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Philip Pilkington: Economics as Metaphysics and Morals

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By Philip Pilkington, a journalist and heathen currently living in Dublin, Ireland

Belligerent ghouls
Run Manchester schools
Spineless swines
Cemented minds
– The Smiths, The Headmaster Ritual

Human beings have always and probably will always construct moral systems around which they structure their thoughts and actions. Some of these are quite simple and basic – for example: laws that prohibit murder. But some are remarkably complex – massive theological, metaphysical and religious systems that are disseminated in varied forms among countless numbers of men.

But here’s a question: to what extent is economic theory – I mean: the ‘highest’ tenets of economic theory – an arbitrarily constructed, yet extremely intellectually sophisticated moral system? By that I mean: a system of postulates constructed to limit and restrict our actions and thoughts. And if we find that economics is simply an arbitrary system of thought, no different in essence from the theologies of yore, is there an alternative approach that won’t have us slipping into dogma?

In order to get a clearer view of this we must first try to understand what the purposes of moral systems of thought are and how they are constructed. For that we will briefly turn to the field of anthropology.

The origins of metaphysics and morals
In the 1940s and 1950s certain anthropologists and philosophers began expounding an interesting collection of ideas. They saw societies as being wholly structured around certain laws and customs. This was perfectly in keeping with the theories of the classical anthropologists at the turn of the century, who noted that primitive societies organised themselves around what they referred to as ‘totems’ – that is, myths about origins – and ‘taboos’ – that is, customs that were so deeply ingrained in the psyches of tribe members that to violate them was simply beyond comprehension. The newer generation of anthropologists – referred to as the ‘structuralists’ – expanded this to all walks of human life. The structuralists argued that even in modern society there were certain habits of thought that were so deeply ingrained that for the individual to violate them would cause enormous psychological discomfort.

Perhaps the most colourful of these was the esteemed British anthropologist Mary Douglas. In 1966 Douglas published a fascinating and idiosyncratic book that was soon to become one of the most widely cited in the field of anthropology. The name of this book is ‘Purity and Danger’ and it can be previewed at Google Books.

In ‘Purity and Danger’ Douglas argues that most of our contemporary practices of dieting and personal hygiene are, in anthropological terms, nothing more than rituals structured around primitive taboos erected by society. She compares these to the rituals found in Leviticus – the book in the Bible that lays down ironclad laws and rituals for the Hebrew people. Douglas pointed out that, when it comes to diet and hygiene, contemporary man is not that much more rational than the first of the Jewish people. She argued that we follow our rules of hygiene and dieting – many of which have dubious scientific bases – for the same reasons that primitive tribes-people follow their rituals. And when we overstep these boundaries and break our hygienic or dietary rules, the psychic consequences are just as dire as they would be for the primitive who forgets to enact his ritual. The result is a feeling of anxiety or panic which can vary from mild to quite severe.

Douglas was not arguing that we shouldn’t wash our hands after going to the bathroom or that we should pick up food when it falls on the floor and eat it without washing it. No, she was merely pointing out that these were highly ritualised acts; based more on psychic taboos internalised by the individual through contact with the social group than they were some sort of rational instinct for self-preservation. These are, in short, ‘symbolic boundaries’ with which we structure and limit our actions.

The structuralists also noted that this is true of the way Man organises his thoughts – and perhaps even his perceptions. A merchant sailor at sea in 1400, for example, would quite literally organise his space-perception around certain taboos. He might think that past a certain point on a map there were man-eating dragons. Not only does this sailor organise his thoughts about the world around this superstition, he quite literally conceives of the space he moves about in with reference to this myth. If, for example, he was to sail near these uncharted waters he would likely experience acute anxiety. Perhaps, if he were suffering from malnutrition, he might even hallucinate a dragon and reinforce the myth.

Systems of morality seem to spring from a similar impulse. People seek to limit what they are permitted and not permitted to think and do around certain – often arbitrary – symbolic principles.**

These limiting principles – or, ‘symbolic boundaries’ – were usually arbitrary intellectual constructs. However, they were often extremely sophisticated. The French anthropologist and founder of structuralism Claude Levi-Strauss, for example, noted that some of the shamans he encountered in the Amazonian rainforests had logically worked out metaphysical systems that were easily as impressive as some of those he had studied at university. These metaphysical systems were then watered down and disseminated among the population of the tribe or village who would then structure their thoughts and beliefs around this system.

So, what is the relevance of all this? Well, what if this is what many academic economists are doing today? They sit around universities, as the shamans sit around their tents, constructing cryptic intellectual systems that few outside the circle can understand which lends these systems a certain gravitas. The economists then pass these on, in watered-down and half-explained form, to students who then go on to govern us, directly or indirectly, and dictate how we live our lives.
The shaman guides the actions of the village elders; the pope crowns the king; the economist equips the educated citizen for civic life.

