Tuesday, October 13, 2015

Are People Waking Up To The Fraud of Economics?

Maybe it’s just me, but there seems to be an increasing realization that capitalism just isn’t working.
There used to be those who say that capitalism is great, and there were its discontents. Now, it seems, everyone is acknowledging that the system is not working, the difference is the fundamental cause.

That’s actually a big change.

Now, as to the cause, there’s a massive and well-funded industry dedicated to advancing the proposition that the trouble with capitalism is too much government. There are too many regulations. Taxes are too high. The national debt is too high. The government does too much intervention in the Market. Left alone the Market will self-correct all its problems. Just pay down the national debt, cut all social programs and subject them to the “discipline” of the Market, eliminate the “hammock” that allows lazy people not to work, eliminate minimum wages so that labor markets can “clear” and everything will be okay. Anyone who can’t cut it in this “pure” capitalism deserves to die, as Ron Paul’s supporters testified to.

Of course, I think this is balderdash. We’ve spent a hundred years getting away from this type of capitalism. The people who actually had to live under this kind of devil-take-the-hindmost economic system fought tooth-and-nail to get rid of it. It posits a capitalism that never exited and assumes a complete denial of the actual history of capitalism. It’s a symptom of the suppression of economic history in favor of abstract mathematical equations.

BUT, this philosophy is very important to the majority of Americans who believe in the Free Market as a sort of religious faith. It’s quite simple, really. The “free market” is failing in practice all around them. Their kids are living at home because they can’t get jobs, they’re in debt up to their eyeballs, they have no savings, all their stuff is made in China, the streets are full of potholes and the water mains are breaking, malls are going out of business, storefronts are boarded up, and so forth

So, because capitalism cannot be blamed for the stuff they see all around them, they must argue that capitalism has been corrupted from the pure and true faith by some sort of evil scapegoat. Since unions aren't around anymore, the convenient targets are immigrants, foreigners (the Chinese), greedy bankers at the top and lazy parasites at the bottom.

This article about Trump’s supporters illustrates the point: The Return of the Middle American Radical (National Journal). Trump’s supporters, although nominally Republican, are still aware of the crumbling society all around them. But they can't blame capitalism, so they need a different scapegoat. While the article doesn’t use the term, there is a specific term for this philosophy: Producerism. Trump is running on Producerist platform.
Although producerism is primarily economic in emphasis, it also has a perspective on social issues. Namely it upholds the traditional values of the middle class as the only true national values. It defends those values against the corruption of decadent inherited wealth, and against the dangerous apathy and sloth it sees as being the inevitable consequence of dependency on a welfare state...The producerist emphasis on the inherent value of hard work is directly related to the Protestant work ethic, outlined by Weber. In the United States and in Europe it is often sympathetic towards conservative or Fundamentalist/Primitive Christianity, seen as a defender against both the moral degeneracy of the poor and the rapaciousness of unbridled capitalism.

Thus Social Security and Medicare must be preserved because people in the working classes “paid in” to the system, whereas welfare just helps the lazy poor to avoid hard work. The poor “lucky duckies” don’t have to pay any taxes, but neither do the scheming rich, while the middle classes are used as tax donkeys. Wealthy elites have sold us out by shipping our once plentiful jobs to the Third World nations while profiting themselves and paying off the lazy to keep them dependent upon government. Taxes are just stealing money from the productive classes and giving it to the lazy unproductive poor and fat-cat government bureaucrats who live in Versailles on the Potomac. Monopolists can escape the discipline of the "free" market by profiteering thanks to the revolving door and government regulations, And so forth.

You can see why this view is popular in a Middle America that sees the rich getting ever richer while it is worked like a mule for less and less discretionary income. Add-in the fact that rural "white" America is no longer going to be the majority, and you’ve got a tailor-made philosophy for Buddy Budweiser and Sue Sweatpants in Oshkosh, Wisconsin.

Another cafeteria choice for Free Market fundamentalists is the Libertarian/Austrian school, where all problems are cured by eliminating the Federal Reserve and returning to the gold standard. This will return us to a time before the Fall - the alleged capitalist paradise of the nineteenth century. The idea that the nineteenth century actually wasn’t a worker’s paradise, was roiled by constant threats of labor revolution and turmoil, and was even MORE unstable than it is today doesn’t occur to them. Neither does the fact that the prosperity was propelled by a wide-open frontier, abundant natural resources, entirely new forms of technology and massive amounts of fossil fuels. Pauls’ historically ignorant supporters all romanticize the past and see themselves as prosperous bourgeois small business owners and rich yeoman farmers rather than the workers in Jacob Riis or Dorthea Lange’s photographs, much the way believers in reincarnation always see themselves as Cleopatra or Napoleon in a past life.

So they keep voting for politicians who promise to “wreak havoc” on government. But nothing changes. Because you can always go to that well. There’s always and forever some government program somewhere that’s weighing down capitalism and preventing it from taking off and delivering on its promises. So they keep voting, and the parts of government that help people get dismantled, the parts that funnel money to the people at the top get preserved, and nothing ever changes. And the frustration level ratchets up another notch expressing itself in all sorts of right-wing lunacy (Oath Keepers, Tea Partiers, Sovereign Citizens, militias, etc). Because the problem can't be with capitalism itself, right?

In the past, people came to a different conclusion. They realized that capitalism is a creature of the state and cronyism is baked in to the cake. They recognized that economies are creations of laws, the only question is whom does the law favor? They realized that left alone, capitalism allocated wealth to a shrinking aristocracy while making the majority of people progressively more miserable. Even innovation and wealth creation are impeded by things like planned obsolescence, artificial scarcity and intellectual property rights, things conventional economics deny even exist or devote much attention to.

They wanted fundamental reform of the system, because they knew the system didn’t work. Some of them were Marxists, or course, but not all of them. You had everything from the Socialist party to the utopianism of Robert Owen to the anarchism of Kropotkin to the technocratic critique by Veblen to the land value tax ideas of the Georgists. But very few people accepted the economic status quo as the ultimate and final revealed truth of how an economy works. For that, we needed to invent the “science” of economics and spend billions promoting it in universities.

What brought this to mind was the fact that every year, the economics “Nobel” comes under more and more scrutiny. And every year there are more denunciations of this so-called “science” and the fact that it is useless in the ongoing deterioration of living standards in the industrialized world.

Is economics a science? Not according to the founder of the Nobel prizes (Christian Science Monitor)

Key member of Swedish Academy of Sciences calls for immediate suspension of the “Nobel Prize for Economics” (Real World Economics Review)

Don’t let the Nobel prize fool you. Economics is not a science (Guardian)

Here’s Noah Smith going to bat for his team. Note how he doesn’t even address many of the arguments directly. Pretty weak tea, if you ask me.

And even former "Nobel" winners are criticizing things as never before - see this: Why Free Markets Make Fools of Us (New York Review of Books)

Economics is the ruling ideology of the modern world. That more people are calling it into question is a good thing.

Nothing will be done of course. As long as they can continue to make us bicker among ourselves over the causes, they can continue looting. And as long as capitalism is not “pure” enough for the true believers (which it never, ever, will be), we will continue to be at each others' throats even as we fight for the remaining jobs, houses, and drops of water. Which is too bad, because if we did manage to chuck the secular religion of economics out the window, we might be able to come up with real solutions to our mounting problems.


  1. Hey on $10k a year, I pay a greater percentage in taxes then before the crash when I made $70k.

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