever have uncorrupted socialism. I’d just be better off in a slightly corrupted version of socialism than I am now under an extremely corrupted version of capitalism. Maybe, back in the day, when capitalism was actually regulated by government(which system most modern day capitalists decry as “socialist,” when if anything it was really a form of social democracy) I would have been OK. But those days are gone and are not coming back in our current political system.
So no, I don’t think you are supporting what you call corrupted capitalism. But I do think your support of capitalism itself is against your own self-interest. I know you disagree. Oh well.
Damn this editing system, anyway. This reply was meant for mathewj above. Hope you can figure out which one.
How can an economy be an ecosystem? An economy is a system of trade and exchange between people. An ecosystem consists of all of the life forms in a biosphere. I went to your link. It made no sense to me.
If you want to make sure that an economic system is compatible with the well-being of the biosphere, I have no problem with that. But again, that is a POLITICAL decision.
Are you suggesting there are no economies in the natural world of animals, etc? I’m not sure those who study ants would necessarily agree with that…
Exactly. My point is that separation of our human economy from the larger system it is embedded in is arbitrary and dangerous.
The necessary distinction is between economics as a science and economic systems enforced by laws. I am suggesting a scientific approach that would lead to an understanding of how any kind of economic system functions internally and in relationship to the larger system it is embedded in. This approach would lead to knowledge which could help make a case for political choices that lead to equilibrium and balance of the whole system rather than the disequilibrium we face today and which is getting worse and worse.
Does this make sense? You need to separate knowledge about economics and the effects of different economic systems from the economic systems themselves and choices about which one to adopt in any given society. It is exactly the conflation of the two which allows the political choice to masquerade as some kind of natural law.
Oh, and I didn’t look at the link too closely myself. I just pulled an example from the google search results. I am simply pointing out that there are others thinking in this direction as well. I believe it will grow to be a highly respected field in time (how long depends on how strong a hold the oligarchs maintain on the academic community)…
“Are you suggesting there are no economies in the natural world of animals, etc?”
Yes. Animals have no economics. In that sense, maybe they’re better off than we are :)
“Does this make sense? You need to separate knowledge about economics and the effects of different economic systems from the economic systems themselves and choices about which one to adopt in any given society. It is exactly the conflation of the two which allows the political choice to masquerade as some kind of natural law.”
Ummm, no. It does not make sense to me. Maybe I’m dense or slow or whatever. Your statement implies that economic systems themselves have an independent existence from those who have knowledge about them, promote them, and benefit from them. I don’t believe that. Economic systems are created by people who benefit from them. Period. That creation is a political act.
Despite what the mainstream says Socialism and Capitalism are not comparable in complete equal terms. Capitalism is purely just an economic theory. It does not take in account anything.
And it itself doesnt need too.
What i am saying is that just like in Democratic Socialism where Capitalism exists but regulated by the government. In essence separated from the social aspect of society and controlled by the needs of society.
When you break it down to basics, Capitalism is just a way for people to freely exchange goods and money. It is not an Social guide for society.
Myself since I havent said anything ever other then I support the idea of Capitalism just as a freedom to freely trade with fellow citizens to you. I have reformist ideas myself but the plausibility isnt logical. And to me Socialism hasnt for various reasons proven to me to be any better then what America could be if people actually followed the letter of the law.
For example I think we should basically strip the presidential powers away. Qualified people should individually do the different jobs of what would now be the presidents job (With voter approval). The president would maintain a diplomatic position. Basically making him a puppet of the people.
So when I talk about Capitalism it isnt in the same respect as what your talking about. I guess I need a different word instead. I couldnt careless what its called to have the freedom to sell what I want for what I want to who I want (although people selling publicly must sell indiscriminately to the public) too, and when and how. Of course within reason.
Understood generally economic systems are simply means of exchanging value. Ants are communities with a very complex economic system (workers, queens, etc). This is an economic system that is instinctual about which none of the participants have any kind of cognitive knowledge.
As far as human economic systems go, you are correct. But yet the system itself and promoters thereof is different from knowledge about the system. Sure some participants have knowledge of the effects of the system (and seek to exploit that knowledge) but that does not mean the knowledge and the system are the same.
When you see knowledge and system to merge then it is possible to claim that one particular system is the right one, or the natural one. It is possible to claim that a particular system is knowledge of the natural order of things. This is exactly what the Chicago school did and their success demonstrates why it is dangerous to think this way.
Choice of economic systems is political. Knowledge (not propaganda) about the effects of different choices that could be made is not.
And a real science of economics would be the objective study of the effects of those various choices / options. To fully study the effects the full system needs to be looked at. This is why any real and objective science of economics would have a biological model at its core.