Home > Uncategorized > Economics is a waste of time

Economics is a waste of time

from Peter Radford

There I said it.

There comes a point when we all have to stop banging our heads against the wall and just step back. Why, we ask in such moments, are we wasting our time? The wall is immoveable. It is indifferent to our efforts. It is solid. It has the appearance of permanence. It just won’t shift.

So walk away.

Do something else.

In the case of economics go and study the economy instead.

Too many people are wasting far too much time talking about economists as if they study the economy. They don’t. They really and truly don’t. They live in a post-fact world. Indeed before it became fashionable to toss that phrase around — Trump and his regime pretty much define “post-fact” — economists had been steadfastly denying fact, ignoring reality, and living in a wonderland of their own creation.

Economists study economics. And economics is not the economy. It is a self-contained set of ideas, models, theories, mathematical intricacies, and axioms, that are designed to provide exciting intellectual sport for those so inclined to busy themselves with such activity. It is carefully constructed to look as if it touches reality. It still contains words that make it look as if it relates to reality. Economists intone cogently about real-world topics. And economists fill all the key policy positions that relate to steering, regulating, and measuring the economy.

But that’s all illusion.  

Poke at what they learn in school. Take a peek at the content of what they believe. Look at what it takes to be a respected economist.

Then try to connect that with what you see around you.

There is little or no connection. It’s as if the weather forecasters predicted the weather without ever looking out the window. Or as if physicists insisted that gravity threw things straight up in the air despite the contrary evidence. Alice and her looking glass have nothing on the ability of economists to defy the world in which they live.

But perhaps it isn’t defiance.

Another attribute of economists is their portrayal of the dispassionate observer of society gravely describing the “deep laws” humans are foolish to push back against. They project the air of sober analysis. They attempt to inject a discipline and rigor into the messy pool of human interaction. They want us to believe that what they describe is inevitable. So they take it upon themselves to act as caretakers of what ought to be.

No, it isn’t defiance. It is activism.

Having wandered into their intellectual wilderness, and having starved themselves of the diversity and complexity of reality, they have returned convinced in their hungry delirium that they have discovered ways in which society ought to conduct its affairs.

Economics, in its various mainstream hues, is profoundly normative. It is an attempt to dictate the ways in which we order our economic activity.

We know this from the way in which it treats collective action. It disallows such activity in its every recess and crevice. It is totally committed to the individual being the core agent. And that individual is presumed to be inhumanly rational.

This is why Keynesian ideas about the efficacy of examining macro or meta themes was considered apostate and had to be eradicated or so mutilated that they could be neutered politically.

This is why the Marxist critique is ignored as if power relations had no social significance.

This is why gender and minority considerations are thought irrelevant.

This is why institutions are disregarded as having theoretical import.

This is why knowledge has never found its way into the core of the so-called “production function”.

This is why the various fantasies of general equilibrium are tolerated by people with vast analytical skills and who, thus, ought to know better.

This is why growth theorists are content with models that predict a small portion of growth — the rest they tell us is a mystery.

This is why theories of the firm are hopelessly at odds with the firms we work in.

This is why oddities such as the notion of “marginal analysis” exist. Beautiful constructs and intellectually interesting, but not found in nature, they distract from locating better, more practical and real explanations of economic artifacts.

The list goes on.

This has all been said before. And it has been said much more eloquently.

So: my advice is to study the economy by taking classes in politics, sociology, philosophy, business or organizational theory. Get steeped in information theory. Build those agent based models. Go and talk to workers, shopkeepers, and all the other people in the real world.

But stay away from economics.

Especially if you’re serious about the economy.

  1. February 15, 2017 at 2:23 pm


    And, don’t just talk about changing theory. Change it! The last thing it is is a mathematical game with unique outcomes that deliver the best of all possible worlds. Abandon ‘equilibrium’, bring in budget formation and the practical consumer behavior that underlies budget formation decisions while ridding economics of ‘endowed’ budgets,ever fixed and immutable in the face of price changes. Get rid of stable downward sloping demand schedules, for budget formation decisions re ‘buying’ goods make for unpredictable responses to price changes. Rid yourself of the false distinction between the ‘consumer’ and the ‘producer since, most of the time, we are producers-who-consume-out- of-what-we produce. Get rid of all so-called real prices between goods, for these imply a neutrality of money that budget formation decisions would reveal to be ridiculous. Nominal incomes and nominal prices always matter. Do only nominal analysis. Employ more shift and share analysis of the effects of price and income changes, especially when looking at compositional changes in aggregate, and especially when looking at demand and supply.

    Bring values-in-use back into theory … for, in the actual world of the economy, the benefits/values-from-use are the drivers of consumption and production activities, for production is merely a different form of consumption activity.

    Recognize that, in practice, economic decision-making has more to do with needs and the ways in which we meet those needs, constrained in our use of goods by incomes and prices, laws, traditions, institutions as well as the reality that our needs change as we do.

    Never conduct analysis or construct theory that fails to account for the diversity of benefits associated with the different uses for goods.

    And, finally, don’t give up.

  2. robert locke
    February 15, 2017 at 2:24 pm

    Why don’t you mention history? I have been saying what you just said ever since I joined the blog in 2008, without any effect on blog readers at all, including you, since you leave history out of the subjects people interested in economic events should study. But as an historian I am not surprised. People who live in particular periods of time, as every historians knows, engage in folly when seeking answers to contemporary problems. People sat and watched the Roman Empire, the British Empire, the European Union… decline because of the folly that their own policies contributed to the ruin.

    • rjw
      February 15, 2017 at 5:25 pm

      You right of course. The biggest failing in modern economics teaching is not so much the use of models … that can be debated …models can be useful, and sometimes even very simply and highly stylized models can provide insights. The problem is that we don’t inculcate a sense of contingency in students … the realization that historical context matters, and that the precise mechanisms at work may vary in different historical contexts and circumstances. And the best way to get that sense, is to be steeped in economic history.

