One of the ‘mysteries’ of the modern era is the failure of economic theories. The neo-classical brand is especially dubious and suffers a kind of ‘physics’ envy that makes it a pseudo-science by trying to be physics: the use of differential equations. In physics these are very exact, in economics a strange fictional pastiche…
The status of theories: physics versus economics
May 21st, 2018 •
Economic theory and public jargon/ideology….
October 29th, 2015 •
Our project to critique neo-classical economics proceeds apace…I keep getting distracted but it is enough to undermine economic theories at the root: a physical theory applies to an exact context. The match is exact. But in economics, if we examine the work, we see differential equations used on situations involving human agency: an instant fallacy. As a result differential equations cease to apply. And yet the theories continue…in fact, as approximations they seem to work often enough to induce their use. But as 2008 shows the theories weren’t there when you needed them…
We have a right to protest against policies of exploitation based on bogus theories.
It might help to swear off marxist theories, except in passing mention. We tend to critique capitalist theories to propose marxist ones. Best skip it. There is no simple way to produce an economic theory. Marx’s insights are acute, but he had as hard a time getting theory straight as anyone else (his critics by the turn of the twentieth century already had most of them nailed, marxists need to be alert to all the critiques).
Listening to conservatives on cable news channels brings the point home (although liberal/left discussion is often itself fallacious where based on neo-classicism…): it is obvious they don’t understand economics and have become vulnerable to lunacies (like Ayn Rand, libertarians, etc…) nobody knows what they are talking about. Noone.
A new approach is needed. Popper’s old idea of piecemeal social engineering, despite its dreadful aspects, points to the reality: all we can do is try basic strategies based not on theories but constructs that resemble them but don’t delude us with exact mathematical delusions.
A revolutionary left has to have a program that has a good chance of working and it has to be more than planning in an office, and it must self-feedback to get it right. We need to create a whole new set of assumptions…
For example…we assume entrepreneurs must be motivated by profit…but there is every possibility of new economic structures created by the ‘will of the entrepreneur’…We don’t meditate for profit, we just do it. The fictions of capitalist mentality need to be challenged…etc, etc…We may or may not wish to have entrepreneurs in a communist system. But the point is clear. The assumptions of capitalism can be challenged at every point.
Proposing bogus economic theories should be considered a crime, because they fake science and cause the death of large numbers of people…