Home > Uncategorized > Modern economics — an intellectual game without practical relevance

Modern economics — an intellectual game without practical relevance

from Lars Syll

mblaugphotoModern economics is sick. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world. Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing. To pick up a copy of The American Economic Review or The Economic Journal these days is to wonder whether one has landed on a strange planet in which tedium is the deliberate objective of professional publication. Economics was once condemned as “the dismal science” but the dismal science of yesterday was a lot less dismal than the soporific scholasticism of today …

If there is such a thing as “original sin” in economic methodology, it is the worship of the idol of the mathematical rigour invented by Arrow and Debreu in 1954 and then canonized by Debreu in his Theory of Value five years later, probably the most arid and pointless book in the entire literature of economics.

The result of all this is that we now understand almost less of how actual markets work than did Adam Smith or even Léon Walras. We have forgotten that markets require market-makers, that middlemen have to hold inventories to allow markets to function, that markets need to be organized and that property rights need to be defined and enforced if markets are to get started at all. We have even forgotten that markets adjust as often in terms of quantities rather than prices, as in labour markets and customer commodity markets, as Alfred Marshall knew very well but Walras overlooked; so well have we forgotten that fact that a whole branch of economics sprang up in the 1960s and 70s to provide “microfoundations” for Keynesian macroeco- nomics, that is, some ad hoc explanation for the fact that a decline in aggregate demand causes unemployment at the same real wage and not falling real wages at the same level of employment …

Indeed, much of modern microeconomics might be fairly described as a kind of geography that consists entirely of images of cities but providing no maps of how to reach a city either from any other city or from the countryside.

Mark Blaug

Mark Blaug (1927-2011) did more than any other single person to establish the philosophy and methodology of economics a respected subfield within economics. His path-breaking The methodology of economics (1980) is still a landmark (and the first textbook on economic methodology yours truly had to read as a student).  

Mainstream — neoclassical — economics has become increasingly irrelevant to the understanding of the real world. The main reason for this irrelevance is the failure of economists to match their deductive-axiomatic methods with their subject.

Within mainstream economics, internal validity is everything and external validity nothing. Why anyone should be interested in that kind of theories and models — as long as mainstream economists do not come up with any export licenses for their theories and models to the real world in which we live — is beyond comprehension. Stupid models are of no help in understanding the real world.

  1. January 5, 2018 at 10:56 pm

    So do we head off around the merry-go-round once again – or can we find somewhere to insert an intellectual ‘piton’ and begin to get off it – and ‘do something’. What do we find wrong that we can right? What/where is the cause of economics’ irrelevance and what, then, could be an alternative methodology, set of axioms, foci, phenomena of interest and so on? So what if we end up with a new unfamiliar nascent discipline. Even economics was new once upon a time.

    • Frank Salter
      January 6, 2018 at 6:59 am

      One ‘piton’ is already in place, but this is still to be fully recognised. But, finally, it will be understood.

      The major cause of economic irrelevance is equilibrium theory. The very concept introduces total nonsense. This has been understood by some — Joan Robinson (Time in economic theory), Douglass North (Economic performance through time) etc. Despite their critical understanding equilibrium persists. It should be dead, but it won’t lie down!

      The alternative methodology is transient analysis. The application of historical time in the mathematical relationships!

      The ‘piton’ for the ‘new unfamiliar nascent discipline’ is already in place.
      It is: Salter, Frank M., “Transient Development”, Real World Economic Review (2017),
      pp. 135–167.

      • Rob Reno
        January 6, 2018 at 4:57 pm

        Thanks Frank, reading your paper now. My background is in software engineering and new technology solutions. Between my wife and I have decades of experience therein. I have questions, but will wait until I thoroughly read your paper. Cheers.

    • January 6, 2018 at 2:15 pm

      What do we find wrong that we can right? What/where is the cause of economics’ irrelevance and what, then, could be an alternative methodology, set of axioms, foci, phenomena of interest and so on?

      Surely Lars Syll does an excellent job of underscoring the fact that economics’ irrelevance is fully due to its lack of correspondence with reality. But what precisely do we mean by that observation?

      Yes, equilibrium models fail to 1) predict economic disasters, and they do not 2) identify initiatives that would prevent their occurrence. But let me suggest that this acknowledgement alone does not give us a truly useful understanding of what the REAL Economy is that we are trying to honour.

      When I refer to the real economy, I PRETEND THAT MONEY DOESN’T EXIST and focus all attention on the productive activities that people carry out every day.

