I made the observation a few days ago on this blog that economics is not a science. Some from the right have, predictably, argued to the contrary.
Unfortunately, their arguments do not hold water. The fact is that most people now think economics is the subject that is taught under that heading at universities. This activity emerged from the more appropriately named moral philosophy that Adam Smith, for example, considered he taught. In the process it was corrupted.
When the likes of Keynes were teaching economics the involvement of mathematics was, to be polite, limited. And that was appropriate. After the Second World War the likes of Samuelson debased the subject in my opinion, reducing its to a quasi mathematical analysis were an argument had either to be resolved through the resolution of formulae or by statistical regression.
There were two problems. The first was the illusion of spurious accuracy. The second was the exceedingly poor mathematical ability of the economics profession.
To take an example of the first, and to highlight an issue which underpins the whole of neoliberal economics which is based entirely upon this mistaken philosophy and methodology, it is assumed that markets, and markets alone, allocate resources efficiently within society. Of course, as some of my critics have noted, some very eminent economists have since tried to relax this assumption, and I do not dispute that they have made progress in doing so, but what that proves is that they are the exceptions to the rule, and that the rule remains intact, as the whole of the drive for deregulation, low tax, and the undermining of government has proven.
This logic that well-being is maximised when profit is maximised is, however, entirely untrue. First of all, the profit which is referred to as the sum total of the future value derived from current economic activity. It is assumed that this is known. As a matter of fact it is not. Accountants even make the rather odd assumption that historical data approximates to this sum of the future well-being. Second, the model only works on the basis of revealed preferences i.e. that if I prefer A to B and B to C I will prefer A to C. Everything that I know about human behaviour suggests that this is an entirely inappropriate conclusion. It shows how far removed from the real world economic theory is. Third on the basis of this idea it presumes that there is always a downward sloping demand curve for any product and always an upward sloping supply curve meaning that a single, discreet and permanent equilibrium state for the economy can be achieved. Unfortunately, if revealed preference does not work, and as a matter of fact it does not, then it is relatively simple to prove that demand curves can be upward sloping and supply curve downward sloping for the same product at different points, so creating the possibility of multiple equilibria, none of which can necessarily be considered optimal. At that point a choice has to be made between them, and all pretence that science has been foregone.
But let's also look at just one of the numerous mathematical errors upon which economic theory as most on the right now teach it is based. It again refers to that absolutely fundamental model of perfect resource allocation by the market when perfect competition is in operation. To achieve this optimal outcome it is assumed that there are so many sellers in the market that none of them have any control on the price at which the goods they sell are priced: they are all price takers and the addition of one further supplier in the markets, or the loss of one supplier in the market, makes no difference to this situation.
This assumption is absurd. If it were true that they would be infinite people joining the market, and yet it is assumed that a marginal operator exists: the one for whom marginal revenue equals marginal cost. For that person to decide whether they are, or are not in the market it is necessary for the price to convey meaningful information. It cannot be argued that this is just with regard to revenue because each of the operators within the market will also have a cost base and their demand for the materials they require to supply the needs of the market must have implication for price through a market feedback mechanism or no one would ever equate a marginal revenue with marginal cost because neither will ever change. In fact, the addition or loss of another supplier will change the marginal cost for all supplies if the assumptions used in this model work, and neither costs nor revenue are therefore independent variables of the number of suppliers in the marketplace. In that case it is unrealistic to assume that any number of additional supplies can be added to the market without having implication for revenue just as it is unreasonable to assume that any number of suppliers can be added without having implication for marginal cost.
I accept the difference in price may be very small, but that does not matter. In fact it is critical because this is the fundamental error of economists. When using this model they assume that a very small change in price, which is what the last producer will in fact induce, approximates for all practical purposes to zero, and can therefore be ignored. Unfortunately, chaos theory shows that even the smallest of numbers behaves completely differently from zero. That is the whole basis on which chaos is based. The neoliberal economic model has never noticed this. That is because it is based upon poor mathematics which creates a lousy approximation to science which is used for political purposes to advance a particular philosophy which requires the believer to accept leaps of faith that any rational, observing human being would consider quite ludicrous if they were aware of them.
One of the things that will be swept aside as a consequence of the current financial crisis is neo-liberal economics. Much of what is taught as economic theory will have to go with it. We will be better off for its demise.
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Menelaus
You say:
“That’s daft. A poor economist might very well allow his prejudice to cloud his understanding or to colour his presentation but that just makes him a poor economist and/or a dishonest scientist.”
I say this: no one travels without their predispositions, culture, prejudice and faith. To deny this is to deny humanity. To do so undermines the resulting studies.
It is not possible for an economist or scientist to be objective: they are human. If you equate the charade of objectivity with science, and so claim a subject is above politics, then you subscribe to the obvious fallacy I was condemning.
Richard
Here’s a useful addition to the discussion, I think.
Here’s a useful addition to this discussion, I think:
http://www.cooperativeindividualism.org/brown-harry_prejudice-versus-economic-science.html.
Sorry, Richard, forgot to paste.
