Are these the same economists that had NO IDEA that the crash in 2006 would happen? If so I think I've had quite enough of their opinions.
This is a fact that's widely recognized, even among economists.
Source: I've got an undergraduate degree in the topic, have been continuing to study it over the subsequent decades, and have been specifically researching in depth the foundations of the discipline in the past few months.
One rather striking failure of economics has been its lack of interest in long-term history. Which is peculiar if you've read Adam Smith as he actually goes into depth on the matter. It's the #2 economist, David Ricardo, who drops that view (though there continue to be economic historians), a fact which was criticized quite strongly by Arnold Toynbee (the economic historian, not his universal historian nephew Arnold J. Toynbee), whose Lectures on the Industrial Revolution begin with the observation:
It has been a weakness of the science, as pursued in England, that it has been too much dissociated from History. Adam Smith and Malthus, indeed, had historical minds; but the form of modern text-books is due to Ricardo, whose mind was entirely unhistorical. http://archive.org/stream/industrialrevol00toyngoog#page/n16... (page 1, 18 of the PDF)
It goes further than this. Nassau Senior, a strong early supporter of Ricardo writes: "Political economy is not greedy of facts; it is independent of facts." Serious WTF moment there.
The Austrian School (from which Classical Liberalism, a/k/a Libertarianism takes its lead) is even worse. Speaking of praexology, the interpretive method on which it's based:
"Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts." -- Ludwig von Mises http://www.goodreads.com/quotes/846342-praxeology-is-a-theor...
Suddenly the whole "reality-based" vs. "faith-based" divide becomes a tad bit easier to understand.
There's a great deal else out there, and no, not all of economics is complete tosh, but a great deal of it really should be tossed out.
I'm still digging into the history behind Ricardo, but briefly:
- He was an ideological opponent (though apparently close personal friend) of Robert Malthus. Malthus strongly criticized Ricardo's theories, and repeatedly questioned their inclusion in the Encyclopedia Britannica, suggesting they wouldn't stand the test of time.
- Malthus himself became strongly criticized by Ricardo's supporters. Much of that present criticism focuses on Malthus's writings on population, though these largely focused on the poor, and expressed a viewpoint not much different from Ricardo's. But by focusing the attention here, Malthus's own criticism of Ricardo is distinctly underrepresented. Compare this with Helen Keller, whose notability to most people is her role as an advocate for the rights of the disabled. Her actual attentions during her life were in support of socialism. For some reason, that message doesn't make it into elementary school texts....
- Ricardo's principle work was his theory of rent, which focused attention on landowners and laborers, suggesting that capitalists would be left wanting in allocations of wealth.
- Ricardo's own wealth came from stock speculation and banking. He later bought a parliamentary seat, according to Toynbee (I'm not sure how unusual a practice this was at the time), and used his MP position to advocate for his political economy (as the study was called at the time) views.
- Ricardo's papers and letters were collected by John Ramsey McCulloch, and subsequently bought by Lord Overton, another banker. They're now hosted by a number of largely libertarian-leaning organizations including the Ludwig von Mises Institute and Online Library of Liberty.
Again: my working hypothesis is that much of economics is more a too for justifying allocation of resources to benefit a specific class than a dispassionate study of a system. Not a unique view by any means:
https://en.wikipedia.org/wiki/Rajani_Kannepalli_Kanth
Rajani Kanth's major philosophical theories include:
a) that Ricardian Economics was merely policy advocacy in theoretical guise,[2][16][17][18][19][20]
b) that Economics is the crown jewel of the hegemonic ideology of Modernism,[2]
c) that European Modernism, whose derivates are capitalism and socialism, is the real grey eminence that has crafted the alienated misery of our epoch ...
John Kenneth Galbraith has some similarly damning comments:
Leading active member's of today's economics profession...have formed themselves into a kind of Politburo for correct economic thinking. As a general rule --- as one might general expect from a gentleman's club --- this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster when none occurs. They deny the possibility of events that then happen.... They oppose the most basic, decent and sensible reforms, while offering placebos instead. They are always surprised when something untoward (like a recession) actually occurs. And when finally they sense that some position cannot be sustained, they do not reexamine their ideas. They do not consider the possibility of a flaw in logic or theory. Rather, they simply change the subject. N one loses face, in this club, for having been wrong. No one is dis-invited from presenting papers at later annual meetings. And still less is anyone from the outside invited in.