      From this perspective, the “economic growth” that has occurred over the past couple of centuries has nothing to do with the larger accumulations of “money” that people now have possession of in comparison to times past. The fact that our balance sheets and paychecks now exhibit higher numbers is utterly meaningless information.

      What economic growth means from a Real Economy perspective (a money-less perspective) is that the activities of economic participants have changed.

      Two centuries ago, most people (agrarian) carried out the same list of survival-based economic tasks most of the time. But over time new innovations and economic efficiencies have been exploited, making it possible for increasing numbers of people to produce other things of value, like airplanes and cars and communications networks.

      IMO, the ultimate focus, or phenomenon of interest, that Real World economists need to embrace is the understanding that any and all economic prescriptions they might feel inspired to advocate can only be ultimately justified by pointing to how they impact the real economy, the economic activity of human beings, while trying to ignore changes in money flows/distributions as much as possible.

      When money flows/distributions are addressed, it is exceedingly important that analysts not make the mistake of assuming that increasing everyone’s money income/accumulations will improve everyone’s economic welfare by supposedly increasing their purchasing power.

      But that’s not how purchasing power works in a money-based market economy. Increases in purchasing power occur only when gains in disposable income are exceptional. Real World economists need to understand that prescriptions which do not acknowledge this key fact are just as useless as any equilibrium model’s predictions…

      • Frank Salter
        January 6, 2018 at 3:37 pm

        The two examples given, of what equilibrium theory does not, do implies that it does something. The truth of the matter is that all empirical evidence demonstrates that equilibrium never exists. So any conclusions drawn from it are without validity! That economic cycles are the norm is a self evident truth.

        Equilibrium has never nor will ever exist. Harvests fail, manufacturing plants breakdown, storms and floods occur and very occasionally extinction events happen. What chance equilibrium?

      • Rob Reno
        January 6, 2018 at 5:10 pm

        IMO, the ultimate focus, or phenomenon of interest, that Real World economists need to embrace is the understanding that any and all economic prescriptions they might feel inspired to advocate can only be ultimately justified by pointing to how they impact the real economy, the economic activity of human beings, while trying to ignore changes in money flows/distributions as much as possible. ~ James Kroeger

        I am not an economist. I have only recently undertaken an effort to study economics beyond the useless micro-macro taught in undergraduate level and not much more useful graduate level studies. My wife and laughed our asses off at some of the BS taught in her MBA course under the title “managerial economics” that parroted mainstream economics. We knew from real-world experience in the business world that the theory was pure bullshit. That the actual behaviors of the actors in the business/software/technology world were completely divorced from the bullshit theory being taught. All the pretty math in the world is useless if it is unable to quantify the actual reality-on-the-ground.

        I am now struggling to reconcile our experience with some of the claims made herein and in mainstream economics. I am learning a lot and am grateful to all of you for sharing.

  2. January 6, 2018 at 12:00 am

    So let us start with what is required and then imagine the economy.

    A gently declining population fully educated to understand Earth’s needs.

    Earth’s former bounty returns as the gently declining population disturbs Earth less.

    Fun and good health replace profit. What will work be as the smaller and smaller population takes care of the elders yet still wants to travel to the stars? I say blast the elders into space for fun.

    • Rob Reno
      January 6, 2018 at 12:29 am

      Oh gosh Mr. Connelly, that last line is so great, “I say blast the elders into space for fun.” Where do I get onboard?

  3. Rob Reno
    January 6, 2018 at 12:42 am

    I have read minds in the know greater than myself (economists no less) who claim Adam Smith’s most important book was his The Theory of Moral Sentiments, yet it is virtually eclipsed in mainstream economics failed attempt model itself after physics (an intellectual form of P-envy?) by expunging all talk of morals and ethics. One cannot really deal with morals and ethics without doing philosophy.

    The history of science (and economics) will aid in understanding how the field got into its current quandary. An interesting read that makes me see parallels I read today was Stephen G. Brush (1974) Should the History of Science Be Rated X?

    See: http://oregonstate.edu/instruct/hsts414/doel/SB_H_S_rated_X.pdf

    Perhaps the path forward begins by taking both philosophy and history seriously so that a better understanding of how the dismal science become so bunkum that it finds itself in such a state.

  4. Rob Reno
    January 6, 2018 at 2:15 am

    Lars, I believe you addressed positivist methodology in your “On use and misuse …” but for the life of me I can’t find it. Perhaps my memory is wrong, but there is no index and I don’t have the soft copy to search. Can you help out here?

