Class interests as economic theory

Written on November 21st, 2014 in politics Comments Off

Ideological foundations of the mainstream neoclassical economics – Published on Intrepid Report, by Ismael Hossein-zadeh, Nov 20, 2014.

There is now a widespread consensus that mainstream/neoclassical economists failed miserably to either predict the coming of the 2008 financial implosion, or provide a reasonable explanation when it actually arrived. Not surprisingly, many critics have argued that neoclassical economics has created more confusion than clarification, more obfuscation than elucidation. Economic “science” has, indeed, become “an ideological construct which serves to camouflage and justify the New World Order” [1].  

Also not surprisingly, an increasing number of students who take classes and/or major in economics are complaining about the abstract and irrelevant nature of the discipline. For example, a group of French graduate students in economics recently wrote an open letter, akin to a manifesto, critical of their academic education in economics as “autistic” and “pathologically distant from the problems of real markets and real people”:

“We wish to escape from imaginary worlds! Most of us have chosen to study economics so as to acquire a deep understanding of the economic phenomena with which the citizens of today are confronted. But the teaching that is offered . . . does not generally answer this expectation. This gap in the teaching, this disregard for concrete realities, poses an enormous problem for those who would like to render themselves useful to economic and social actors” [2].

The word “autistic” may be offensive and politically incorrect, but it certainly provides an apt description of mainstream economics.

Interestingly, most economists do not deny the abstract and irrelevance feature or property of their discipline; but argue that the internal consistency of a theory—in the sense that the findings or conclusions of the theory follow logically from its premises or assumptions—is more important than its relevance (or irrelevance) to the real world … //

… Despite its irrelevance and uselessness, neoclassical economics is neither uninteresting nor illogical. Within its own premises and presuppositions it is both logical and mathematically rigorous, which explains why it is packaged as a scientific discipline. But, again, it falls pitifully short of explaining how real world markets or economies work, or how economic crises, as inherent occurrences to a capitalist economy, take place; or what to do to counter such crises that would help not only the capitalist/financial elites but the society at large. Although most mainstream economists proudly characterize their discipline as scientific, adornment of the discipline by a façade of mathematics does not really make it scientific. In reality, the math superstructure simply masks the flawed or unreliable theoretical foundation of the discipline.

It follows from the discussion presented in this essay that a driving force behind the evolution of economics as a dismal and obscuring discipline is the role of influential vested interests and/or the dominant ruling ideology. In a critique of mainstream/neoclassical economists’ blatant disregard for actual developments in the real world, economics Professor Michael Hudson writes:

“Such disdain for empirical verification is not found in the physical sciences. Its popularity in the social sciences is sponsored by vested interests. There is always self-interest behind methodological madness. That is because [professional] success requires heavy subsidies from special interests who benefit from an erroneous, misleading or deceptive economic logic. Why promote unrealistic abstractions, after all, if not to distract attention from reforms aimed at creating rules that oblige people actually to earn their income rather than simply extracting it from the rest of the economy?” [10].

Why or how is it that most economists are either unaware or pretend to be unaware of the specious theoretical foundations of their discipline?

A charitable answer is that perhaps the majority of economists who teach their discipline or otherwise work as economic professionals are not necessarily guilty of obfuscation, or deliberately promoting a faulty paradigm. Many economists sincerely believe in the integrity of their discipline as they carry out highly specialized research or produce scholarly publications. Economists’ confidence or faith in their discipline, however, does not make it any less flawed. They simply teach or carry out elaborate scholarly research work within a faulty paradigm without questioning, or even detecting, some of the submerged defects that makes the discipline not only irrelevant and useless but indeed harmful, as it tends to create more confusion than illumination or understanding.

It can also be argued that since most economists are deeply wedded to their profession, and are dependent on it as the source of both intellectual and financial survival, they would most likely be in denial, and would continue working within the only academic tradition or professional path they know how to navigate, even if they suspected or realized the esoteric and irrelevant nature of their discipline.

(full text, notes).

(Ismael Hossein-zadeh is Professor Emeritus of Economics (Drake University). He is the author of Beyond Mainstream Explanations of the Financial Crisis (Routledge 2014), The Political Economy of U.S. Militarism (Palgrave–Macmillan 2007), and the Soviet Non-capitalist Development: The Case of Nasser’s Egypt (Praeger Publishers 1989). He is also a contributor to Hopeless: Barack Obama and the Politics of Illusion – AK Press 2012).

UPDATE – more books on amazon:

Links:

Global economy falls deeper into slump, on World Socialist Web Site WSWS, by Nick Beams, Nov 20, 2014;

EU rejects Osborne’s bank bonus cap challenge, on Left Foot Forward, Nov 20, 2014: the UK government’s challenge to the European Union’s cap on bankers’ bonuses has been throw out by the advocate general …;

False hope for equal pay in latest ONS report, on Left Foot Forward, by Ruby Stockham, Nov 20, 2014;

New York-born London mayor Boris Johnson refuses to pay US tax bill, on The Guardian, by Haroon Siddique, Nov 20, 2014: Politician says he is ignoring US demand for capital gains tax, despite row with country’s UK embassy over unpaid charges

Pakistani Sikhs Back in the Dark Ages of Religious Persecution, on Inter Press Service IPS, by Ashfaq Yusufzai, Nov 20, 2014;

Over 4,000 dead, almost 10,000 injured in E. Ukraine fighting since April – UN, on Russia Today RT, Nov 20, 2014;

Teeth and Bones: Mass Abduction Reveals a Decaying Mexican State, on Spiegel Online International, by , November 20, 2014 (Photo Gallery): Most murders don’t even make the front page in Mexico anymore. But the recent abduction of 43 students has infuriated the country. The story has exposed the tight relationship between politics, law enforcement and organized crime. And it shows how weak the state has become …;

Hashtags and Holy War: Islamic State Tweets Its Way to Success, on Spiegel Online International, Interview with Ali Soufan, conducted by Britta Sandberg, Nov 19, 2014: In an interview, Ali Soufan, the former FBI agent who was a key figure in the arrest of the mastermind behind al-Qaida’s 9/11 attacks, discusses Islamic State’s massively successful social media strategy and serious errors made in the war against terror …;

US-Led NATO Risks Global War, on Steve Lendman Blog, by Stephen Lendman, Nov 19, 2014;

The ational Health Service NHS cost statement will make sick people feel more of a burden, on Red Pepper.org.uk, Dr. Jonathan Tomlinson, Nov 3, 2014: The most vulnerable patients already attend too little, not too much, and don’t need to be made to feel more guilty about what they are costing the NHS;

… and this:

… und noch dies:

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