    • February 16, 2017 at 12:45 am

      I agree that a history of economic thought should be required to be taught. It would show that the marginal revolution stopped economics from being about real human behavior and actual economic activity, and that it largely did so through mathemagical thinking about imaginary beings who never suffered if they failed to consume anything at all owing to a lack of sufficient income to do so.

      It is well past time to re-introduce values-in-use back into economic theory.

      • February 19, 2017 at 4:06 pm

        I think the point is not so much to focus on the history of economic thought, although that’s relevant too, but to use comparative historic analysis, studying similar events in the past and their outcomes, to try and make sense of what is happening now and gauge its possible consequences. The results of such analysis then to be used as an for input policy making.

  3. February 15, 2017 at 3:57 pm

    Yes. I too have for a long time been attempting to explain my impressions of historical lessons and the weird ideas of equilibrium and often only apparent economies of scale.

    I gave up and camouflaged what I consider the most advanced economics on Earth in an adventure story. Here you will zoom among the stars and also see that the dirty darkness drifting around Earth is little doom clouds of pollution posing as profit.

    intro … http://zerowastenews.org/chapters-web/Pacifica-ch0.html

  4. February 15, 2017 at 5:55 pm

    Yes, mainstream economics is a waste of time. But what’s worse, the faults of economics in combination with its influence on policy making block society from effectively using its productive potential to address its ecological, economic and social problems. Society can afford groups of economists conducting pseudoscience in the academy, though of course the money and intellect going into that effort would be spent better on other endeavors. But society cannot afford not taking effective action to address the major environmental, social and economic problems that threaten present and future generations. And it’s economic dogma – reducing the role of the state, regulation and taxes, perpetuating a monetary system in which commercial enterprises are allowed to create money and reap the profits, and so on – that keeps society from doing so. That is the most important reason why the immovable, indifferent, solid, permanent wall the author speaks off must be tumbled.
    And as the commentators say, a new economics should make historical analysis a key tool. Forget about modelling, also about agent-based models. The human condition, mind and behaviour are too complex to be caught in models; attempting to do so leads to simplifications that distort reality to such an extent that the outcomes are useless and worse. As is presently the case in economics. Forget about models and go into the real world, past and present, collect and analyze real life data and information, apply social science methodology to improve the validity and reliability of information gathering and to conduct proper analysis.
    For those interested: I’ve written a critique of economics for a broad audience, elaborating on the above, the consequences of the primacy of economics in policy making, and guidelines for improving things. It’s called Crisis, Economics, and the Emperor’s Clothes (2012), and it’s a free download from http://www.new-economics.info, as is a short version, the Common Sense Manifesto. Feel free to download and, if you like the contents, share. With interested lay persons, students and especially, non-economic scientists – the group of professionals best placed to call economics and economists to task.

    • February 16, 2017 at 12:52 am

      Thank you. Have downloaded.

      • February 19, 2017 at 4:00 pm

        Thanks for downloading the book, Larry, hope to receive some feedback in due course. And if you think it’s worth reading, I’d appreciate your pointing it out to others.

      • February 20, 2017 at 12:16 am

        Addressing your earlier comment I will comment on The Emperor’s New Clothes at some point.

        I agree that historical analysis — where there are elements in common (say, for instance, shares in income distribution; or, for that matter, ‘debt loads’ as reducing disposable income shares) — is a critical component of useful policy guidance. This said, what often passes as ‘historical analysis’ in economics often amounts to trying to fit ‘history’ into far-fetched models based upon will o’ the wisp assumptions that ignore actual human and institutional behaviors, so I do not trust the mainstream orthodoxy to conduct such ‘analysis’.

        I see economics much as Weber and Veblen did. And, I think economics is in need of thinkers trained in European sociological methods and research as opposed to American sociological structuralism in most of its forms.

      • February 20, 2017 at 6:47 am

        The history of trade gives insights into how advantages are made and unmade, how traders combine factors not considered economic by today’s economists (religion, military, technology, etc.) to create trade deals, how trade is always about more than winning, and how trade can be a beginning of civilizations (Norse, Russia).

        Yes, economic historians who are economists are generally a waste of time to read. I stick to actual historians who study economics.

        Long ago the German Historical School of social science lost the battle with the positivism social science of Emile Durkheim and August Comte. That victory carried over to the US, where American social scientists used science based on the model of physics to build laws that would explain and predict the future of the “exceptional” (i.e., perfect and guiding light for the world) American society. So, where European social scientists only had to break free of the formal models and axioms of physics applied to human society, American social scientists had the added burden of demolishing American perfectionism before they could free themselves from social physics. European social scientists are moving forward with the project. American social scientists are decades behind. Which explains some of the misunderstandings between American and European social scientists. Economics is a special case here. Economists have yet to generally even acknowledge that social physics is the wrong path for economics. Here even European economists lag in reaching this conclusion.

      • February 20, 2017 at 4:10 pm

        I couldn’t agree more. I never came across the concise term ‘social physics’ before, but I like it a great deal as it underlies all of the mathemagics of mainstream subjective utility and ‘macro’ model making.

      • February 21, 2017 at 5:14 am

        The term was first used in articles August Comte published in “Le Producteur” in 1825/1826. Comte defined ‘la physique sociale’ (social physics) as, “that science which occupies itself with social phenomena, considered in the same light as astronomical, physical, chemical, and physiological phenomena, that is to say as being subject to natural and invariable Laws the discovery of which is the special object of its researches.”

      • February 21, 2017 at 1:07 pm

        Thank you.

