Home > Uncategorized > This intellectual cult threatening us all

This intellectual cult threatening us all

from Edward Fullbrook

Determinism, the idea that everything that happens must happen as it does and could not have happened any other way, and atomism, the idea that the world is made up of entities whose qualities are independent of their relations with other entities, are fundament components of classical mechanics. Atomism is also central to the concept of mind developed in John Locke’s An Essay Concerning Human Understanding, published (1690) three years after Newton’s Principia. Locke’s general conception of the human mind became commonplace among 18th-century philosophers, so when Adam Smith came to write the foundational text for economics, The Wealth of Nations (1776), he had the example not only of Newton’s material atomism, but also of Locke’s extension of it to an altogether different area of inquiry. If atomism could form the basis of a theory of ideas, then why not apply it as well to a theory of human beings?

Of course Smith did not limit his vision of economic reality to what could be seen through the metaphysical lens of classical mechanics. But a century later the founders of Neoclassical economics did exactly that and even boasted that they were doing so. Their justification of course – and it was a plausible one at the time – was the enormous success that exclusive devotion to this approach had yielded in physics. In time, especially from the 1960s onwards, undivided allegiance to this determinist-atomistic narrative became, with few exceptions, a basic requirement for making a career in economics. 

History, however, has shown that there was a great irony in economics’ decision to become zealously fixated on taking this particular approach toward economic reality. In the same decades that Neoclassical economics was being created, physics was moving rapidly away from its insistence upon the determinist-atomistic narrative and towards narrative pluralism. The achievements resulting from this opening up of physics to other narratives have been even more spectacular than those that came from classical mechanics. Without that intellectual liberation, human reality would be radically different from what it is as I write.

But economics – except among a now widening fringe heavily supported by the young – remains locked in the same narrative dogmatism from which physics escaped a century and a half ago. Meanwhile economic evolution has continued. And as the gap between economic reality and the Neoclassical portrayal of it grows ever wider, Neoclassical voices become shriller and their arguments, when placed within the context of the real-world, ever more farcical. Understandably in self-defence, but shamelessly and ultimately at great cost to humanity, economics in its traditional centres moves ever further away from the ethos of science and becomes ever more ruthlessly devoted to scientism.

This book, against the background of modern physics’ narrative pluralism, considers the foundations of the single narrative path along which mainstream economics has for so long travelled and the increasingly bizarre narrative to which it has led. As Einstein said, “It is theory which decides what can be observed,” and as history’s decades pass, what Neoclassical theory enables us to observe becomes less and less, until even colossal economic events on the eve of their happening go unnoticed. Whereas the Global Financial Collapse of 2007 was foreseen years in advance by Baker, Borio, Godley, Hudson, Keen, Pettifor, Richebächer, Roubini, Shiller, Soros, White and other economists not circumscribed by Neoclassicalism, its approach right up to the day of its happening was unobserved by those who were. Meanwhile the economy’s death threat to the ecosystem remains for the Neoclassical mainstream an irrelevancy, as do the enormous upward redistributions of income and wealth undermining society’s fundamental structures and now giving rise to Trumpism and the new fascism in general. Scientism is always a farce, but in this case it is one leading humanity towards devastation. We, economists and non-economists, urgently need to understand this intellectual cult threatening us all.

  1. robert locke
    November 6, 2017 at 9:52 am

    I, as an historian, have had two things to say to people on this blog, since, at your invitation, I joined in in 2010. One, which is the subtitle of Appreciating Mental Capital in the WEA ebook series. “What and Who economists should also study” is that people who are interested in economics needs to study people actively engaged in the economy; instead they are ignored, unless, inadvertently, they are people in the past before the institutionalization of economic studies in academia began. This groups includes German historical economists, e.g., Schmoller, Weber, Sombart, etc. whatever their fame, who did not actually work in finance, commerce, or industry. They, like the neoclassical group, were “observers” not doers.

    The second thing I have said is about tacit as opposed to explicit knowledge/knowhow. The economist observer in the neoclassical vein made explicit knowledge their goal, with the prospect of scientifically managing the economy. This body of explicit knowledge has failed in this object, as you so rightly stressed.

    But tacitly acquired knowledge, the neoclassical economists have ignored, too, since so much of it can be acquired from looking at people who actually worked in the economy. A lot could be learned about them from historians, who are interested in people not economists, but the way economics was institutionalized led to the education of economists who, despite their discontent with neoclassical economics, are historically illiterate. Most of the argument on this blog is about explicit knowledge. We haven’t even tried to (re)introduce an historical consciousness (which means about those engaged in the economy in their individual and social context) into our awareness.

