[quote=urbanrealtor]
Economics is a science of observable behavior as governed by situational exigencies (like your real income) and cultural realities (like why you don’t need a bike lock in Japan and why socialism has a stigma in the USA).
When read as a natural science (akin to physics or math), it is easy to ascribe meaning to behavior in a way that does not necessarily map.
.[/quote]
Economics is largely a self-fulfilling psychology. It effectively constructs a model of behaviour, to a model for behaviour; whereby such models educate us to think how we’re ‘supposed’ to think. As a result, this pseudo-science has maintained a heavy reliance upon seeking numerical legitimacy and mathematical reassurance for justifying assumptions of rationality.
No, it’s not a science. I’d call it the “sciencization” of a political understanding, based on false assumptions. Assumptions that are held as universal truths.
“Economists enamored of pure markets begin with the theory, and hang models on assumptions that cannot themselves be challenged. The characteristic grammatical usage is an unusual subjunctive — the verb form ‘must be.’ For example, if wages for manual workers are declining, it must be that their economic value is declining. If a corporate raider walks away from a deal with half a billion dollars, it must be that he added that much value to the economy. If Japan can produce better autos than Detroit, there must be some inherent locational logic, else the market would not dictate that result. If commercial advertising leads consumers to buy shoddy or harmful products, they must be ‘maximizing their utility’ — because we know by assumption that consumers always maximize their utility. How do we know that? Because to do anything else would be irrational. And how do we know that individuals always behave rationally? Because that is the premise from which we begin. The truly interesting institutional questions — the disjunctures between what free-market assumptions would predict and the actual outcomes — are dismissed by the tautological and deductive form of reasoning. The fact that the real world is already far from a perfect market is ignored for the sake of theoretic convenience. The dissenter cannot challenge the theory; he can only describe the real world.”
— Robert Kuttner, EVERYTHING FOR SALE
An arrangement that seems to naturally gravitate towards social discord.
Along with it’s false assumptions – it has massive blind spots that it ignores for theoretical convenience as well. The economic institution has, actually, at times, admitted its false assumption and blind spots. However, the die was cast a long time ago.
To really understand this assessment, and the creation on Homo Economicus, you need to go back to the enlightenment and look at what was going on politically and philosophically.
Chapter 7 of Steve Keen (2001).Debunking Economics
“Economics as a discipline arose at a time when English society was in the final stages of removing the controls of the feudal system from its mercantile/capitalist economy. In this climate, economic theory had a definite (and beneficial) political role: it provided a counter to the religious ideology that once supported the feudal order, and which still influenced how people thought about society. In the feudal system the pre-ordained hierarchy of king, lord, servant and serf was justified on the basis of the ‘divine right of Kings.’ The King was God’s representative on earth, and the social structure which flowed down from him was a reflection of God’s wishes.
“This structure was nothing if not ordered, but this order imposed severe restrictions on the now dominant classes of merchants and industrialists. At virtually every step, merchants were met with government controls and tariffs. When they railed against these imposts, the reply came back that they were needed to ensure social order.
“Economic theory — then rightly called political economy — provided the merchants with a crucial ideological rejoinder. A system of government was not needed to ensure order: instead, social order would arise naturally in a market system in which each individual followed his own self-interest.
So, on the one side we had the rising merchant class that wanted to to expand markets and power.
On the other side, we had increasing peasant revolts with a feeling that arose by the seventeenth century that moralizing and preaching religious doctrine could no longer be trusted to restrain the destructive and “irrational passions” of men.
Or maybe, better yet, it’s a form of social engineering – which was theorized to be “natural”. This is where the state comes in(as theorized), even though, the commercial class railed against it as not necessary – they were more than happy with its assistance force the lowers classes to act ‘economic’. Early theorists knew that sometimes “nature” required the assistance of an absolute authority capable of forcing natural order upon its recalcitrant population.
You can trace the “sciencization” of economics to the French physician François Quesnay. Where he, basically, added math to a social theory. He was the leader of a sect of Enlightenment thinkers known as the Physiocrats (or économistes) who founded Libertarian economics. The term “Physiocracy” means rule of nature and was coined in 1767 by Pierre Samuel du Pont de Nemours to describe the doctrine of the first modern school of economics.
Here’s what economist Adam Smith said:
“Whenever there is great property, there is great inequality. For one very rich man, there must be at least five hundred poor, and the affluence of the rich supposes the indigence of the many, who are often driven by want, and prompted by envy, to invade his possessions. … Civil government, so far as it is instituted for the security of property is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”
It’s interesting because Smith is describing what many modern social scientists describe as and unhealthy environment. Something called the socioeconomic health gradient goes into this quite well. Where just being on the lower end of the social strata causes health issues from the socio-psycho stress of it all. He is also saying that the it’s the governments ‘business’ to protect the wealthy from the poor and propagate this “natural” environment. Of course, this is all necessary for “progress”
Regardless, IMO, it’s a bunk science with increasing amounts of state force needed to propagate and referee it. Markets would collapse with out ever-present “state” interventions. It will fail as a social organization eventually. Basically, because we have outgrown it and it is becoming supremely illogical and damaging on a myriad of levels. In a century, if we don’t blow ourselves away, we will laugh at how idiotic and primitive we were.