  5. February 15, 2017 at 6:01 pm

    Forget about the theory, leave operational systems the same. Change to a more efficient way profitable way to invest. https://medium.com/@kevin_34708/money-with-interest-is-inefficient-not-evil-38adbe3ba44d#.umf1moamp

  6. February 16, 2017 at 10:20 am

    Peter, all your points are valid. But how did we and by we I mean US economists get into this fix? In her book “Origins of American Social Science,” Dorothy Ross (an historian not social scientist) focuses on the history of the disciplines of economics, sociology, political science, and history, examining how American social science came to model itself on natural science and liberal politics. In the use of such models American social science wasn’t different from European social science. In short, this meant social scientists searched for and expected to find universal “laws” or relationships that could be used to clearly spell out cause and effect. They also believed their sciences had to support and were supported by the basics of liberalism – individual rights/freedom, rationality and science over religion, empiricism over magic, and the certainty that technological and political progress are unending. Ross goes on to argue that American social science receives its distinctive stamp from the ideology of American exceptionalism, the idea that America occupies an exceptional place in history, based on her republican government and wide economic opportunity. Under the influence of this national self-conception, Americans believed their history was set on a millennial course, exempted from historical change and from the mass poverty and class conflict of Europe. Before the Civil War, this vision of American exceptionalism drew social scientists into the national effort to stay the hand of time. To create an eternal utopia as an example to the world. Not until after the Civil War did industrialization force American social scientists to confront the idea and reality of historical change. The social science disciplines had their origin in that crisis and their development is a story of efforts to evade and tame historical transformation in the interest of exceptionalist ideals.

    How can the historical changes and upheaval coming via the Civil War and American industrialization be reconciled with the US as the shining light to the world? To this day this question drives American social scientists, including economists. All the American social sciences claim an answer via one theory or another. Sociology in structural-functionalism, Political science in various forms of behaviorism. And, economics of course in marginalism and rational choice. Recently, each of these theories has begun to crack. Now multiple theories compete in sociology and political science. Economics’ is changing also. Perhaps a bit slower than the others. We don’t yet have a clear picture of the new theories in economics. But they’re on the way. Let’s not single out economics as an exceptional or unusual case here. It is generally following the same path as the other American social sciences. In 20 years, it will look very different than it does today.

    • February 19, 2017 at 4:31 pm

      Dear Ken,
      In sociology theories are complementary rather than competing. More important, in contrast to mainstream economics most sociological research is conducted using relatively sound, empirically based methods rather than mathematical modelling based on wholly unrealistic assumptions.
      On the other hand, there are few signs of mainstream economics not budging, whereas even critics of the mainstream continue to be infatuated with and therefore use modelling. Modelling, in turn, is unavoidably linked to unrealistic assumptions, due to the need to simplify reality to make the models work. That leads to comparably distorted images of reality, misinterpretation and faulty predictions as those of mainstream economics.
      Most important, the influence of economics on policy an thereby, how we address our societal challenges is immeasurably greater than that of any other social science. In consequence, the harm caused by the faults of economics is immeasurably greater. For the further elaboration of this point of view I’ll have the temerity to refer once more to my critique of economics Crisis, Economics, and the Emperor’s Clothes (2012), a free download from http://www.new-economics.info. Hope you’ll take a look.

      • February 20, 2017 at 10:19 am

        Frans, economists crave perfection. A perfect economy is without flaws and always leads to the the best of all possible worlds. Economists are charged with and know how to create these. At least, that’s what economists tell everyone. Everything is just decoration after this. Only supposedly unquestionable, absolutely true and universal assumptions fit with a perfect, flaw free economy. At that point empirical observation and learning from experience go out the window. Real people’s lives and concerns also go out the window. Economics becomes the search for a delusion.

        Sociology and the other social sciences are not as delusional an economics. But most still are to an extent. Sociology, for example was dominated by one theory – structural-functionalism (SF) – from the second world war till the 1970s. SF is a conservative theory, assuming the stability of societies through the common structures that fulfill common functions, thus maintaining societal equilibrium and continuation. SF really can’t handle change or uncertainty well. And falls apart in the face of things like social movements and intentional social disruptions about such things as civil rights and inequality. Just as the political structure of the US was shifting to the right SF fell apart in the 1980s. Now there is no dominant single theory in sociology. One of the reasons perhaps that sociology’s work has so little influence outside academia. But even with its mixed up theoretical arrangements sociology is generally more realistic than economics in its assessment of society and recommendations for dealing with social concerns.

        I read your book. The points it makes are all important. The treatment of science is somewhat simplistic and misdirected. But that’s the case with most treatments of science, even sometimes by scientists.

      • February 20, 2017 at 6:13 pm

        Are you aware that your link http://www.new-economics.info is no longer working? I seem also to be unable to re-open my download.

      • February 20, 2017 at 7:27 pm

        Hi Larry,
        No, was not aware the link isn’t working. I’ll try and fix asap. Apologies. Re. the download, wouldn’t know why you would not be able to open it a second time, unless the file got damaged somehow between the first and the second attempt to open. Best may be to try and download again when the site is accesible again. Again, apologies, will inform when things are working again.

  7. Neville
    February 16, 2017 at 10:25 pm

    Absolutely correct. It will be advantageous for all to read Steve Keens books; Debunking economics and; A new economics for the post crisis world.

  8. May 4, 2017 at 2:01 pm

    I cannot agree with Peter Radford. He said “stay away from economics.” Even if this is a warning for students, I cannot think that he was right. Real World Economics should provide an alternative to the mainstream economics. He should have hinted how students can get an orientation to this alternative.

    At this point I agree with Larry Motuz. He put it: “Don’t just talk about changing theory. Change it.” We should not escape from economics. We should pay all our efforts in creating a new alternative.

    Students should know the possibility of the alternative economics. Even if they are still in a formative state, students should learn them eagerly. Only through this narrow trekking route, some of them can be founders of a long waited new theory.

    Study mainstream economics is not a waste of time. Study mainstream economics does not mean to accept it. It is also a basis of go beyond it. Without having a right understanding of mainstream economics, students and heterodox economics cannot overcome it. In this sense, Franz Doorman is wrong when he said that “mainstream economics is a waste of time.”

    Everybody who read this blog must have their own idea on how the alternative should be. Many talk about policies and ideologies. But in order to provide a real alternative to mainstream economics, we should provide a new theory in the main core of economic theory, i.e. from the very basis of price theory. The present mainstream is based on the neoclassical paradigm and the law of demand and supply. We should change this state of economic thinking.