    • Rob Reno
      January 6, 2018 at 3:26 am

      Think I found it (pp. 4-6).

  5. Hepion
    January 6, 2018 at 11:29 am

    Somebody descripted economics as “profession in crisis” in media, I can’t remember who. That was after dismal failure of all economic modeling of Brexit.

  6. Rob Reno
    January 6, 2018 at 7:24 pm

    “Harvests fail, manufacturing plants breakdown, storms and floods occur and very occasionally extinction events happen.” ~ Frank Salter

    In Phishing for Phools: The Economics of Manipulation and Deception Akerlof and Shiller document the _real_ economy and how _real actors_ behave in the _real_ world of the living. (http://a.co/7qpZWQU)

    Unless the opportunistic manipulation and deception, often enabled by and perpetrated with new technologies is taken into account, then all the theoretical superstructure and mathematical modeling is for nothing. We have seen first hand that power, be it political and/or economic, is most often wielded by corporations to enrich their CEOs and upper management and shareholders at the expense of the average worker — the family wage/salary earner, and this in turn is driving increasing levels of inequality destabilizing society. These bad actors don’t give hoot about economic theories except to the extent they can be used as cover by their lobbyists to make sure uninformed politicians rig the economy such that they can continue pursuing their strategy if manipulation and deception for opportunistic predatory profiteering of fools who allow themselves to be phished.

    Where, Frank, does your analytical theorizing address such opportunism?

  7. January 6, 2018 at 8:25 pm

    I can’t say I agree with the title of this post. Modern economics is being played as an intellectual game of hide and seek, but as it is successfully obscuring fraud on such a scale that it is wrecking peoples and the world we live in, it is very far from being without practical relevance. Much the same can be said of James’s perspective here. Money is not irrelevant, because people take it seriously. What needs to be done, Spender, is to broadcast far and wide the truth and the evidence for it that money is merely a credit note: mere information about credit worthiness (not necessarily true) and not stored value. People have been saying this before broadcasting became possible: I’m thiinking in particular of John Ruskin inventing paperbacks in order to publish what in 1864 the fraudsters tried to surpress. This from the Preface to ‘The Crown of Wild Olive’, 1866:

    “It matters little, ultimately, how much a labourer is paid for making anything; but it matters fearfully what the thing is he is compelled to make. … it has not been without displeased surprise that I have found myself totally unable, as yet, by any repetition, or illustration, to force this plain fact into my readers’ heads, – that the wealth of nations, as of men, consists in substance, not in cyphers”.

    But read Michael Hudson on how (before this) Ricardo had left the meat out of his rent and interest sandwich (“How economic theory came to ignore the role of debt”, real-world economics review, issue no. 57, 6 September 2011, pp. 8-11 [but read it all :- pp. 2-24]; http://www.paecon.net/PAEReview/issue57/Hudson57.pdf). Listen to Steve Keen on what happened within a few years of Ruskin: how the neoclassicals eliminated class inequalities by theorising only individuals, i,e, representative agents and commodities. (The IIPP conference, https://www.youtube.com/watch?v=sUEWLqY9DEQ, from 1 hr 23-25, but again, watch it all).

    Having again looked through Frank’s paper, I was enthused by his dimensional theory and accounting for maintenance but I’m afraid he’s still mistaking cypers for substance (signs for meaning) at #4.1 on aggregation: http://www.paecon.net/PAEReview/issue81/Salter81.pdf.
    Above, Frank says “The major cause of economic irrelevance is equilibrium theory. The very concept introduces total nonsense. … The alternative methodology is transient analysis.” He’s so nearly right. Equilibrium is about balances of forces. Transcience is about motion, so it not only involves time but is directional.

    The alternative methodology is therefore steering, in which the balance of forces steering the real economy is set up by the steersman in the monetary economy using the equivalent of compass and sextant and look-ahead to keep correcting the rudder so that the ship stays on course, i.e. at equilibrium with our purposes in a dynamic sense. The crunch is that the economy cannot be aggregated into one big self-steering bullion carrier, for the reality is a fleet of vessels of different sizes all with their own world-changing cargoes and destinations. The only common to them is not even their having rudders but the methods of navigation or driving a car: knowing how to know where you are going and how to enlist the forces of nature to get there. The practical details depend on the vessel or vehicle you happen to have.

    Youngsters seem to want economics to be fun, so let’s hope that IIPP conference goes viral.