“I make the simple point that your action is not reflection of a commitment on your part to freedom of speech. It is a deliberate attempt by you to exclude others from debate. You seek to deny reasonable, well mannered and civil people the opportunity to comment by making them fear abusive reaction.”
Richard, you make the above comment on DK’s ‘action’ of not censoring others’ comments on his blog. So, if I understand this correctly, by censoring those whose comments do not meet your criteria of ‘appropriateness’, you safeguard freedom of speech. Whereas, allowing people to say what they want without censorship is a ‘deliberate attempt… to exclude others from debate.” Is that how you interpret freedom of speech?
Rory
One person’s liberty is very often abuse for another.
DK is perpetually abusive, I think for the reason’s noted. I think abuse does need to be constrained for the sake of the majority – who have a right not to be abused and who refrain from participation for the reasons I have given.
Our society has been based on this principle. Only those with intent to overthrow the basis of the society we have appear to think otherwise.
That is why I suggest those using these methods can be linked to the unelectable fringes of politics some might wish to callextreme.
Richard
“One person’s liberty is very often abuse for another.”
I’d say it always is. There will always be someone who will claim “offence” at pretty much anything anyone might say. Which is why it is of little consequence.
“abuse does need to be constrained for the sake of the majority – who have a right not to be abused”
Naturally, this is your blog so you are perfectly at liberty to moderate comments at whatever whim you choose. But I would suggest that censorship is the very antithesis of free speech. There is either free speech or there isn’t. You don’t really believe free speech is to be found in censorship, do you? Censorship is Free Speech. Orwell would have been proud.
Why does anyone have a right not to be abused? Once you have accepted such a ‘right’, you have accepted the framework for tyranny.
Rory
I absolutely fundamentally disagree
Race abuse, gender abuse, abuse on the basis of sexual orientation, plain straight forward bullying (and much more) are all of massive consequence. They all represent the abuse of those without power by those with it – and it is often the power of might that backs up the verbal abuse and leaves the victim frightened and unable to participate in society.
Civil society requires that those perpetrating that abuse be curtailed from doing so – by legal means is necessary. This is to prevent tyranny. It is to permit all reasonable people to live a full life without fear – fear of the sort that verbal abuse creates. Verbal abuse of the sort that DK uses on his blog, for example. Verbal abuse of the sort that Tim Worstall permits on his blog, for example.
Your approach can only permit tyranny. Your perverted logic is, yet again, that associated with the political fringes, usually these days of the far right.
As I’ve said before – I am not accusing those who have linked here of physical thuggery – but it is the next step from the position you take. And the attitude you take is profoundly dangerous to large numbers in society – who have the right to live in peace without being menaced by anyone.
And I reiterate: I have no doubt at all that this verbal abuse is used with intent – the intent to close down open debate, and that I consider harmful to democracy. You and others who have commented here may not value that because it is clear that the ideas you promote have no chance of reaching the politcal mainstream – but as someone who works in the centre of the political mainstream democracy is something I value greatly. And I sincerely hope that the democratic process continues to protect people from abuse of the sort you espouse.
Richard
[…] have been pretty shocked by what I consider the callousness of some commentators on this blog of late, but Bauman’s analogy is straightforwardly offensive to the Jews and […]
[…] have been pretty shocked by what I consider the callousness of some commentators on this blog of late, but Bauman’s analogy is straightforwardly offensive to the Jews and […]
Richard
There is a strand of thinking running amongst some of your correspondents that confuses liberty with licence. Freedom of expression does not always require that we must endure the type of hyper-aggressive abuse that you have been subjected to in recent days. It happens that my mother is German – of Jewish family – and she grew up in Berlin during the inter-war years. She witnessed exactly the same patterns of abuse – used systematically as a tool for intimidation and subjugation by the thugs of the far-right – and the tactic proved vary effective since ordinary people withdrew from the political space of the centre left and centre right because it was made frankly too unpleasant and scary. Only the most courageous were prepared to take a stand, and they were physically beaten up and worse for their troubles.
The language employed by some of your detractors, the Devil’s Kitchen blog providing extreme examples, is appalling, and to justify this in the name of free speech is pure humbug. This is no more nor less than an attempt to intimidate you. Full marks to you for standing your ground and retaining your dignity.
Best wishes for 2009
John
[…] John Christensen manages the Godwin’s to end all Godwins. […]
“She witnessed exactly the same patterns of abuse”.
That is far more offensive than anything I have read on Devil’s Kitchen. To belittle the horrors the Jews in Nazi Germany went through by comparing it with being called a few names on a blog (which in any event you can choose to visit – or not) is offensive in the extreme. If I was your Jewish mother I would be thoroughly ashamed of you for using my suffering in this way. Get a sense of perspective.
Richard,
“I make the simple point that your action is not reflection of a commitment on your part to freedom of speech. It is a deliberate attempt by you to exclude others from debate. You seek to deny reasonable, well mannered and civil people the opportunity to comment by making them fear abusive reaction.”
Possibly, although there are two points that I would raise.
1) My blog started as — and to a large extent remains — a cathartic outlet. What can I say? — you annoy me.