    In my understanding, the new core is already found. We should come back to the classical theory of values. Of course, it does not mean simply return to David Ricardo or to Adam Smith. The right way to restart is to return to Ricardo and start developing it as a modern theory. Ricardo contains many flaws like subsistence wage theory and others. He could not present a complete theory of his cost of production theory of value. Piero Sraffa amended and developed Ricardo but he is still on a half way. We need other principles that Sraffa did not talk. For more details, please read
    The Revival of Classical Theory of Values

    Classical theory of value had an apparent weak point. It was the theory of international values. The latter was a missing link. Ricardo and Marx knew that the classical theory of value must be fundamentally modified, but neither of them could hint any idea of the new theory. That missing theory was now discovered. All sincere economists who seek to produce an alternative economics should learn it. An introduction is given by my paper:
    The New Theory of International Values: An Overview

    Both of my papers are already published as chapters of books, but the draft versions of those are sufficient to know the main content.

    • May 4, 2017 at 5:21 pm

      I am looking very forward to reading your two papers. I got briefly into one.

      My fundamental stance is that equilibrium analysis is the major epistemological obstruction to the further development of economics today. …

      That is certainly one major faux element. All of the equiblibrium analysis within Marshall is based on 1. actors called ‘consumers’ never engaging in budget reformation decisions when prices or the supply of goods changes; 2. a Hicksian limited and unchanging ‘endowment of income’; 3. a confusion between subjective pleasure satisfaction ‘utility’ and beneficial utility, the actual empirical benefits arising to ‘consumers’ from their obtaining or having specific goods, the former ‘utilty as satisfaction’not being a proxy for the latter ‘utility as benefits’ at a level and in a form that may or may NOT bring some ‘satisfaction’.

      Incorporating benefits from consumption as well as incorporating the reality that consumers observably change their budgets as their circumstances, goods prices, and supplies of goods change leaves us without a micro-economics as such, for it means that there are no micro-foundations to micro-economics.

      At the micro-level, and without even taking into account recent works like Kahnemann’s, taking into account the above factors leaves us with constrained ‘ranges’ of possible choices of, say, X and Y goods, that just meet or exceed, say, a daily need, which, over longer periods will tend to a combination of X and Y that meets average requirements or average wants.

      The actors in economics are not ‘consumers-demanders’ and ‘producers-suppliers’. They are, each of them, ‘producers-who-consume’ with what they produce or consume bound in what they are and what purposes are being served by their use of goods. One kind of ‘producer-who-consumes’ is a human being :: a life-form with a basic need to sustain itself, and other needs and wants life-forms have, including meeting their responsibilities to others. The other kind of ‘producer-who-consumes’ is a firm or, so to say, a fictive person whose production, like that of life forms, depends upon what it consumes, and which, in a monetary economy ‘sustains’ itself and ‘grows’ by obtaining monies for what it produces from what it consumes.

      We can have theories about agents as ‘producers who consume’ but we cannot have individual demand curves like Marshall’s or Hicks. This said we can statistically observe how and what income (or wealth) stratified groups get to consume, and, from there, we can certainly constructed a macro-economics more firmly based on observed patterns of use by agents. (As you put it, Keynes was trying to put new wine in old wineskins.)

      [I could go on all day, but won’t. Assad is on the right track and so are you]

    • Risk Analyst
      May 4, 2017 at 5:59 pm

      You have a much more strict interpretation of Mr. Radford’s piece than I did. I see nowhere that he says don’t take any economics classes ever. My interpretation is don’t get an MA or PhD in it. For one, a student starting down that path is just that, a student. He is searching for knowledge and a useful skillset to justify the tuition. He will not have your skillset to put the macroeconomics nonsense he hears into perspective and being young and impressionable, will accept much of what he is told by these experts.

      You seem to believe the students somehow will have prior knowledge enough to pick up heterodox materials somehow in their spare time to do a compare and contrast. They will not have that time or prior skillset. And, the cost in time and money of going through an advanced economics degree to later be able to refute neoclassical economics is huge. Depending on the department, a graduate economics student with a finance emphasis would be required to take classes such dynamic programming and be able to solve Bellman equations. Why should he have to pay that price in time and money so that he later can say the efficient markets hypothesis is wrong. You can say the EMH is wrong without knowing Bellman equations.

      • May 4, 2017 at 8:11 pm

        Much of what you say is true. That said, I was appalled at the astounding ignorance of the history of economic thought by those teaching the subject. There has been no concerted effort to even attempt to understand how the ‘truth’ of what is taught became the ‘truth’.

        Forethought, the original grounding in which rational behavior could be deemed ‘rational’ because it speculated and planned, was cast aside by the ‘utilitarians’ — making ‘reason’ and ‘rationality’ into a logical order bereft of forethought and, thus, rationality. What do decisions lead to in practical terms became a question absent in the theory of the ‘rational’ consumer who, as long as he, she, or it was optimizing while starving to death, going bankrupt, or destroying the foundations for life itself was being rational because he, she, it was being logical.

        Forethought precludes the ignorance of the logical order being necessarily rational also. What economics has left out of the logical order are all of the reasonable decisions anyone with forethought would make even if those decisions are only made speculatively, which, as it happens, is how most practical decisions are made.

  9. May 5, 2017 at 2:01 pm

    This post is partly a reply to Risk Analyst’s post May 4, 2017 at 5:59 pm and at the same time an addendum to my first post..

    I am not sure of the real intention of Peter Radford’s careless announcement. I wondered if his post is a warning for students. So I wrote in a conditional mood “Even if this is a warning for students.” This is my most favored interpretation. Many people who read his post will think that all of economics is rubbish which sometimes contain fatal poison. They will naively think that it is safe to keep away with it.

    If Radford wants to say that it is a waste of time for future students to learn mainstream economics, why did he add some words that there are different strands of economics other than the mainstream? They have some chance to find heterodox economics courses even if it is rare and sometimes difficult to find. If this is rare and difficult, the information they need most is to give some hints for their choice. Radford did nothing and simply said stay away of economics.

    We can make other interpretations. If Radford’s warning was directed to common people who are not economists, is his warning a good one? I do not think so. He wrote: “Too many people are wasting far too much time talking about economists [sic] as if they study the economy. They don’t. They really and truly don’t.”