    • November 7, 2017 at 4:28 pm

      Robert and Edward:

      Does the reality of “competitive capitalism,” the daily lives of those living under the idealistic words “free markets,” I’m thinking now of the the business people themselves (then: the men) ever penetrate academic economics, CNN or Fox News?

      In doing some research on the realities from an earlier Gilded Age of American Capitalism, very late in terms of economic evolution, just before World War I, I finally got around to reading Woodrow Wilson’s “The New Freedom,” an account of his 1912 successful campaign for the Presidency in a fractured three way race, at the peak of the insurgent “Progressive Movement.” You can find it online here: http://www.readcentral.com/book/Woodrow-Wilson/Read-The-New-Freedom-A-Call-For-the-Emancipation-of-the-Generous-Energies-of-a-People-Online

      This may be WW at his best, though still ever the Victorian Southern tinged, moralistic American “gentleman,” sharing his campaign stories of all the small and medium sized businessmen who would come to him, afraid to speak in public, and privately tell him of the horrific tactics that the big economic sharks directed against them: economic blackmail.

      I suppose we hear this aspect today from writers like Michael Lewis, who gave everyone a heads up for 2008-2009 fiasco in his “Liar’s Poker,” introducing us to the “Human Piranha” and the expression “Rip their faces off” (the customers of Wall Street, that is) …and he continued this fine muckraking tradition in “The Big Short” and “Flash Boys,” the last book of his that I read.

      There is so much brutality hidden from the public’s eye under the glory term “free markets,” and by its idealizers, the Right and the Libertarians, so much that doesn’t seem to factor into the dominant still Neoliberal paradigm and its academic defenders and enablers. Women are now boldly telling their version, at the intersection of gender and power inside the business world, and it is not pretty. Something similar is missing from political perception from the competitors pushed under, often bought out or off, and locked into non-disclosure agreements.

      • robert locke
        November 8, 2017 at 3:54 pm

        In line with your research into the gilded age, read Vernon L Parrington’s Main Currents in American thought, which won the Pultizer Prize in History 1927. It was the text I used in American intellectual history in the 1950s. Everybody stopped reading Parrington in history, when the robber barons of the gilded age were turned into the management heros of American wealth creativity, a la Alfred D Chandler Jr., The Visible Hand, which won the Pultizer Prize in history fifty years after Parrington’s (1977). Between these two books you’ll find a complete transformation of the American mind. Parrington on the Gilded Age, vol. iii, might be old fashioned history, but it is the sort of book about American civilization that needs to be written now.

      • November 8, 2017 at 4:40 pm

        Agree Robert; during a brief stint in graduate school in American Studies, in the 1970’s one of the faculty dynamos was very down on what he termed the overly simplistic Parrington narrative, I remember that very clearly, and he was very much, instead, into Perry Miller.

        As I’ve come to learn much later, and incorporated into some of my longer essays (“Sinners in the Hands of an Angry Market” {2010} Miller actually was closely attuned of the power of capitalism to undermine even the most tightly woven of religious systems, albeit one that lived in tension from the start with “trade” and growing secularism. He traced the crablike flow of history, none dare call it “progress,” as behind their backs and against their divines’ wishes, trade and commerce slowly transforming the Puritan Commonwealth on the Hill into merchants and manufacturers deeply complicit with slavery. Of course some of the old Puritan spirit fed into the Abolitionists like William Lloyd Garrison, and if David Reynolds great bio is right, into making John Brown the last of the old Puritans.

        Perhaps this flow of thought, bowing a bit to Perry Miller, can help us today to see the inverse mirror image of globalization in the strong green progressive de-centralized reaction, it’s grow-your-own, farm to table back to the land, small is beautiful orientation. However, some of this movement is so detached from the flow of politics that it has a tough time comprehending political actors like Yanis Varouvakis…who otherwise might be allies…

  2. Frank Salter
    November 6, 2017 at 1:00 pm

    While said in the context of the nature of capital in production functions, Joan Robinson’s 19 53 words still ring true — ‘Before ever he does ask, he has become a professor and so sloppy habits of thought are handed on from one generation to another’.
    Nothing could be truer! Has anything changed in some six decades of economic thought?
    Is it possible that by demanding that they, who claim to be practising science, should actually be judged against the demanding requirements of the scientific method? Would reiteration of the fact that neoclassical hypotheses fail to achieve the status of theory and therefore must be declared invalid? Partial validity is not an option! Ultimately valid theory will prevail.

  3. Thornton Hall
    November 6, 2017 at 1:09 pm

    How can you be so smart about the history of science, and yet…

    One narrative? Two? Will one hundred narratives transform biology into physics?

