Wednesday, December 21, 2011

Neoliberalism for dummies

We are told to appease the market gods or face eternal financial damnation.
Read it at AlterNet
Why Are We Forced to Worship at the Feet of 'Mythical' Financial Markets Controlled by the Elite?
by Les Leopold, executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009)
(h/t Kevin Fathi via email)

Says in a simpler and more humorous form what Prof. Robert Nelson investigated in Economics as Religion: From Samuelson to Chicago and Beyond (Penn State Univ, 2001) — available online at Scribd here.

My contention is that the invisible hand of Adam Smith is the god of 18th century Deism that creates the universe and then lets it operate automatically in accordance with the laws of nature He has ordained. 

This is one reason that economics as a discipline compares itself to physics. Another is Smith's association with his contemporary Isaac Newton, who influenced Smith's thinking about natural processes. While my view of direct influence is rejected by some Smith scholar's for lack of evidence, it seems that even if Smith was not directly influenced by either Deism or Newton, these were dominant ideas of his time and his work arguably reflects these overarching themes.

However, as Smith scholars correctly observe, Adam Smith cannot be blamed for spawning neoliberalism, which is a bastardization of his ideas by some New Classical economists, as well as New Keynesians, subsequent to the marginal revolution ushered in by Alfred Marshall. Marshall himself cautioned against using his ideas in a simplistic fashion to draw unwarranted conclusions from mathematical models. Marshall realized that economic models are thinking aids and not expressions of either natural laws or God-given ones.

What began as political economy with Adam Smith and David Ricardo has become theological economy under Milton Friedman and neoliberalism. It is a theology that the privileged are using to exploit the credulity of the masses with yet another superstition.

1 comment:

El Viejo said...