    This may be true. At the time when the mainstream economics is dominant, majority of people think in mainstream economics. It would be a waste of time. However, is it a good advice for them? If I were he, I would hint that there are other ways of thinking in economics and I would advice them to chose good economists.

    If Radford’s warning was directed to economists, is his warning a good one? If this is the case, Radford is advising that all economists (mainstream and heterodox) should abandon economics and revert themselves to other disciplines if they want to stay academic or seek their profession out of universities. The best expectable effect of his advice (if it has an effect) would be abandon of economics by many heterogeneous economists and majority of mainstream economists would remain intact and continue to preach their economics.

    I agree with Peter Radford that

    But he should add somewhere one more phrase: this is the story of mainstream economics. The trouble with him is that he does not do that. He continues to talk about single economics, as if it is a monolith. He is totally wrong.

    His conclusion at the end of his post reads as the following:

    Even a trained economist cannot arrive at a good knowledge of the economy, if he or she does not study economics of the present and the past. Of course, he or she should do it critically. Is it possible for a lay person (I mean lay in economics) can get a good grasp of economy without studying economics and by studying instead politics and sociology and others? I contend that it is impossible. Peter Radford is fooling economics. He is fooling scholarship. He is fooling people.

    • May 5, 2017 at 2:07 pm

      Let me add the sentences which should appear between .

      The first should read

      economics is not the economy. It is a self-contained set of ideas, models, theories, mathematical intricacies, and axioms, that are designed to provide exciting intellectual sport for those so inclined to busy themselves with such activity. It is carefully constructed to look as if it touches reality. It still contains words that make it look as if it relates to reality. Economists intone cogently about real-world topics. And economists fill all the key policy positions that relate to steering, regulating, and measuring the economy.

      The second should read

      my advice is to study the economy by taking classes in politics, sociology, philosophy, business or organizational theory. Get steeped in information theory. Build those agent based models. Go and talk to workers, shopkeepers, and all the other people in the real world.

      Can someone teach me how to edit the post that I have already posted?

      • May 6, 2017 at 3:23 am

        It seems all parts put between “” is left blind. I am sorry for the readers that I have imposed much trouble in reading my comments.

    • Risk Analyst
      May 5, 2017 at 6:09 pm

      I’m not going to let this go quite yet. Let me provide an example and a quote.

      The example is Tim Geithner. He wrote an excellent book called Stress Test that provides substantial information about his background. He got a master’s in international economics at John’s Hopkins University. Piecing together what he says with a little bit of research and a good guess or two leads me to believe he used Thomas Sargent’s first edition book Macroeconomic Theory and other hard core rational expectations and neoclassical material to learn his macroeconomics. That was his skillset as he later assumed the presidency of the Federal Reserve Bank of NY and became the one chiefly responsible for the systemic risk management of money center banks prior to the great financial crisis.

      Geithner was taught endogenous systemic risk cannot happen and true to his degree, there is little evidence of focus he gave to the banks as they bulked up their derivatives exposures. He was taught that the market would take care of itself. I believe in this case, one could argue that his graduate economics degree did more harm than good, just as Mr. Radford argues. Frustratingly, Geithner says that after the market started to struggle, he picked up a copy of Minsky’s book, but it was a bit late for that. His master’s degree had left him with the wrong skillset, and by extension the graduate education he got arguably did more harm than good to all of us.

      And a quote (mentioned in Lavoie’s book Post-Keynesian Economics, p. 3) by Willem Buiter Chief Economist of Citigroup:

      “Indeed, the typical graduate macroeconomics and monetary economics training received at Anglo-American universities during the past 30 years or so may have set back by decades serious investigations of aggregate economics behavior and economic policy-relevant understanding. It was a privately and socially costly waste of time and other resources.”

      • May 6, 2017 at 4:35 am

        Dear Risk Analyst,

        do you think that Minsky’s book Stabilizing an Unstable Economy is a book of political science or sociology? It is a book in economics, even a famous book for some people. A simple fact of evidence is that it was translated into Japanese in 1989.

        What you have told on Geitner must be true. It is true that “his graduate economics degree did more harm than good.” However, your example of Geitner means that it would be much better that Geitner had learned Minsky’s book or any other books which may replace it when he was master degree student. (I am not sure if Minsky’s book (1986) was already published when he was a master course student. So I am talking in a subjunctive mood without determining if it is true or not.)

        What Radford advices is not that Geitner should have learned Minsky but Geitner should not have learned Minsky. For all people (students, lay person in economics and specialists in economics), this is an advice which may leads them astray in a wrong direction. It is highly possible that a bad economics does not harm if nobody learns economic but it does not help the economy to turn better. It is important to distinguish rubbishes in economics and true ones. If you think that there is no such ready made economics, you should search something which may guide you in a better direction when you think economic phenomena. If you are an economist, you should endeavor to reconstruct economics in a right way.

        Radford was too careless or negligent in his advice. He should have thought what meanings and effects his advice may have if he was sufficiently influential. He is at least a regular contributor to the Real World Economics Blog.

        Your quotation by Willen Buiter tells the same thing. It only tells that “the typical graduate macroeconomics and monetary economics training received at Anglo-American universities during the past 30 years or so” were extremely bad and harmful. It tells that it is absolutely necessary to change this state of high learning in economics. But it does not imply that we should abandon economics. It tells that the economics should be reconstructed. Of course, this reconstruction is not easy at all and requires hard, sincere and long efforts. What I am contesting is the idea that leaving economics may turn the situation better. It is impossible.

    • Tatenda Chisadza
      October 18, 2018 at 5:51 am

      Well put Yoshinori Shiozawa, you captured my thoughts perfectly.

  10. Ram
    October 17, 2018 at 9:59 am

    Are you not serious really about theories of economics. How does an economy works without reagent model of economics

  11. Rebeca Justicia
    October 17, 2018 at 1:03 pm

    You must also take ecology 101 and ecological economics. And start realizing that unless we internalize the envionmental impact in the cost of production, we will not achieve the stabilization of climate change that we need to avoid the debacle of the human species. Mother earth will go on without us.

