“If people acted at the level of rationality presumed in standard economics textbooks, the world’s standard of living would be measurably higher,” assures Alan Greenspan, former chair of the US Federal Reserve. So what if really-existing markets are one of the most hybridized of social institutions? So what’s wrong with believing that the answer to always-incomplete regulation must be always-incomplete markets?
Let there be no doubt that the cretinization fostered by economism follows from its lethal attraction to a timelessness that voids context and difference.
Open The Twentieth Century Fund’s 1945 publication, Financing American Prosperity: A Symposium of Economists and turn to the summary recommendations culled from its contributors. There you find: “Create budget surplus for debt repayment,” “Create budget surplus to reduce inflation,” “Avoid [public works] projects that compete with private investment,” “Abolish double taxation of distributed earnings,” “Raise interest rates when inflation threatens,” “Avoid wage increases beyond increases in productivity,” “Eliminate restrictive trade practices,” and such. These same nostrums are the ones we have been talking about for over the last seven decades, and doubtless will be so in the decades ahead, if economism has anything to say about it.
Though, the most blisteringly obvious fact is that WE ARE NOT LIVING IN THE 1940s. We are, to put it mildly, in a different mess today.
The earlier nostrums remain salient not because of timeless economic theory, but because the really-existing systemwide patterns we recognize today and the really-existing contingency scenarios we face now render the notion of “economic practice” still intelligible to us in real time.
And, what, you don’t think the practice of economics has changed? Why then, by way of example, has economics altered so much since the advent of large datasets?