Economics is a Waste of Time

There I said it.

There comes a point when we all have to stop banging our heads against the wall and just step back. Why, we ask in such moments, are we wasting our time? The wall is immoveable. It is indifferent to our efforts. It is solid. It has the appearance of permanence. It just won’t shift.

So walk away.

Do something else.

In the case of economics go and study the economy instead.

Too many people are wasting far too much time talking about economists as if they study the economy. They don’t. They really and truly don’t. They live in a post-fact world. Indeed before it became fashionable to toss that phrase around — Trump and his regime pretty much define “post-fact” — economists had been steadfastly denying fact, ignoring reality, and living in a wonderland of their own creation.

Economists study economics. And economics is not the economy. It is a self-contained set of ideas, models, theories, mathematical intricacies, and axioms, that are designed to provide exciting intellectual sport for those so inclined to busy themselves with such activity. It is carefully constructed to look as if it touches reality. It still contains words that make it look as if it relates to reality. Economists intone cogently about real-world topics. And economists fill all the key policy positions that relate to steering, regulating, and measuring the economy.

But that’s all illusion.

Poke at what they learn in school. Take a peek at the content of what they believe. Look at what it takes to be a respected economist.

Then try to connect that with what you see around you.

There is little or no connection. It’s as if the weather forecasters predicted the weather without ever looking out the window. Or as if physicists insisted that gravity threw things straight up in the air despite the contrary evidence. Alice and her looking glass have nothing on the ability of economists to defy the world in which they live.

But perhaps it isn’t defiance.

Another attribute of economists is their portrayal of the dispassionate observer of society gravely describing the “deep laws” humans are foolish to push back against. They project the air of sober analysis. They attempt to inject a discipline and rigor into the messy pool of human interaction. They want us to believe that what they describe is inevitable. So they take it upon themselves to act as caretakers of what ought to be.

No, it isn’t defiance. It is activism.

Having wandered into their intellectual wilderness, and having starved themselves of the diversity and complexity of reality, they have returned convinced in their hungry delirium that they have discovered ways in which society ought to conduct its affairs.

Economics, in its various mainstream hues, is profoundly normative. It is an attempt to dictate the ways in which we order our economic activity.

We know this from the way in which it treats collective action. It disallows such activity in its every recess and crevice. It is totally committed to the individual being the core agent. And that individual is presumed to be inhumanly rational.

This is why Keynesian ideas about the efficacy of examining macro or meta themes was considered apostate and had to be eradicated or so mutilated that they could be neutered politically.

This is why the Marxist critique is ignored as if power relations had no social significance.

This is why gender and minority considerations are thought irrelevant.

This is why institutions are disregarded as having theoretical import.

This is why knowledge has never found its way into the core of the so-called “production function”.

This is why the various fantasies of general equilibrium are tolerated by people with vast analytical skills and who, thus, ought to know better.

This is why growth theorists are content with models that predict a small portion of growth — the rest they tell us is a mystery.

This is why theories of the firm are hopelessly at odds with the firms we work in.

This is why oddities such as the notion of “marginal analysis” exist. Beautiful constructs and intellectually interesting, but not found in nature, they distract from locating better, more practical and real explanations of economic artifacts.

The list goes on.

This has all been said before. And it has been said much more eloquently.

So: my advice is to study the economy by taking classes in politics, sociology, philosophy, business or organizational theory. Get steeped in information theory. Build those agent based models. Go and talk to workers, shopkeepers, and all the other people in the real world.

But stay away from economics.

Especially if you’re serious about the economy.