    Darwin superseded Newton in all life sciences. If we actually wanted to fix economics the first thing we’d do is kill all the physicists and hire biology professors.

  4. Alan
    November 6, 2017 at 3:45 pm

    I’m not sure why you are tossing in Adam Smith in here. For a detailed account of Smith’s social science, which is at odds with the determinism and atomism you link to him here, see Chapter 2 in Samuel Fleischacker’s On Adam Smith’s “Wealth of Nations”: A Philosophical Companion.

  5. November 6, 2017 at 5:51 pm

    Edward, I am fully enjoying your book, a fine contribution to the much neglected and disrespected history of economic thought.

    Long experience has taught me that all current affairs concerning the United States are only partially understood unless the elephant in the room — imperial predatory corporate capitalism — is fully acknowledged, its pernicious role recognized, and its inherent qualities of instability, inequality and unsustainability made transparent. The century-and-a-half evolution of orthodox (neoclassical) economics must be seen for what it is: the intellectual cover for this; the design, manufacture, and donning of the elephant-emperor’s clothes.

    Without these understandings I believe that changes in the economic and political orthodoxies are mere tinkering and that reforms will continue to fail. We likely are headed for either full-scale collapse or nationwide revolt. In either, many people will be harmed.

    There’s nothing wrong with “determinism” except for the “ism”, which coverts any good idea into a quasi-religion (e.g., scientism). Cause-and-effect is a partial analysis with conditional results. Perhaps such analysis can be useful in limited situations, where the conditions and limitations are fully transparent and understood.

    That said, partial deterministic analysis is of limited use in studying life systems, including human life systems, which ought to be at the center of proper economic analysis.

    According to biographical statements attributed to him, Einstein self-identified as a determinist. This belief likely accounts for much of his criticism of quantum mechanics (see, for example, Paul Halpern’s book, Einstein’s Dice and Schrodinger’s Cat).
    “Atomism, combined with determinism and the worship of individuality, inevitably marginalizes, dismisses, and disrespects all forms of life and of cooperative community.

    The technical critiques of the fraud that is orthodox economics all are necessary and right-on. But we need at least to plug up the trunk of the elephant or it will hose us all.

  6. November 7, 2017 at 1:46 pm

    Heterodoxy and Pluralism, too, is proto-scientific junk
    Note on Edward Fullbrook on ‘This intellectual cult threatening us all’

    Edward Fullbrook summarizes: “Locke’s general conception of the human mind became commonplace among 18th-century philosophers, so when Adam Smith came to write the foundational text for economics, The Wealth of Nations (1776), he had the example not only of Newton’s material atomism, but also of Locke’s extension of it to an altogether different area of inquiry. If atomism could form the basis of a theory of ideas, then why not apply it as well to a theory of human beings?”

    Joseph Schumpeter characterized Adam Smith correctly as storyteller: “… in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.”

    In fact, Smith is the founder of economics as narrative or soapbox rhetoric or plain sophistry or sitcom entertainment. With Newton as the beacon of science before everyone’s eyes, 18th-century philosophers and economists were seen for what they were: scientifically incompetent blatherers who cannot be taken seriously.

    This lead to a change of rhetoric in public discourse. Locke and Smith, among others, mimicked physicists without ever understanding what science is all about. This is how the so-called social sciences became what Feynman famously called cargo cult science: “They’re doing everything right. The form is perfect. … But it doesn’t work. … So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”

    Understanding nothing, the fake scientists of Political Economy took determinism as the characteristic feature of science. This was a rather silly methodological mistake because it was long known that determinism does not apply to human action: “The bifurcation of motion into two fundamentally different types, one for natural motions of non-living objects and another for acts of human volition … is obviously related to the issue of free will, and demonstrates the strong tendency of scientists in all ages to exempt human behavior from the natural laws of physics, and to regard motions resulting from human actions as original, in the sense that they need not be attributed to other motions.” (Brown) What scientists of all ages knew, the fake scientists of economics simply ignored.

    But the incompetence of the representative economists goes even deeper. What economists never realized is that economics cannot be founded on any assumptions about Human Nature/motives/behavior/action. Economics is not a so-called social science but a system science. There is, of course, no such thing as a deterministic law of human behavior but there are indeed deterministic laws of the economic system.#2

    The state of economics is this: theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.#3 The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong. With the pluralism of provably false theories economics sits squarely at the proto-scientific level.

    Heterodoxy’s crime against science consists in (i) praising the pluralism of false theories, (ii) misleading students about want science is all about, and (iii), the inability since 200+ years to come forward with something better than Orthodoxy.#4

    Economists in their utter scientific incompetence ― right-wing or left-wing does not matter ― always were and still are a threat to their fellow citizens.

