Archive for January 12th, 2011

“Hardly a Revelation”

I’m about a week late on this gem from Peter Radford, but such are the consequences of falling off of blogging for several weeks.

Economists are free to do as much damage as they like. One of the most worrying trends of the last three decades has been the total commitment of orthodox economic ideas to supporting a generally right wing political agenda. This may be unwitting. It cannot be unnoticed. Only the most blind of professors could have ignored the incessant anti-government rhetoric, the attacks on regulation, and the attempts to undermine the social safety nets put in place during the years of Keynesian hegemony. It is a nice but specious distinction to argue that such attacks are simply the result of an improved theory. It is convenient to overlook the ideological taint that permeates such theory, but the surely taint exists.

Some economists complain that non-orthodox economists are too invested in left of center politics. It may well be true that some heterodox economists are not exactly friends of the Republican party. But that merely shifts the question it does not answer it. Heterodox economists are not those claiming scientific status. They are not claiming to be “positive”. They, mostly, recognize the intractable connection between politics and economics. It is the orthodox, the market magic folks, who make such claims and thus hide their ideological roots beneath the skirt of scientific righteousness.

So as the debate about ethical standards roils on I feel foolish to have to point out that ideas have consequences. This is hardly a revelation. But to hear people like Lucas speak you would think it is shockingly new.

Positivist economics should always be viewed with greater skepticism than economics that embraces uncertainty, and it’s for the precise reason that Radford cites- ideas have consequences. In the last few decades, economics has increasingly served, and led to policies that reinforce, an elite capitalist mindset. In a separate post, Radford writes,

This new elite thinks it is above what it sees as local, and therefore lesser, issues. It is based in places such as New York, London, Moscow, Hong Kong or Mumbai, and sees workers the world over as one big labor pool. Differential wages, and cultural matters are nuisances. Worse, they are seams of profit to exploit. It is convenient to this elite group for local politicians to adopt similar solutions to what are viewed by the elite as similar problems. Thus the wave of austerity sweeping the industrialized world. This is a homogenous solution to a set of heterogeneous problems. Those that suffer are the ordinary workers in those countries who are saddled with bailing out the errors of the elite. An elite unchastened by its errors, but determined to protect its wealth at all costs.

The same economic orthodoxy that led us into the crisis is leading us through our non-recovery. It is not an economics that serves truth, nor one that is intellectually curious; rather, it is one that generates policies beneficial to the powerful. This conclusion also should hardly be a revelation.


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