"The global financial crisis has ...also made clear a systemic failure of the economics profession. Over the past three decades, economists have largely developed and come to rely on models that disregard key factors... ...In our hour of greatest need, societies around the world are left to grope in the dark without a theory."
"The Financial Crisis and the Systemic Failure of Academic Economics" - http://www.econ.ku.dk -
This agrees with my views. And it was written by a bunch of academics. Of all people!
The authors further state: "The implicit view behind standard equilibrium models is that markets and economies are inherently stable and that they only temporarily get off track."
That is the wrong thing to be assuming.
What is inherently stable (what is assumed) is not markets and economies. Some more basic factor needs to be found, like "the world," or "an established human culture." The search is on for the assumptive entity, the assumed, the basis on which profit and loss and everything else are balanced. We need to assume that "the world" is stable, that is justified because, for one thing, without a stable world there is no investigation and no investigator and nothing to investigate. The world can be assumed to be stable, because, if it were not, you the researcher would not be here, supported by an institution, doing your work.
Or, for example, an individual human biological organism must be stable in order to function properly. Something like that can be posited as being stable, otherwise there cannot be any theories. We never speak of the relationship of (what the authors are calling) "markets and economies" to the assumptive physical world. What then is the relationship of "markets and economies" to the assumptive physical world? "Markets and economies" so to speak are overlaid upon that reality, which is to say the reality of the world or of the human beings in it. The question then becomes: what is economics, and how is it overlaid upon the world?
Therefore, the economists who collaborated on this paper are right in general. I agree about the failure of the field of academic economics. The academics are right, too, because something indeed has to be automatically OK. But it is the world or the human being that has to be automatically OK, and that has to be the value system to which capitalism, or, in a sense, "economics," is compared. Economics cannot merely be compared to itself --- and then backed up by some kind of math. When we presume to study "economics" we are missing something. The new task is made a bit more clear: what must be investigated is the relationship between "the economy" and "the world." The focus needs to change. The field of Economics is misinformed, misdirected.
Thus, the very most basic assumption of "the economists" is wrong because this academic clique never places markets or economics into any context, there is never the context of human reality. Supposing that they did, there would be lots of things to consider, beyond any quick statement for me to make here. But...
The first thing that occurs to me offhand is that they should consider that trade is interactive, and human reality is social. Economists never consider that social aspect. But economics is something that humans do as social beings.
How would that be a new kind of economics? Well, what did Weber ask? He asked: why did Europeans allow capitalism to be a part of their world? Why did society accept capitalism? And capitalism also displaced something. It has, again, a context. It displaced feudalism (or something like that). What made capitalism as a system not only acceptable but able to dislodge other systems, earlier ones that the societies had as their earlier systems?
How is it that people allowed capitalism to be overlaid onto their societies? This is the great matter of the how and why of the system. How did a system characterised by the twin features of capitalistic economics and the people's right to vote, or democracy, replace feudalism or the aristocratic systems or whatever I should call the pre-capitalist world? It seems to me that that is a very great question.
And as for these academics, they even agree with me on another thing, the idea of scarcity:
"This failure has deep methodological roots. The often heard definition of economics—that it is concerned with the ‘allocation of scarce resources’—is short-sighted and misleading."
My reasoning -- I don't know what theirs was -- which is to say as to the scarcity thing -- is that if capitalism is good at anything, it is good at producing what McKibbenn his bood called MORE. If capitalism does anything, it produces more and more, never stopping, and not only that it does so at lower and lower costs.
That does not that sound like scarcity. 90% of economics today deals in things like software and coffee concoctions. Why does standard, neo-Classical economic theory always get caught in contradictions like these? The easy answer is that they made up the wrong thing. The thing they compose is the wrong theory. (What are they going to do, get mad at me?)
What you would need to find is causality. Why do people work and live in a capitalist society every day? Where does business profit come from? (Scarcity?!!!?? Maybe a rabbit out of a hat, huh?) The question is: Why does a person not make money one year and go on to make money the next year? The person goes from hunting to agriculture, then from agriculture to the city. Where is the cause for the quest for money to get itself satisfied in the capitalist system? Why should that work?, and, where is the underlying principle?
Sounds like that is a statement of the basic question of the study of economics...indeed...