    Egmont Kakarot-Handtke

    #1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure

    #2 The existence of economic laws and the nonexistence of behavioral laws

    #3 Economics: 200+ years of scientific incompetence and fraud

    #4 The stupidity of Heterodoxy is the life insurance of Orthodoxy

    • Risk Analyst
      November 8, 2017 at 7:37 pm

      This is a really good post. I don’t necessarily have anything to add, just saying it is very insightful.

    • November 9, 2017 at 9:54 am

      From its indentation of his comment I am not sure whether Risk Analyst is praising or disagreeing with Egmont (i.e. praising Edward’s post). I think I will praise both, though I don’t think Egmont is being very helpful, using his stick rather than the encouragement of a carrot on struggling Heterodoxy.

      I do want to disagree with Egmont’s concept of science. In my experience new theories are motivated by failures in trying to apply old ones. I agree with him, “Economics is not a so-called social science but a system science”. However, there are different types of system science, for the evolution of systems creates new capabilities which change what the latest system is capable of, which in the case of humans is not just biological survival but (via language, i.e. the ability to index, store and communicate information) the formation of social systems. As a biological species humans have developed the feedback capabilities of a PID control system, and Egmont’s “agenda pushers” still subconsciously think that way, but the more grown up humans among us realise that children, men, women and intellectuals tend to have different agendas, which can only be achieved if the intellectuals give way to the needs of the young in the event of conflict. Remember my example of drivers giving way at a roundabout? This, I suggest, is what the pluralism Egmont so despises is really all about.

      • Risk Analyst
        November 9, 2017 at 5:17 pm

        Sometimes a complement is simply a complement. And, somehow you quoted exactly my favorite line in his note mentioning system science. I like arguments well presented whether or not I agree with them, and while I enjoyed his note, I am far more optimistic about the field than he is.

      • robert locke
        November 10, 2017 at 8:06 am

        Dave, the burning issue today is not instituting a systems science in economics but politics, for as Machiavelli said over 500 years ago:

        “There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle than to initiate a new order of things. For the reformer has enemies in all who profit by the old order and only lukewarm defenders in all those who would profit by the new order. The lukewarmness arises partly from the fear of their adversaries who have the law in their favor; and partly from the incredulity of mankind who do not truly believe in anything new until they have actual experience of it.”

        a new order of things won’t be achieved by a group of scientists who can’t even agree on their definition of science. It requires the mobilization of the people, which is why I have always pushed for this blog to investigate the doers and not the scientists in the quest for an economics that deals with the real world.

      • November 10, 2017 at 10:07 am

        Robert, Machiavelli, like Marx, was entirely right about the problem, but telling the people what political and scientific princes wish them to hear has given us the politics we have now. Formulae advocating one thing and mobilising the people to get them to do wrong are not what is needed. What they need is a map and method of navigating which will enable them to get their selves wherever it is they want to go. That needs a Copernican revolution which will change not the reality they see but the way they see it.

        No matter how conscientiously scientists study reality, if they haven’t experienced such a gestalt switch, their disbelief is more likely to hinder than help the having of it. Having had it, my own efforts have gone into map making with the new way of seeing things (i.e. that based on communication rather than force). The Good News is that the differences in the detail of what we see can then be seen as complementary rather than competitive. Because the Copernican revolution is no longer controversial, there is at least a possibility that, in practice, this newer scientific understanding of the facts may prevail.

      • robert locke
        November 10, 2017 at 10:35 am

        Dave,, you are arguing by analogy, which cannot be right. If Newtonian mechanics is right, it cannot be mapped on economics to prove the latter right. That’s Fullbrook’s point. I do not have a proven economic theory, with which to work. I do know that the present economy does not promote the general interest. I think you agree.

        I guess it possible that some theory will explain reality but no consensus has emerged about that and it even took hundreds of years for Copernicus to be accepted. In the meantime, we just wait before we act on consensus. I prefer to give political clout to what President Carter’s labor secretary of labor Ray Marshall called the “unheard voices” of working people in economic matters. When no science is perfect, let the vested interests of all interested parties have a say in outcomes.

      • November 10, 2017 at 3:53 pm

        Robert, I am NOT arguing by analogy, I’m arguing that economics is not right because the economy is NOT a Newtonian mechanical system, but a different TYPE of system: an information system. Whether or not Fullbrook’s logic extends to types I don’t know, but of course you cannot map an apple onto a banana. Given uncertainty about such an object one has to judge whether it is more probably one or the other.