    • Rob Reno
      January 6, 2018 at 10:40 pm

      “Modern economics is … successfully obscuring fraud on such a scale that it is wrecking peoples and the world we live in, it is very far from being without practical relevance.”

      This true, and when economists refuse to take responsibility, refuse to be accountable to the laymen asking honest questions by ignoring them, refuse to face the evidence that their obsession with trying to create a useless social mathematics that obscures more than it reveals and actually harms us and our children, then don’t be surprised when the people rise up and tear down such a useless pseudo-scientific edifice. It is not enough to develop obscurant mathematical models divorced from reality. Our children’s very future depends on exposing this naked emperor.

      “Having again looked through Frank’s paper, I was enthused by his dimensional theory and accounting for maintenance but I’m afraid he’s still mistaking cypers for substance (signs for meaning) at #4.1 on aggregation.”

      Are you referring to the fallacy of aggregating individual demand via REH? Could you help o laymen understand this in a way I can explain it to my adult children?

      • Risk Analyst
        January 7, 2018 at 5:49 am

        I have a nice book called A Guide to Post-Keynesian Economics edited by Eichner. It was published in 1979 and was used at my school. It is filled with essays condemning mainstream economics and much of what Lars and others here write would fit in quite well. The point being that decades of iterations of well written essays has not dislodged mainstream economics, and in fact there is now support for the assumption of equilibrium economics, not in the economy, but in how the mainstream seems to have achieved an equilibrium of intellectual control without sufficient challenge. I would not bet on a near term tearing down of this system.

      • Rob Reno
        January 7, 2018 at 6:21 am

        I truly think you are right Risk Analyst. I don’t see this is pessimistic, but rather facing reality. If those who see the problem continue to entertain the illusion of a just-out-of-reach social mathematics — the misguided dream of making a “science” out of economics when it can only be a _social_ science — the are no different nor any better than the mainstream economists who got into this path to destruction in the first place. For when they pursue this chimera they are ignoring morality, ethics, and philosophy and like the blind leading the blind.

        Having raised two young women who are going into science and medicine, we have watched them become mired in the swamp of the Fissured Workplace with its predatory middle-tier layers sucking away any chance of funding their own advanced education. We fund it but get the hell out of this country.

        It is time to start a social movement independent of the economics profession that educates the youth to the perils of leaving economics to the deaf, dumb, and blind economists who refuse to pull their heads out of the mathematical hind ends and take a look at the real way the economy works and how it is not working for the people of society. Our children, their friends, our friends and their children are all discussing this now and they are listening. And soon they will roar.

        The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It
        by David Weil Link: http://a.co/fCG8bma

      • Rob Reno
        January 7, 2018 at 6:38 am

        Risk Analyst, our children grew up fully aware of the predatory abuse of corporatism. Now it is time to weave the rest of the story and create the memes that connect their awareness of predatory capitalism with those who provide its intellectual justification — economists and mainstream economics, including those who call themselves reformers but are reforming nothing in their mathematical hubris. Not all that matters in life and society is quantifiable. My hunch is that those who are pursuing this chimera are philosophical idiots whose only moral compass is self-interest. They are blinded by secular materialism and the false belief that science is the only source of truth.

      • January 8, 2018 at 11:03 am

        Where I wrote ““Having again looked through Frank’s paper …” Rob asked “Are you referring to the fallacy of aggregating individual demand via REH? Could you help laymen understand this in a way I can explain it to my adult children?”

        Google not helping, I take Rob to mean by REH a real economy hypothesis, i.e one into which money doesn’t enter directly, although actually it is being used as analogous to real values in much the same way as the position of the hands on a clock are used as an analogy for time. in that analogy we actually see the hands but don’t notice them, understanding the time their position represents. In respect of Frank, I was not disputing his analogy (his focus on transients and the dimensions of time is important as the equivalent of my drawing attention to most clocks having several hands going round at different speeds), but I’m asking him to look at it again. What happens if the clock is wrong?

        Please reply to this, Rob, so I can know that at least you have read it and it hasn’t got buried as you and Ken exchange opinions at length! (See the third of ‘Guidelines for Comments’ on the right).

      • Rob Reno
        January 10, 2018 at 2:35 am

        REH = rational expectations hypothesis. I’m struggling to understand Frank’s paper (no reflection on him, my limitation, I think). Will look at guidelines, my apologies if I did something wrong.