  12. Yok
    October 17, 2018 at 9:06 pm

    Come On People. It’s not as complicated, confusing, unfathomable as all that. It’s exquisitely simple – when the truth runs against the Wealthy and the Powerful, the Wealthy and the Powerful Step on the Truth. Ol Geitner could NEVER have gotten to where he was, if he had read and believed Minsky. You must serve. Economics won’t work unless it will acknowledge the base elements of human nature. All the professors out there, the coarse and crude truth – you’d rather have your position. Somewhere along the way you compromised your discernment for success. After all, the money you make and the positions you hold, are a proof of your success. If you serve the interests of the Wealthy and the Powerful, they reward you. That’s True throughout the economy, and certainly true in higher learning. College professors certainly aren’t radical rebels. They do well serving. Only a small number in such a charged area as economics serve truth. Economics, wealth and power, dividing up the pie; look for the self-serving lies. 17 candidates, 1 remedy for a weak economy – cut taxes for the wealthy. One Big Lie. Not One economist challenged. At least not one in the media.

    • October 18, 2018 at 4:09 am

      Yok, I’m with you but you make one error, in my view. The “good” economists don’t serve truth. They serve the opposite, the multiple possible truths that make up human reality. It’s the “service” economists who serve truth. They serve it by asserting they know what it is, and that it’s consistent with the needs of their clients. The genuine economist (or any social scientist) accepts that there is no final truth, only facts created based on the approaches taken to examine the events and actors around us. This allows these social scientists to look for and point out where and why the truth (facts) of the dominant groups are incomplete or mistaken, compared with multiple other observations. We want to expand the picture, not limit it to one version of truth, useful to some, less so to others.

  13. ecatin
    October 18, 2018 at 2:12 pm

    All those things you say economists should be doing. They are doing it. Btw you forgot randomized control trials. You really should go out and read more about what economists are actually doing. That research has shifted away from mathematical models to data (perhaps to a fault) and context. Your comment is about 30 years late.

  14. Dr. Abhishek Bhatia
    December 20, 2018 at 3:08 pm

    People who have taken a cynical and skeptical view of economics usually sound this way. Economics itself is framed around telling the student on how to begin thinking. The real world is way too complex and doesn’t make sense when tried to be compiled as a 500pg study textbook taken over a semester. Or even for that matter a masters level course with many more aspects to be covered and no time to delve deep into any one aspect and flourish. All the cautionary advices come along with the textbook. It gives a starting point of a simplified world which then the student is free to explore and incorporate and extrapolate reality and fit into the expanded models. So instead of speaking ill of the field, it would be better that you suggest what should students and economists and the government do otherwise.

  15. Craig
    December 21, 2018 at 10:37 pm

    Economic tweaking and tinkering when paradigm changing policies and wise and ethical regulations are actually available. And after understanding such policies and regulations it is actually an unethical act to advocate palliatives instead.

    • Craig
      December 21, 2018 at 10:39 pm

      Make that: Economic tweaking and tinkering when paradigm changing policies and wise and ethical regulations are actually available is stupid. And after understanding such policies and regulations it is actually an unethical act to advocate palliatives instead.

  16. Larry Motuz
    December 23, 2018 at 5:12 pm

    believe actual benefits-from-use underlies all consumption activity. Classical economists called this value-in-use. That’s to say that all of them, explicitly or not, believed that valued goods had exchange value because and only because they were useful to someone in at least one way (if not also in many different ways).

    William Stanley Jevons once said that “Consumption is Everything.” He appeared to mean by this that ‘economics’ was about how people use things (and exchange things) to obtain benefits from those exchanges and the uses they put those things to. Though I profoundly disagree with where he went with this, and especially with his and all subsequent mathemagics of ‘utility’ when taken as ‘benefits from’ OR satisfaction with a purchase’ or ‘benefits from’ OR ‘pleasure associated with’ a purchase, his insight that consumption was everything and defined all economic activity (also providing the why for exchange) was seminal for me.

    The subject of economics is how people use things to provide for their needs and their wants.

    In brief, all economic activity is by agents who view things as useful to themselves directly or indirectly. I’ll note here that monetary exchange is useful because a common unit of account simplifies trade in goods or services. [I’ll get back to this later, Gary, for it’s also the case that unrestrained monetary exchange can be detrimental to actually providing for many things including the ties which hold communities together. This happens when the unit of account becomes a somewhat transcendental medium of value for all human activity, displacing many other necessary human values essential to preserving our identities as human beings.]

    The agent in economics is always a consumer: a user of goods. That’s true whether that agent is a life form or not: a person or a corporation as a legally fictive person. And that’s why I’ve abandoned the very separate theories of the consumer and the firm as self-evidently false. This is not an axiom.

    Rather, it’s an empirical observation that there are no agents in economies of any kind who are not users of goods to produce direct and/or indirect benefits for themselves.

    That’s my starting point for a very different economics than modern economic theory provides.

    Modern economic theory contains demand curves for what’s said to be ‘consumers’ as people, never firms. [One must also assume declining marginal rates of total utility and that prices equal such declining rates. Since this mathematically means that increments to utility are always larger than such marginal rates, a surplus of satisfaction is a characteristic of this kind of thinking and of the mathematical functions implied.]To derive such a ‘curve’ one must assume that people never change their budgets when the prices of goods change. One of the most stupid things about modern economic theory is this idea that the budget allocation changes but the budget doesn’t.

    That’s because economics does not have a theory of budget formation for persons or firms. Instead, it presumes that people as consumers simply stick with the budget they arrived at ‘somehow’ (economists endow ‘consumers’ with initial and unchanging budgets in all current textbook theoretics), so ‘consumers’ are allowed to only shift how they spend this budget between goods in a basket if they are faced with price changes. and that they simply shift the composition of the basket they purchase.

    None of the micro-economic theory of the consumer contains budget formation decisions. Whereas a firm would ask itself what budget it have to have to get a set of inputs essential to production at different prices for those inputs, modern theory about consumers says they don’t ask themselves this question at all. This means, practically, that if prices go up, less of the existing budget will be spent on the good at higher prices than at lower prices. This so-called ‘law of demand’ follows from the assumed fixed budget of the consumer.

