Home > neoclassical economics > Economic theory creates the world we live in, and the rules we live by.

Economic theory creates the world we live in, and the rules we live by.

How does it happen that we have given our quiet assent to a situation where the richest 85 individuals have more money than the bottom 3.5 billion? Where vultures wait for starving children to die, while others eat luxurious meals on private resort islands? Where horrendous military and commercial crimes leading to deaths, misery, and deprivations of millions are routinely committed by highly educated men with multimillion dollar salaries in luxury corporate and government suites?

A core component of the answer to these critical questions is that we have been educated to believe that this is a normal state of affairs, which comes about through the operation of iron laws of economics. Economic theories currently being taught in universities all over the world are an essential pillar which sustains the economic system currently in operation. These theories state that we (human beings) are cold, callous, and calculating. Microeconomic theory says rational individuals are concerned only with their own consumption. They are callous; completely indifferent to the needs of others. They maximize, calculating personal benefits to the last penny. They are cold – their decisions are not swayed by emotions of any kind. All this theorizing is not without power – it creates the world we live in, and the rules we live by.

Asad Zaman

  1. Jorge Buzaglo
    December 19, 2014 at 6:06 pm

    I agree, but I would say, following great philosophers of the past, that coldness, callousness, avarice, etc., are themselves (negative) emotions. These emotions or passions do not at all represent rational thinking, but on the contrary, they manifest ignorance and lack of rational emotional control. These emotions are negative for those who experience them in the first place, and also negative of course for others.

  2. Ken Zimmerman
    December 19, 2014 at 6:37 pm

    Interesting notions. But it’s not that simple. Callous, cold, calculating, etc. are just words. That can on there own do very little. They must be interpreted and lived in varying situations involving varying actors, human and nonhuman. It is in these interactions that the world is created. And lots more than economic theories and economists are involved. Study the world building interactions.

  3. December 19, 2014 at 9:24 pm

    The overly simplistic breakdown of basic motivation into contrasting camps does nothing to foster the unity of objective needed if we are going to turn this situation around. It’s far more constructive to view this aberrant behavior in this way… The core of moral/ethical behavior and the responsibility it promotes is rightly contained in the idea of “do unto others as you would have them do unto you.” This theme ideologically pervades almost all cultures. Unfortunately, its meaning has somehow got corrupted in the translation. In many quarters, it has come to mean “do unto others whatever you can, so you can better provide for those you love.” As situation would have it, in the eyes of the ignorant the “self” has come to top the list of those one loves. In doing so, it successfully defeats the initial premise and allows greed and avarice to run free. How economics is factored into this equation has been covered in depth on the “Mainstream macroeconomics distorts our understanding of economic reality” thread. The next thing I hope will be given appropriate consideration there is what can be done to try and turn our current situation around. For those in need of refresher regarding the challenges before us, please go to … http://www.edenorg.com/edp-001b.htm,

  4. Ben
    December 20, 2014 at 3:01 pm

    For me it was a pleasure to read and i do understand which is important in order to believe in something. I do make sure that this 13 pages long paper gets distributed wherever possible… and make references to it. It is good that it is short, makes a quick read possible. I’m sure that he is right and interesting to explain the past 50 years or so of change. I can see when others mention morality and ethics against what economists and politicans try to tell (us) every day…

  5. Nell
    December 20, 2014 at 5:28 pm

    Nicely said Zaman. The social sciences have a lot ot say about how grand cultural narratives impact our understanding of the world, and the actions that we take in the world.

  6. December 20, 2014 at 5:43 pm

    Thanks, Nell, Ben and Jorge for your agreement and amplifications. Ken, I agree that it is not that simple, Ultimately, reality is too complex to be captured by words, but we are necessarily restricted to this medium. I do not know what you mean by world building interactions — I agree with the grand narratives of Nell — we can only tell stories, none of which can really capture reality, but some stories are more human, and humane, than others. Donald Sagar — I tried to find out about your Eden project — some of what you say resonates with my ideas — However, I cannot understand how a secret project revealed to those who establish their credentials could change the world. Surely, a new idea must be shared widely in order to build consensus that is required to make it effective.

    I have reposted these two opening paragraphs from my article, and also provided some background and context, on the WEA Pedagogy Blog:

  7. Bruce E. Woych
    December 20, 2014 at 6:34 pm

    Inter-generational Path Dependence and the Stockholm syndrome make up at least part of this false consciousness under banners of historical realism. This is something to be said for an ideological central place theory in all this as well as the analogy to the frog being slowly heated to its death in a pot of water that starts cold…and ends badly.

  8. Bruce E. Woych
    December 21, 2014 at 9:08 pm

    The reduction in authentic news media is part of the problem that has only recently been alleviated somewhat by an open channel internet that permits independent coverage to surface and be disseminated. While social media is clearly manipulated and under constant revision for controls and corporate/ political advantage, the communication afforded by blogs like this one is still the front line of true freedom and what is left of discovery and transparency. The question of the very foundation or the systemic itself that supports and perpetuates these “systems” is still a hotly contested and hard to literally finance in the current trends of the self-proclaimed “Ownership Society” under aggressive privatization. Some independent reporters are considered mavericks or conspiracy theorists if not outright quacks and the process of discrediting them is a very successful tactic. In the meantime some economic research is done that breaks the mold (PERI Institute for example) but does not get high distribution or is too specialized even for the educated public. Some reporters are great guides for economists that could work to substantiate some of what is revealed (or establish what is essentially ‘ethnographic’ realism or perhaps a newer version of demographic realism that can build new models for economic foundations that are not derived from 19th century thought and opportunistic power groups that pretend they are “deductively” doing science with such conviction. Interested economists might take a good look at what some of the authentic reporters are doing around the world, since they seem to be the bravest of us all in discovering and covering unfiltered truth in real time and in real proportions 9often at the risk of their own lives).
    see (for example): http://johnpilger.com/

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