        My examples, then, are not arguments but illustrations. At a macro level the economy is the same TYPE of system as navigation, i.e. a PID servo using information feedbacks in directing (not powering) motion. Illustrating the problem with mistaking the reality of money, if one takes the North-South compass as pointing north when it is actually pointing south, the sense of the feedbacks gets inverted (so our economy is directing less where more is needed, and vv). At micro level the system is demonstrably a system of many-to-many relational databases (transaction receipts and institutional books), for which flow mapping techniques have long been spelled out in SSADM (the systems analysis and design method) .

  7. robert locke
    November 10, 2017 at 5:48 pm

    Dave, I don’t care if economics is a map of a Newtonian mechanical system or an information system. I know, as Marx said, it is an exploitation by the propertied people of the propertyless wage slaves, or as Simone Weill put it, the oppression of the managerialial class, who control the distribution of emoluments, in the managerial hierarchies that have superseded the forest of firms. Politics is the milieu of distributive justice.

    • November 11, 2017 at 9:24 am

      Hey, Robert, I’m on your side! We’re agreed on the problem, but you’ve been pointing to an answer in the German managerial history society has forgotten, whereas I’ve been pointing to an equivalent answer in the information science it hasn’t yet learned. What’s wrong with that?

      Though by nature I may be an explorer, I’ve been nurtured on Christian history. Was not List in the tradition of the wisdom of Charlemagne and capitalism the marriage of Norman piracy to the insane syphilitic lust of a rebellious Welsh Henry? But Charlemagne was in the Christian tradition of the Good Shepherd at the head of human diversity, theorised in 1 Cor 12 as the Mystical Body of Christ. As both a Christian and an information scientist I’m seeing that same human diversity playing out in the growing up of children. Our different perspectives, from different points of view as we grow up, enable us to correct each other – but also to mislead each other, if like children we still think gold beautiful because it glitters. Might it not be easier for the modern world to save face if, rather than repeatedly hearing it has got it wrong, it can latch on to science showing it that money is not a physical valuable but information, recording at one time credit to be grateful for and at another debts which (if we give each other due credit) are capable of being honoured?

      • robert locke
        November 11, 2017 at 2:42 pm

        Right. But the main figures who launched and pushed the new deal legislative programs (Mrs. Roosevelt, Francis Perkins) worked as young people in the slums of New York and Chicago, or both == meaning those that knew about the squalor and degradation of the civilization first hand, turned to practical political policies, to deal with them. Maybe people who study economics should have to do a period of practical study among the downtrodden.

      • November 12, 2017 at 9:21 am

        I entirely agree with this suggestion, though it does suggest politics are to economics as a general practitioner doctor is to a medical researcher. I would go further and require economists to do a George Orwell, not merely studying the downtrodden but living as one of them.

        The problem with that, however, is that what they will see is a problem of physical supply and demand – a lack of involvement in production correlating to lack of involvement in consumption – when the problem lies in a false theory of money leading to centralisation and mismanagement of distribution. The facts of this are obvious on an overview, but the GP-type politicians see only what is in front of them, thus seeing the answer as more jobs and more production, not local (indeed personal) credit facilitating local production as needed, eliminating waste and environmental costs in distribution due to overproduction.

  8. November 13, 2017 at 12:30 pm

    I’ve been exploring Egmont’s arguments above and see what he means about understanding profit, i.e. in seeing its distinctness from production and productivity. But that follows from his unrecognised axiom that economics is a purely monetary system, which from a practical point of view is equivalent to saying that, by the time we get round to consuming anything, it is likely to be second-hand by dint of having been through a wholesaler.

    In the Real World Economic Review I hope most us us will agree the economy is not just a monetary phenomenon, and Keynes wouldn’t have been bothered about unemployment if he had thought it was. I don’t know whether Egmont’s cult of this neo-classical monetary economics cargo is rhetoric or self-deception, but having corrected him several times I do think him thoroughly dishonest to still be claiming that WHAT KEYNES WAS GOING TO DISAGREE WITH is what he believed:


    “The Keynesian Revolution failed because Keynes messed up the move from micro- foundations to macrofoundations.#2 Keynes’ own methodological blunder can be exactly located in the General Theory: “Income = value of output = consumption + investment. Saving = income – consumption. Therefore saving = investment.” (p. 63). Read this in context.

    This two-liner is conceptually and logically defective because Keynes did not come to grips with profit”. Says Egmont.

    It was conceptually and logically defective because it was: because the neo-classicals, like Egmont, had reduced productive economics to the marketing of second-hand goods; and if Keynes was too far in advance of his time to be able to articulate the reason, he nevertheless shows in his theorising that he understood well enough the fallacy in the reasoning.

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