    I blame Alfred Marshall for this fixed budget nonsense. If he had said, er, “Of course, a consumer could change the budget decision itself even in the moment, he or she might not act in this way” but, well, that would have been the end of the never-observed-in-reality ‘demand curve’ with its law of demand.

    Marshall was brilliant in obfuscating the issue that a consumer might immediately decide to budget more for some goods when their prices were higher and budget less when their prices were lower if nothing else was at stake. He partly rescued himself because he allowed for satiation in people’s demand for most goods, except money and near monies (near monies being goods that can be liquified easily into money at minimal transaction costs).[ And he needed a subjective to a particular consumer constant marginal utility of money in order to set prices equal to the marginal utility of the good in question: marginal utility being benefits OR satisfaction) throughout his blackboard analysis. This is somewhat hidden in modern analysis, and especially in macro-economic theory based on a ‘representative’ consumer. [But Marshal was just being consistent for he regarded his marginal utility as an objective measure subjectively defined by each consumer, so the marginal utility of money had to be an objectively measured subjectively defined as a constant for each consumer taken as an individual.]

    So, in my framework to consume is the use a good or service to obtain a benefit which flows from that particular use. Also, if something has no value-in-use that provides some kind of benefit there is also no value-in-exchange. That’s true in both non-monetary economies and monetary ones, for what is useless to anyone for any purpose commands no value as a traded good.

    And that’s why I reject the theories of the consumer on one hand and of the firm on the other. Instead, I say that every agent of economic activity is a user of goods to obtain objective benefits from the uses they put those goods to. Though I do distinguish between those who produce goods or services for sale and those who purchase these, I refer to all economic agents as ‘consumers’. Firms consumes goods to obtain the direct benefit of producing other goods :: services themselves being goods :: to sustain themselves through revenues from sales at mark-ups (over total costs) that sustain the firm by both covering its operating costs and providing profits to provide a cushion for variability in revenues, and to provide for growth if such growth is sustainable. [I’m not talking about artificial market growth through acquisitions here, for that often adds little to the economy but a lot of useful economic power to the acquirer.]

    Adam Smith’s argument that persons pursuing their own self-interests create the Wealth of Nations –in terms of what they produce and whom they purchase from– has merit only when it is acknowledged that a framework of law and regulations under the law bridle how that that self-interest is pursued. Unbridled self-interest is has nothing to do with any of Adam Smith’s writings. Unbridled self-interest is generally not allowed in law, for, if unbridled, what arises leads to 1) all manners of fraud that so raise the transaction costs of exchange that they 1) stultify the growth of markets essential to economic growth, 2) impede innovation; and 3) take no account of the public costs of dealing with harmful direct and indirect operational after-effects, thereby ignoring the real costs that arise from those operations and impeding efficient production. These demerits, so to speak, can lead to death, disease, temporary and long-term disabilities, other injuries, infertility, miscarriage, fetal harm, the loss of habitat, biological diversity, chaotic climate and global climate change, especially warming, and the like.

    Thus, to properly understand Adam Smith’s invisible hand, one must understand that it exists and can only exist within a superstructure of laws and moral and ethical traditions which bind all economic agents all of the time. Otherwise, per Joan Robinson, the invisible hand is more likely to strangle the economy and most within it.

    I do believe that mark-ups enter into product prices, and, certainly in his day, those mark-ups were constrained by competition between producers, wholesalers and retailers. Many a classicist believed in a natural rate of profit [er, mark-up over costs], They thought so because they felt that competition using the common capital equipment of industry led naturally to this. And, it is true that if the capital equipment used by firms is identical through the industry in question, then the only difference between firms will be how good or bad their managers are. The better managed firms would enjoy higher profits at the same mark-up that left the bad struggling to survive. Over time this would result in mostly well-managed firms. As a thought experiment, this feels right, albeit is has little to do with the practicalities of innovation, geography, varying distance to markets and associated transportation and distribution costs and all manner of things which, in the real world, ‘interfere’ with the thought experiment. Nor does it allow for acquisitive market power, artificial or otherwise, which can allow for cut throat pricing below costs to drive out all and sundry competitors to then raise prices.

    • Craig
      December 23, 2018 at 6:30 pm

      I basically agree with what you say, particularly that the purpose of production is consumption, it’s just that intelligently and insightfully changing the systemic realities of monetary austerity and individual income scarcity into abundance of both, and chronic and erosively cost inflationary into beneficially price deflationary with a new paradigm of Direct and Reciprocal Monetary Gifting….almost entirely moves us on from debate about it and also enables us to regulate economic vices and virtues via lower but more effective rates of taxation.

  17. December 24, 2018 at 11:54 am

    Peter, excellent article. Just doesn’t go far enough. Let’s take your conclusions further. “Economics, in its various mainstream hues, is profoundly normative. It is an attempt to dictate the ways in which we order our economic activity. We know this from the way in which it treats collective action. It disallows such activity in its every recess and crevice. It is totally committed to the individual being the core agent. And that individual is presumed to be inhumanly rational.”