Economics as metaphysics and morals

Is ‘higher’ economics really a metaphysical construct? I think so. But before I make this argument let’s get a little familiar with what ‘metaphysics’ actually is.

Ask three philosophers what ‘metaphysics’ is and you’ll get three different answers. I consider metaphysics to be a process of thought that seeks to understand fundamentals about the nature of reality based on reasoning alone. In this metaphysics is opposed to empirical verification and, it should be said, opposed to most contemporary philosophy and social science.

Metaphysicians tend to create airy constructs of how the world works – and they often do this entirely in their own head. A good example would be the German philosopher G.W.F. Hegel. Hegel believed that there was a universal force moving history which he called Reason. All actions were thus tending toward a certain outcome that he could, in a sense, work out in his own mind. Hegel reached these conclusions through grandiose logical arguments with almost no reference to reality.

The problem with this sort of reasoning should be clear: its rubbish. It is, when you look at it closely, just an intellectual system that is worked out by some guy sitting in his study. It has no more validity than biblical stories about how Adam and Eve were the first humans and were expelled from the Garden of Eden, or the idea that the world sits on the back of a turtle.

These are all just stories worked out arbitrarily by people who should know better. They are not open to empirical verification and are generally useless from a practical point-of-view. They are the same sorts of systems as the ‘totemic’ myths that are generated in tribal societies. So, while the Christian claims that we are descended from Adam and Eve, the Native American claims that we are descended from the eagle. All the while Hegel claims that we are descendents of Reason.
So, is economic theory just one of these stories? Certain central aspects of it, I think, are.

Taken at a very base level, the notion that there is an ‘invisible hand’ that irons out inconsistencies and increases the efficiency of the production and circulation of goods is basically the same claim that Hegel made about history being moved by a force called Reason. (Indeed, Adam Smith was one of Hegel’s references, perhaps even one of his key references). This claim, when made by either Smith or Hegel, can be traced back in turn to the Protestant tradition of predestination. The reasoning here is absolutely metaphysical and like the metaphysicians of yore it carries with it a moral lesson to be passed on to disciples.

Yet, if we dig a little deeper we find that even the more developed and less theological claims of economics are strongly metaphysical.

Take the example Yves uses in her book ‘Econned’ of how economists conceive of the demand function. There she shows, drawing on the excellent work of Steve Keen, how economists make huge generalisations about the people they study. They assume, for example, a single consumer that consumes the same goods and then projects this onto all consumers.

This is pure metaphysical reasoning. The economists concoct an idea in their heads which they then use to construct a theoretical edifice which falls apart when the original idea is shown to be false. They then derive a sort of ‘moral code’ from this construct which tells people how they should behave. In this case, students are told that this is how people should behave if they are to produce efficiently and effectively.

How is this different from the shaman who makes up a myth about the origins of the tribe and then derives moral lessons from this myth that he then teaches to the tribes-people? It’s not.

Let’s take an invented example – but one very similar to the real totemic myths studied by anthropologists. The shaman might say that the tribe was born out of a monkey’s mouth and thus the monkey is a sacred creature that cannot be hunted without first performing a certain ritual – say, a certain hunting dance.

Here we have an identical method of reasoning as we do in economics departments. Belief systems are constructed upon arbitrary assumptions (that are probably untrue). The shaman claims that the tribe was born out of the monkey’s mouth, while the economist claims that all people consume in the same way. The shaman or economist then distils out certain ‘lessons’ – moral lessons – about how people should behave from these totemic myths. These lessons are then handed down by the elders of the tribe or by the government of the state to dictate how the village should be run. The village elders then ensure that people perform the ritual dance before hunting the monkey, while statesmen tailor their policy proposals to fit in with the economists’ metaphysical system.

Economic ideas – such as the myth of the ‘single consumer’ – serve the function of ‘limiting principles’ for the way people in our contemporary society are allowed to think about the world. To think outside these ‘symbolic boundaries’ is not to be taken seriously. And yet, these boundaries are simply metaphysical constructs built up by economists and then disseminated to the population at large as a type of moral system.

Economics, then, is the totem – its simple moral lessons, the taboos. And this is how we in the modern world organise our thoughts and actions. When we go to the bathroom our systems of hygiene tell us that we should wash our hands; when we discuss public policy our moral systems tell us that we cannot undertake certain actions as economists have worked out that such actions are ‘wrong’ when their metaphysical models are considered. To violate either of these taboos is to risk social isolation and exclusion.

Is there an alternative way of thinking economically?

Okay, so let’s say this is true. Economics is today what religion was in older historical times and totemic myth was in tribal times. Is there some way that we can euthanise the ritualistic elements of economic theory? Yes, I think there is.

