September 15, 2015

How to minimize political confusion

Comment on Peter Radford on ‘Let’s all blame capitalism’


“I realize it’s fun to be ideologically committed, and that a binary worldview make life simpler, but we need to get beyond that divide.”

Economics started as Political Economy and has never recovered from getting off at the wrong foot. Your fundamental error consists in depicting economics as a world view. On the surface it is and exactly this has always been its fundamental defect.

The binary code of world views is good/bad. Accordingly, the discussion since 200 years has been whether capitalism as a specific form of organizing the national/world economy is good/bad. This discussion has been complicated — to say the least — by mixing it up with the political issue of democracy/autocracy.

Your personal criterion reduces to good old individualistic utilitarianism: “My family was liberated by the Industrial Revolution. Capitalism, if that’s what we describe the basic economic model of the past two hundred years or so, has done me proud.” That is fine for the Radford family but begs the question.

The binary code of science is true/false. And the task of economics is not to produce a world view but to explain how the actual economy works. What we have at the moment is, broadly speaking, Walrasianism, Keynesianism, and a conglomerate of political/ sociological/historical/individual storytelling.

According to well-defined scientific criteria all these approaches are false. Because economists do not know how the monetary economy works the question whether capitalism is good/bad lacks any foundation whatsoever.

Until now economics consisted essentially in praising/blaming capitalism. This is a post-Enlightenment sequel to praising/blaming Catholicism/Protestantism/Islamism/Hinduism and other belief systems.

Going beyond this unsatisfactory state of affairs means in specific and concrete terms to advance from the proto-scientific state to the scientific state, in other words, to stop producing worthless opinions and to start producing valuable knowledge.

The pivotal question for Heterodoxy is not whether English capitalism has been good/bad for the Radford family but whether economics is true/false. As Schumpeter summed up the situation: “We are not yet out of the wood; in fact, we are not yet in it.”

The alternative between left/right has always been a political distraction, the real choice for every student of economics since Adam Smith has been between political junk and science. The sad state of economics proves that the representative economist has consistently preferred the former.

What is required most urgently in order to minimize political confusion among the general public and to secure a fresh start is an explicit dishonorable discharge of economics from the sciences.

Egmont Kakarot-Handtke