Thursday, December 18, 2014

Peter Radford — Economic Realism

Epic rant or brilliant takedown. Utopian economists will opt for the former. I opt for the latter.
Lars Syll seems to have started a perpetual conversation when he posted a comment about Tony Lawson’s longstanding complaints about realism in economics. I don’t want to get dragged into what appears to be an endless, and pointless, debate … but.
The Radford Free Press
Economic RealismPeter Radford


NeilW said...

The one point Peter misses is that having created this artificial world, the economists set about convincing politicians to constrain the real world and force it into the shape of the model.

They are not just Ptolemaic in nature, but also Procrustean.

Tom Hickey said...

Neil, this is the crux of it. There is a big debate going on now about how influential economists are on policy, with the defenders of the status quo arguing that economists have very little leverage over policy directly and even their indirect influence is minimal.

However, the problem does not arise from so much from individual economists influencing policy as the economic way of thinking based on homo economicus, which fits very well with the Anglo-American absorption with individualism as the basis of freedom. So economic liberalism is argued to be the sine qua non of social and political liberalism. Of course, history shows that nothing could be further from the truth, with the ownership class merely being populated with a different set of individuals based on the ability to accumulate through a cultural and institutions based on accumulation instead of force and the ability to apply it as under feudalism.

Under economic liberalism the force of law is bent to the interest of the owners, which results in an antithesis of social and economic liberalism. This is underscored, for example, in the historical evidence that the ownership classes have been liberal economically but conservative socially and politically.