2) The Kitchen was started as a place to rant, before the two-way nature of the blogosphere really took off. I am a lot less rude now than I used to be.
3) I am usually pretty polite to people engendering proper debate in my comments. And, similarly, I don’t (usually) swear in other blogs comment sections.
However, for John Christiansen to equate the language that I use to the Nazis is, frankly, entertaining. I might just as well compare your moderation of comments to the Nazis penchant for censorship.
DK
So Worstall, DK and others seek to attack John Christensen, whose family suffered in the holocaust for suggesting that their abuse is harmful and akin to that used to suppress debate in the build up to fascism in Germany.
I did not note them condemning their fellow right-winger – Bob Bauman – whose obnoxious comments are noted here -http://www.taxresearch.org.uk/Blog/2009/01/02/shame-on-them/
He has no shame in using Nazi analogies to defend tax havens. They do not appear to have anything to say about that
John meanwhile is drawing on his families experience to say this sort of verbal / written abuse matters – and is used deliberately to oppress debate. He knows and I know people suffer as a result of it
But I’ll be candid – I really don’t think Worstall and DK would mind if they do.
Richard
“The language employed by some of your detractors, the Devil’s Kitchen blog providing extreme examples, is appalling, and to justify this in the name of free speech is pure humbug.”
Oh bless. And what do you think free speech means? The right to vociferously agree with you, personally?
“So Worstall, DK and others seek to attack John Christensen, whose family suffered in the holocaust for suggesting that their abuse is harmful and akin to that used to suppress debate in the build up to fascism in Germany.”
I’m presumabley”the others”. I did not “seek to attack”, or even actually “attack” John; unless your definition of attack is so broad as to render the word meaningless. I told him that being called names on a blog is not akin to what went on in Nazi Germany, and to say it was showed a total lack of perspective.
“I did not note them condemning their fellow right-winger – Bob Bauman – whose obnoxious comments are noted here -http://www.taxresearch.org.uk/Blog/2009/01/02/shame-on-them/”
Well I didn’t see the comment. But I note tht you are not condemning John for his insulting comments. (Insulting to the victims of the holocaust, not to DK, et al). So you seem to be equally guilty of selective outrage.
“He has no shame in using Nazi analogies to defend tax havens. They do not appear to have anything to say about that”
If he did say that, I will go on record now and call him a bloody idiot for so doing. Unless the matter in hand involves persecution of people because of their ethnicity then most comparisons to Nazis are likely to be ridiculous.
“John meanwhile is drawing on his families experience to say this sort of verbal / written abuse matters – and is used deliberately to oppress debate. He knows and I know people suffer as a result of it”
No, he is trivialising the holocaust and using its victims suffering for his own ends to make a silly political point. And having family who may have suffered in Germany does not entititle him to use their suffering.
As an aside, they used to walk dogs in Nazi Germany, and go to restauraunts, and get married, and had children. So declaring that something used to occur in Nazi Germany does not automatically mean it is a terrible thing.
“Civil society requires that those perpetrating that abuse be curtailed from doing so – by legal means is necessary. This is to prevent tyranny.”
To me, this sounds reasonable, until you look into the details. Who will do the curtailing? How will their decisions be made? That’s what would make me nervous.
For example:
“So Worstall, DK and others seek to attack John Christensen”
What did they say?
Tim Worstall: “Yes, really, the Devil ‘effin’ and blindin’. Obnoxio and his potty mouth, this is indeed the same as the Nazis and their suppression of public debate.”
Devil’s Kitchen: “… for John Christiansen to equate the language that I use to the Nazis is, frankly, entertaining.”
This is what you call attacking, and that’s why you and people who think like you should have no role in “curtailing” the rest of us. You seek to control not abuse, but mockery and dissent.
“So Worstall, DK and others seek to attack John Christensen, whose family suffered in the holocaust for suggesting that their abuse is harmful and akin to that used to suppress debate in the build up to fascism in Germany.”
If you had any proper understanding of the holocaust, had any understanding of how it came about, you’d never have invoked it in your grubby cant.
I have allowed more comments on the four comments that proceed this on, not because I think them appropriate, for I do not: they are, without exception, offensive
I have allowed them to be posted because they show the complete contempt of the far right for others.
In this case John Christensen wrote based on his family’s experience of being abused; of how the language of abuse led in turn to thuggery, and in this case to genocide
That experience has been trivialised here
Not one of those who has commented here has condemned Rory Meakin for saying abuse was of little consequence
Instead I note the delight all take in the freedom to abuse, for that is what is being promoted by those who comment.
I am appalled, but the eviudence has been laid clear. The dividing line is apparent.
To prevent further abuse this thread is no closed to further comment and further comment on this issue on this site will be blocked. Abusive language is clearly condoned by those who comment. It has no part to play in civilised democratic society. I am now content that those who have supported that right to abuse want something very different indeed.
Richard
What needs to be recognised is that the libertarian fringe is petrified at the current display of the inevitable outcome of neo-liberal economics. This, they will do all they can to draw attention away from it.
Thankfully, they will become the past and people will not be as easily fooled again.