(Quoted in Robert Heinberg's The End of Growth).
I agree that much of conventional economics functions largely as apologia and "retroactive continuity" for existing power structures and legacy wealth. While there are obviously spectra of disagreement within the field, as a whole it does seem largely oriented towards received wisdom in its academic culture, but that's from a distinctly outsider perspective.
What's your opinion, if any, of David Graeber's ideas in "Debt: The First 5000 Years"?
That said: his is some of the most original writing on the topic of money I've seen, period, it's not obviously wrong, to the extent I've read it, it addresses a great many misconceptions baked into economics since the time of Smith. Specifically: correcting Smith's descriptions of pre-money economies as being barter based, which Graeber replaces with gift-based (though that's something which works only in communities up to a certain size, most communal communities peaking around 300 members).
Money in general is something that fascinates me (in an abstract, what-is-it and how-does-it-influence-the-economy sense). It seems intrinsically tied to both the fossil-fuel lead growth of the past 200 years. As some have pointed out, the US transition to a central bank, fractional reserve, fiat currency pretty much tracked the milestones of industrialization: railroads (1830s), electricity and industrialization with the start of the petroleum boom (1930), oil imports and Bretton Woods (1950s), and the transition past peak oil with the birth of the petrodollar (1972). Dates somewhat approximate. There's the point that's raised by many (Richard Heinberg and Chris Martenson in particular) that fractional reserve lending and monetary supply growth mandate economic growth, which I haven't fully subscribed to, but that would suggest one primary source of opposition to sustainable, zero-growth economic paradigms.
That's not really a correction; there are pre-currency societies with both barter- and gift-based (and there's not really a clear delineation between the three, there's overlap between barter- and gift-based structures in pre-currency societies, and overlap of all three once currency is in the mix.)
> There's the point that's raised by many (Richard Heinberg and Chris Martenson in particular) that fractional reserve lending and monetary supply growth mandate economic growth, which I haven't fully subscribed to, but that would suggest one primary source of opposition to sustainable, zero-growth economic paradigms.
The human desire for better things demands economic growth; zero economic growth literally means things never get better (currency-value-based measures of economic growth are proxies for changes in experienced utility; zero economic growth means no increases in experienced utility. That's not really a desirable goal.)
Smith doesn't allow for the concept of a gift-based economy. Or for the possibility of an explicitly accounts-based economy, also supported by the anthropological record.
> zero economic growth literally means things never get better
I've argued both sides of that statement myself. I think I'd argue it on an evolutionary basis: the level of supportable complexity is static, but the focus of that complexity, where complexity is used to provide solutions to problems, isn't fixed. As the environment itself changes, or even interests within that environment, changes can occur within the economy. It's bounded but not static.
The material standard of living cannot increase overall, but its application and allocation can be shifted.
And whether or not the goal is desirable really has zero impact on how real the situation is. That's a classic wishful thinking response -- or if you prefer, argumentum ad consequentiam, appeal to consequences, or Diax's Rake. The Universe doesn't owe you your desired lifestyle.
Thats not to say that if they started from scratch there wouldn't be some unforeseen bugs down the road.
Which is sort of like writing code without ever referring to your specification, use-cases, and/or users, or in fact, compiling or running it.
Now, there's the Great Recession that got going in 2008 which economists should be embarrassed about not seeing as a consequence of the crash of 2006, but we all know that economists don't agree much about macro stuff. By contrast, the effect of patents is all microeconomic. And microeconomics is the part of economics that is actually generally understood and agreed upon by professionals.
As Jeffrey Reuben has pointed out, all but one of the post-WWII recessions in the US was preceded by an oil price rise. Including the 2008 recession.
Agreed that microeconomics (mostly) works better than macro, though it too has its issues.