  8. Rob Reno
    January 7, 2018 at 1:59 pm

    How then is one to navigate being an economist if one is not convinced of its methods and approaches? McCloskey worries about the current teaching of economics and urges a return to a more holistic approach as suggested by Joseph Schumpeter-one that emphasized economic ideas over simply mathematical proofs. She proposes also having much greater training in courses beyond econometrics such as archival research, accounting and experiments. Similarly, renewed attention to the History of Economic Thought. But such widespread revisions seem unlikely to occur anytime soon. How, then I asked does a young person who wants to walk in her freethinking tradition make an intellectual life for himself or herself? Her answer was surprising and delightful for me, given how wildly iconoclastic she has been in her life. By now she identifies as “a postmodern free- market quantitative rhetorical Episcopalian feminist Aristotelian woman who was once a man.” But while she is a radical individualist, always pushing for greater freedom, she also believes in community and has benefitted greatly from those that she has been able to be part of. A serious alternative intellectual life, she suggests needs both individual expression and intellectual companionship. It is essential to make friends, have a loving group of people, even if small, who are intellectual comrades. A lifetime of rebelling and unsettling her past has convinced McCloskey that, as she puts it, “Love is crucial for scientific advance.”


    • Rob Reno
      January 8, 2018 at 6:17 am

      The Golden Rule, which exists in one form or another in all the world’s religions, is the secret incrediant in the recipe needed to reform modern economics. See: https://www.amazon.com/dp/0195110366/ref=cm_sw_r_cp_awdb_t1_qYWuAb9HB2NAQ

      • Rob Reno
        January 8, 2018 at 6:28 am

        In one additional way, the golden rule for Augustine is not restricted to relationships between human beings. It is not that believers should contemplate treating God as they want God to treat them. Rather, they should realize that there is an analogy between the situation in which they bring their needs to God and the situation in which beggars bring their needs to them. He cites the warning about reciprocity: “Whoso stoppeth his ears, saith Solomon, to the cry of the poor, he also shall cry himself but shall not be heard” (Prov. 21.13). Augustine continues:

        That he [God] may own us his beggars, let us in like manner look upon ours; and that we may know what we ought to bestow on our neighbor asking of us (begging alms of us) to the intent that we in like manner may be heard in what we crave of God, we may consider from this, what we would that others in a like case should bestow upon us.[13]

        Thus, if believers desire to have their prayers heard, they must repond to others’ needs as they would like to be treated. (Wattles 1996,71-72)

        Have some economists stopped hearing the cry of the poor?

      • Rob Reno
        January 8, 2018 at 6:32 am

        Reference List
        Social, Economic, and Political Implications

        The golden rule is, first and foremost, a principle in the philosophy of living, expressing a personal standard for the conduct of one-to-one relationships. A Chinese teaching illustrates priority of the personal dimension: “If there is righteousness in the heart, there will be harmony in the home. If there is harmony in the home, the nation will be well governed. If the nation is well governed, there will be peace in the world.” (….)

        In a personal philosophy of living, the golden rule promotes social service, and its most basic systems application is a commitment to social equity. Applications to economic and political affairs extend that underlying commitment. The philosophy of living, in general, and the golden rule in particular, do not offer detailed patterns for social systems, or specific steps for a particular generation to follow toward actualizing ideals. The rule inclines towards peace, but cannot construct proposals for defense and disarmament. When it is clear what military policy is best for political evolution toward enduring world peace, then the golden rule will clearly authorize that as the policy requires. Those whose perspective on economics are clearest can see how to apply the golden rule in that realm. There is just one caveat: the way to apply a moral principle to complex systems is not always immediately obvious. Without wisdom of evolution, moral idealism and fanaticism take bold steps backward. The weakness of much of modern political philosophy is its failure to keep pace with Kant’s appreciation, expressed in his essays on history and politics, of the importance of a gradual and proper evolutionary approach to the ideals of an advanced civilization.[5] Complacent conservatism and attempts at revolutionary social transformations prove equally self-destructive. (Wattles 1996, 173-174)

        What the rule does for systems is to prompt questions that imply norms for systems. In the family, does parental authority degenerate into patriarchy, violating the equality of men and women and making fear predominate in the child’s relation to the parent? In society are extremes of inequality of wealth and power tolerated? Does talk of “community” along ethnic lines betray human kinship? In business, does the profit motive eclipse the service motive? In politics, does a nation go beyond intelligent patriotism to assert its sovereignty without regard for planetary responsibilities? Does an organization benefit those within and those without? By virtue of its implied respect for human dignity, the golden rule is inconsistent with sexism, nationalism, racism, and mistreatment of others based on distinctions of class, age, condition of health, religious belief or disbelief, level of education, linguistic preferences and so on. The rule illumines the ethics of social systems but its primary benefit is to individuals. The golden rule raises the question; a successful inquiry enables a golden rule explication of the result. That much, but no more, can be expected of a moral principle. (Wattles 1996, 174)