    First, it’s not just mainstream economists who want to control the economic order. Each theory pursues this goal. Some more aggressively and routinely than others. Second, while wanting to put themselves in charge economists are amazingly dimwitted when it comes to missing what’s in front of them. For example, Adam Smith writes about common practices of his time, using this to justify certain general conclusions about economic actions. What Smith misses is that the society and culture he wrote about and admires was not an accidental occurrence. It is created by powerful groups, with clear points of view and cultural priorities. One of these is the capitalists. For over 200 years before Smith published “Wealth of Nations,” this new social class establishes its title to a full share in the control of the state. In its ascent to power, it broke down the barriers which, in all spheres of life save the ecclesiastical, had made privilege a function of status, and associated the idea of rights with the tenure of land. To achieve its end, it effected a fundamental change in the legal relationships of men. Status was replaced by contract as the juridical foundation of society. Let me put all this in a slightly different way. Before the advent of the “capitalist culture, people lived within an economic order in which the effective social institutions, whether the state or the Church or the guild, judged that activity by criteria derived from outside itself. They did not regard the individual interest as conclusive. They refused to accept material utility as a valid justification of economic actions. They sought to impose, and they enforced, a body of rules upon economic life of which the inner principle was consideration for social well-being taken in the context of individual salvation in the next life. To this consideration they were prepared to sacrifice the economic interest of the individual on the ground that by so doing they were assuring their heavenly destiny. Something akin to the capitalist spirit is present in Europe as far back as the Roman Empire, but it did not set the tempo of economic life. People note it as an exception rather than as a rule. People appreciate wealth; but the search for it had not come to occupy the dominating position that is characteristic of the nineteenth century. Social organization is not yet rationalized upon the basis that this search was the true way to satisfy the nature of man. The capitalists changed all this, and they invent liberalism to explain their actions, and justify them. Smith should have spent more time on his homework. He misses the entire ethos capitalism creates, to free the owner of the instruments of production from the need to obey rules which inhibit full exploitation of them. In other words, a society in which the potential for profit from capitalist investment is unlimited.

  18. Roberta
    October 22, 2019 at 9:39 pm

    I stumbled upon your article, because I asked Goggle if Economists were a waste of time. I had just came upon an article about the rent control law just passed in California, and there was a quote from an economist who began to sprout the downside and ugly results rent control will have on the future housing crisis here. I immediately asked myself, what the check do they know, and how do they know this , and now I’m in full learn mode as to why we bother to listen to these people, what clot do they have? So I love your article, because it let me know that that thought I had wasn’t an investigated one.

    • Roberta
      October 22, 2019 at 9:42 pm

      Sorry about the couple of misspelled words. I meant heck and uninvestigated.

  19. Yoshinori Shiozawa
    August 23, 2020 at 7:39 am

    Again on Peter Radford’s article “Economics is a waste of time”

    He may have changed his opinion but I post this comment, because it has a more general significance than as a specific comment on the article.

    Peter Radford’s practical advice was:

    In the case of economics go and study the economy instead.

    The central problem is: Is this possible?

    Economics is a framework when we think of and study the economy. Whenever we think of any economic phenomenon, we think of it using some terms of economics even it they are very primitive ones. To study the economy with tabla rasa in mid is a sheer fiction.

    Economists study economics when they feel in the latter dissatisfaction. Conscious economists study economics in order to remake economics. We cannot make science from nothing. All scientific endeavor is to repair a ship off the ocean (Neurath’s boat). Economists as a part of scientists cannot escape from this dilemma.

    Here is one of Neurath’s texts:

    We are like sailors who on the open sea must reconstruct their ship but are never able to start afresh from the bottom. Where a beam is taken away a new one must at once be put there, and for this the rest of the ship is used as support. In this way, by using the old beams and driftwood the ship can be shaped entirely anew, but only by gradual reconstruction. (cited from Wikipedia “Neurath’s boat” in Wikipedia.)

    This does not deny that economists study the economy. Economics is a science that has its object to study. This object is the economy. To study the economy is the main objective of economics. However, if there is no tabla rasa, our efforts necessarily lie between economics and the economy. We study the economy, using economics. Let us call it economics I. When we finds something unsatisfactory or contradictory in economics I (now mainstream economics), we try to re-build economics: we break down economics I and build economics II (now heterodox economics). We try then if economics II works well in interpreting or studying the economy with a new view opened by economics II. If economics II is not satisfactory, we must try to build economics III. This process goes on for ever.

    If we understand the nature of economic research (study of economics and the economy), we must not imagine that we can be free from past idea of economics. Without having a new framework, we are obliged to think in the old framework even though in most cases we are not aware of it. This is the reason why John M. Keynes warned us at the end of his book The General Theory of Employment, Interest, and Money (1936) in this terms:

    But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

    It is good to find dissatisfaction in existing economics (economics I). But we must endeavor to build a new economics (economics II), without which we are obliged to think in the old framework.

    A simple litmus paper for the moment as to whether you are thinking in economics I or not is to check if you believe the law of demand and supply. If yes, you are still trapped in the magnetic field of neoclassical economics. See Shiozawa 2017 An Origin of the Neoclassical Revolution: Mill’s “Reversion” and Its Consequences, Chapter 7, pp.191-243 in Shiozawa, Oka and Tabuchi (eds.) A New Construction of Ricardian Theory of International Values, Springer. You can download the sencond draft of the paper here.

    • Craig
      August 23, 2020 at 5:00 pm

      “so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”

      Precisely. Because ideas rule men’s minds, and particular ideas like paradigms which are single integrative concepts that define and re-define entire patterns are the most powerful such ideas.

      Finance dominates economics. If you want to change economics awaken to the current monetary and financial paradigm and find its new one. Do this by becoming aware of the signatures of historical paradigm changes and apply your thinking on that search thusly.

      • Yoshinori Shiozawa
        August 24, 2020 at 2:44 am

        Have you reflected on my litmus paper test? What was your result?

  20. David Bower
    October 7, 2020 at 7:17 pm

    Why do economists always imply that economic growth (in GDP for example) is always required for a healthy economy? With a constant growth rate, our finite world will be overwhelmed (if it isn’t so already). Is it possible to have a healthy economy that is stable, i.e., in a steady state? If so, how can a healthy steady- state economy (for example, with zero population growth) be achieved?

    • LarryMotuz
      November 4, 2020 at 4:35 am

      This is not a reply to David Bower but to Yoshinori Shiozawa.

      I have read your paper and like it.

      Might I suggest that you continue to focus on the discontinuity in the thoughts of the subjective utilitarians of the 1860s and 1870s relative to that of their predecessors, but also alter you focus to examine the forces prices exert on budget formation decisions in monetary economies. I can explain that further if you’d like. Ask yourself if the work of Isnard or Cournot depended in any way on subjective utility. (Ans: NO!) Go from there.

      I’d like to write you at some point. Please show me how to..

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