        [5] Such an evolutionary perspective does not, of course, require blindness to symptoms of civilizational decline; but decline does not go on forever. Sooner or later we will find the inspired leadership and teamwork to reorient our planetary course, and who can say whether that reversal is not already under way? It is no simple matter to generalize regarding the countless ups and downs that simultaneously and continuously reshape the present and future. During years when I taught world history, I arrived at the conviction that history is like a decathlon in which the power of love competes with the forces of self-centeredness and materialism and destruction; I am not in doubt about the ultimate triumph of love, though in any given event on the horizon, there is uncertainty. There are so many positive persons to work with and so many promising projects to join that courage and faith can dispel anxiety and cynicism. Nevertheless, I believe that nothing short of a spiritual renaissance will have the power to remotivate and redirect our planetary course. Moral teaching and religious doctrine are not enough. (Wattles 1996 174)

      • Rob Reno
        January 8, 2018 at 6:36 am

        Compassionate conservatism was a short lived ideal that regressed back into its innate state – complacency and indifference to the plight of the poor – leaving only complacent conservatism which spawned the poverty industry: making profit off the backs of the poor. (Citation Unknown)

  9. Edward Ross
    January 7, 2018 at 11:02 pm

    Re Rob Reno Jan 6,2018 12:42 am, I find your honesty and clear thinking very encouraging to an old largely uneducated member of the public whose cognitive processes are certainly slowing down. I also think from your description of your background your view of economics has not been clogged by a load of mainstream economic BS. I also agree with your insistence that morals and ethics have to be included in the economic conversations along with at least some philosophical study that is important to examine unsubstantiated axiomatic beliefs. On morals and ethics I found Julien Edneys Greed part 1 and 2 Post autistic economics review no 32 2005 very informative including his use of an old religious ideal (do unto others as you would have done unto you) a very important guide to promoting a fair and just society. On McClosky in 2004 as a humble mature age graduate I fluked an invitation to the Cambridge economic conference where she publically supported my controversial poster presentation and had a short conversation with me. Later witnessing her speak in spite of her speech impediment. One has to respect her and some of her ideas, such as all economists should have an interest outside economics to prevent tunnel vision. I have said it all before but say it again I think these conversations are very important for academics students and interested members of the public.

    • Rob Reno
      January 8, 2018 at 12:47 am

      Thank you Edward Ross for your kind words and for the references. I will follow up with them. I agree, the Golden Rule has relevance to today’s economics: Nelson’s Economics as Religion is very relevant here. So too Tomas Sedlacek’s Economics of Good and Evil. Asad Zaman, who posts on this site, has written extensively on the nexus of religion and economics (http://asadzaman.net/about-me/) from an Islamic perspective. As soon as time allows I intend to study his study his writings. I have studied philosophy of religion and history-comparative religion for over 30 years. It is time to reconnect economic thinking with its roots in the early nineteenth-century social gospel movement. Of course that includes learning from their mistakes. Thomas C. Leonard’s Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era is a good resource for this.

      • January 8, 2018 at 3:03 pm

        With respect, Rob, I suspect you must be referring narrowly to the roots of American economic thinking, as world-wide they go back at least as far as Aristotle 300 bc and Aquinas 1100 ad. People today label the Bible as ‘religion’ without having read it to work out what that means in relation to its central story of economic enslavement, and how much the Good News is couched in terms of economic wisdom and God paying off our mortgages for us. Same with the Koran, actually, the problem with extemists in both cases being childish (self-centred) minds taking the texts literally rather than preserving them intact as a basis for comparison of historic with modern mores.

        As it happened, the interpretation of the Golden Rule came up in a discussion my wife and I had this morning, very much in the spirit of your Reference List. Give that, as of now, we have money to spare, how much should we give to those who are begging for it? I would like to give most of it today, but what if they need even more of it tomorrow? My wife is worried about ending up in a nursing home and the State selling our house to pay for it so she couldn’t leave a legacy for our kids; but will our kids actually need it?

        I suspect the really rich are faced with much the same dilemma, which will only go away if we get hold of the right end of the stick about money, so we can rely on credit being there when we need it rather than when it suits others. Right now we need to give each other some slack on this. The big problem is family oriented financiers taking my wife’s bent to extremes. They see their own kind as shepherds and the rest of us as sheep, who may turn them a profit but ultimately don’t matter.

      • Rob Reno
        January 8, 2018 at 3:45 pm

        Yes, that is correct, my apology for not being clear. I was referring specifically to US institutionalization and transition from religious based universities to the professionalization (and secularization) of the universities.

        Thomas C. Leonard’s _Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era_ is one source. (http://a.co/aH9PMSd). Many of the early social gospel leaders — who frequently went to Germany to study — went on to be thought leaders in American universities and aided in the professionalization of the field, including making it more “scientific” and less overtly religions in motivation.

        Gary Dorrien has written a insightful triology on this in his _The Making of American Liberal Theology: Imagining Progressive Religion, 1805 – 1900_ (http://a.co/4xHTJw1). Nelson documents this too in his Economics as Religion.

      • Rob Reno
        January 8, 2018 at 5:11 pm

        First, I owe those here who are economists an apology. Sometimes I have painted with too broad a brush out of frustration. To be honest, I fear for my children’s and grandchildren’s future, which in itself reveals my own lack of living faith, I suppose. Jeffrey Wattles is a dear friend and far better man than I. He taught philosophy at Kent State and is now retired pursuing his lifelong passion; developing a philosophy of living grounded in a balanced integration of enlightened science, philosophy, and religion. (If interested his work can be found here: http://universalfamily.org/)

        davetaylor1 I am ever amazed at the thoughtfulness of those who post here. You deserve repeating:

        “People today label the Bible as ‘religion’ without having read it to work out what that means in relation to its central story of economic enslavement, and how much the Good News is couched in terms of economic wisdom and God paying off our mortgages for us. Same with the Koran, actually, the problem with extremists in both cases being childish (self-centered) minds taking the texts literally rather than preserving them intact as a basis for comparison of historic with modern mores.”

        Fundamentalisms (Marty 1993, The Fundamentalism Project.)have more in common than their differences; whether economic fundamentalism, religious fundamentalism in all its flavors, they share many common characteristics. Today here in the US, we are witnessing a socially dangerous toxic mix of fundamentalisms: religious fundamentalism joined in an unholy alliance of economic fundamentalism (market fundamentalism) fueled by 20+ years of AM Hate Radio spread by the right-wing religious-conservatives. They have ripped the scriptures out of historical context and birthed a monstrosity of biblical literalism referred to within the fundamentalist evangelical community as Biblicism. One evangelical scholar wrote, “The scandal of the evangelical mind is that there is not much of an evangelical mind. (Noll 1994, 3)” They are willing to turn a blind eye to a pussy grabbing pathological serial lying narcissist who engages in a form of demagoguery that threatens the very foundations of American democracy and the peace of the world. These are not normal times. We are swiftly coming to an inflection point in the evolution of civilization. There is no such thing as equilibrium in nature; stagnation is like the minima-maxima; it only lasts an instant and then we either progress or retrogress. The choice is ours.

        This unholy alliance between extremist religion and politics was fueled by neoliberal economics in its blind pursuit of globalization while ignoring the economic consequences for those being economically disenfranchised by the resulting growing inequality. What was done to blue-collar workers in the decades past is now being done to white-collar workers today. But economists largely ignore what is happening in the _real world_ while they pursue a chimera of creating a “social mathematics” and reaching the promised illusory dream land of making economics into a so-called “true science.” My fear is we don’t have time for this. Economics must become pragmatic and solve real-world problems, and swiftly, less its beautiful theoretical superstructure become irrelevant as civilization retrogresses into the Dark Ages 2.0.

        Economists far smarter than I are saying we must broaden our approaches and reintegrate morality and ethics (that is doing philosophy) and religion into our economic thinking. I agree. We also cannot afford any longer to leave economics to the experts. We do so at our own peril (http://a.co/bm8HL73). This needs to be a societal-wide discussion. It needs to include not only science, but the best of our philosophical and religious thinking. We have a rich tradition in all three domains; it is a matter of taking them seriously and educating the general public.

        Regarding “family oriented financiers,” I have a very low opinion of financial advisors. They have a dog called “greed” in the game. There is nothing wrong with wanting to leave something for your children. Charity can be given wisely and unwisely. I know my wife and I struggled with his too wanting to teach our children to give wisely. I guess it comes down to balance. I have some ideas on new business models I am trying to develop that seek to find this balance and augment the profit motive with the service motive. Time will tell if I am able to actualize the potential or whether I am dreaming pipe-dreams, in which case I hope they just put me on a spaceship and shoot me into space where I can get a good look at the stars.

        Reference List

        1. Marty, Martin E. and Appleby R. Scott. et. al. Fundamentalisms and Society: Reclaiming the Sciences, the Family, and Education. Chicago: University of Chicago Press; 1993; 2 pp. 62-64. (The Fundamentalism Project.)

        Notes: A _Kulturkamp_ may well take place in which rival totalitarianisms clash, violently perhaps, to mobilize consent and enforce political order.[77] Under less dire circumstances, after all, as it was predicted a decade ago, “Christian doctrine, made an adjunct to right-wing and capitalist policies, could provide the necessary self-imposed order that a fascist movement in America would require to maintain control over the country.” And more recently, “a state religion, compulsory in character, authoritarian in tone, ‘traditional’ in outlook,” has been seriously foreseen. “America would be ‘socialized’ not in the name of Marx but of Jesus, not in the name of communism but of Christian republicanism.”

        None of these possibilities is inevitable, of course, or even likely. But one thing at any rate seems certain. Whatever shape the creationist cosmos may take at the hands of Protestant fundamentalists, it will break free from its flourishing subculture and hold sway over people and nations only when it is commended in its integrity: not as a mere science among sciences, but as the one religious answer, among uniquely religious answers, to the unfathomable mystery of existence.

        2. Noll, Mark A. The Scandal of the Evangelical Mind. Leicester, England: Inter-Varsity Press; 1994; pp. 3-4.

        Notes: The scandal of the evangelical mind is that there is not much of an evangelical mind. An extraordinary range of virtues is found among the sprawling throngs of evangelical Protestants in North America, including great sacrifice in spreading the message of salvation in Jesus Christ, open-hearted generosity to the needy, heroic personal exertion on behalf of troubled individuals, and an unheralded sustenance of countless church and parachurch communities. Notwithstanding all their other virtues, however, American evangelicals are not exemplary for their thinking and they have not been so for several generations.

        Despite dynamic success at a popular level, modern American evangelicals have failed notably in sustaining serious intellectual life. They have nourished millions of believers in the simple verities of the gospel but have largely abandoned the universities, the arts, and other realms of “high” culture. Even in its more progressive and culturally upscale subgroups, evangelicalism has little intellectual muscle. Feeding the hungry, living simply, and banning the bomb are tasks at which different sorts of evangelicals willingly expend great energy, but these tasks do not by themselves assist intellectual vitality. (Noll 1994: 3)

        (….) Evangelical inattention to intellectual life is a curiosity for several reasons…. The historical situation is similarly curious. Modern evangelicals are the spiritual descendants of leaders and movements distinguished by probing, creative, fruitful attention to mind. Most of the original Protestant traditions … either developed a vigorous intellectual life or worked out theological principles that could (and often did) sustain penetrating, and penetratingly Christian, intellectual endeavor…. None of them believed that intellectual activity was the only way to glorify God, or even the highest way, but they all believed in the life of the mind, and they believed in it because they were evangelicals. Unlike their spiritual ancestors, modern evangelicals have not pursued comprehensive thinking under God or sought a mind shaped to its furthest reaches by Christian perspectives. (Noll 1994: 4)

  10. January 16, 2018 at 4:13 am

    Several year after Blaug wrote this article, he elaborated it into a book chapter with the same title. One of his additions was this sentence: “…the dismal science of yesterday was a lot less dismal than the soporific scholasticism of today. To paraphrase the title of a popular British musical: “No Reality, Please. We’re Economists.”

    • Rob Reno
      January 31, 2018 at 9:12 pm

      The Middle Ages overflowed with the numbers of dancing angels on the head of a pin … and our era is possessed by the idea of counting marginal optimization. In this light, however, the medieval discussion on how many angels could fit on the head of pin appears more realistic only because, as opposed to the secret terminology of theoretical economics, the head of a pin is real and the concept of an angel is accessible to everyone. Nevertheless, both ways of theorizing are not empirically measurable and outside of their own discourse they are nonsensical and inapplicable. They make sense only when locked in the given discourse–in their own world. (Sedlacek 2011, 315)

      Blaug’s reminded me of Sedlacek’s statement.

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