Consider law – a discipline which economics bears far more affinities to than any science. Law also has its origins in the ritualistic and religious aspects of social organisation. Our current legal system is the direct descendent of this; much like the way economic determinism – and by that I mean Adam Smith’s ‘hidden hand’ – is the direct descendent of Protestant predestination. However, law has, to a large extent, done away with silly metaphysical speculations and got down to the nitty-gritty of doing business. Law has, in most cases, become an operational discipline.

Economics, as we have pointed out above, is today taught to citizens – through the universities and schools, but also through the media – in order to guide them in their actions. This is especially true of those citizens who go on to wield power over others and direct the institutions that govern our societies. So, why not cut out the metaphysics and the morals altogether and simply teach people what the levers of economic power in our societies actually are and how they can be used?

Economics was moving in this direction after Keynes had founded macroeconomics as a discipline. To a large extent after Keynes economics came to be seen in operational rather than moral/metaphysical terms. All that seemed to change when Milton Friedman – channelling the Austrian School, who explicitly founded their ‘theories’ on moral judgments – tried to re-establish macroeconomics as catering to a certain moral and metaphysical view of the world. Larry Summers once wrote that although Friedman is seen by academics as an ‘innovator’ of monetary policy, one of his most important contributions lay “in convincing people of the importance of allowing free markets to operate”. Summers got it.

Friedman snuck the metaphysics back into the discipline through the back door and the results have been regressive, both intellectually and socially. Economics has become, once again, a metaphysical doctrine boiled down to a few crass moralisms that are spoon-fed to the educated public. Its proponents, in true moral and metaphysical style, claim to be championing ‘freedom’, but any reasonably detached observer should clearly be able to see that this is the ‘freedom’ handed down by a preacher to his congregation. It is really a subtle way of telling people what to do and assuring them that such authority is founded on some sort of Natural or Divine Law.

One school, however, has managed to keep to the operational way of viewing economics. I’m talking, of course, about the Modern Monetary Theorists (MMTers, to use the jargon).

The MMTers stick to a wholly detached description of the way the economy works. They describe the actual working of the money and credit systems; they also describe how the system of national accounting works. There is no metaphysics here. This is just a description of how these processes work from an operational point-of-view.

Describing these systems is like a lawyer describing a body of laws. The lawyer – provided he is not a hack – is not going to tell you what you should or should not do, instead he lays out what you can and cannot do and lets you decide from there.

Is this not a far better way of educating citizens? Let them know what can and cannot be done and then let them decide from there. Don’t fill their heads with theoretical and speculative rubbish about ‘ideal consumers’ and the like, but explain how the system works and let them decide how they should direct this system through the democratic processes that we base our societies on.

This would, of course, greatly restrict the power of economists. In policy circles today economists play the role of the court-priest. They deploy their esoteric and impenetrable ‘knowledge’ to tell policymakers what they should and should not do. To constrain economists to simply explain how the system works is to give them a role closer to that of the lawyer. The policymaker consults a lawyer to figure out what he or she can or cannot do and then makes a decision from there. Similarly, he or she might consult the economist, if the latter was seen as an operational role rather than as that of a seer.

This would, of course, threaten the role of the economist in society today. One can imagine that it is rather nice to be thought of as a divine, laying down metaphysical principles about the ‘inner’ workings of the world and deriving from these timeless truths and moral certainties that we mere mortals can then submit to. So, one can also imagine that these preachers and their flocks will respond to such a challenge with moral outrage. It is the outrage of a priest who has been told that his God is an invention, concocted in his mind to be used as leverage over his fellow men.

One will also be sure to encounter a sort of religious fear in the minds of the citizenry. For many of them – policymakers included – to simply describe how the system works without genuflecting before the Great Ideas of the metaphysical System is to blaspheme. The crowd falls silent, waiting for some Divine Justice to be unleashed upon the heathen who dares speak in such a way. And yet the storm never comes.

It is like the 15th century sailor being told that there are, in fact, no dragons beyond a certain point on the map. To do so is to disrupt the ‘symbolic boundaries’ that he has erected in his mind to structure his world. Extreme disorientation is likely to follow and from that, fear and anger.
So, it is only gradually – very gradually – that we can expect this to change. But change it must.

** As an aside, Sigmund Freud had recognised this long before the structuralists. He even went so far as to show how similar certain neuroses – especially what he called the ‘obsessional neuroses’ (OCD etc.) – were to primitive rituals. He also noted that certain phobias were remarkably similar to taboos. It was soon to be recognised that these tended to arise as ‘substitute’ structures to replace incomplete internalisation of societies more ‘normal’ symbolic structures. But we are not here engaged in a history of thought so we shall move on.

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116 comments

    2. ambrit

      Oh yes, he’s just restored my faith in the Erse. (You’re not of the Sidhe, are ye?)

    3. Scott

      Yes, this article says please accept my religion MMT without even considering why people would agree to that religion.

    4. Just Tired

      Yes, what an incredible observation PP. The patient is sick. But in all of those many words, there is not one mention of your proposed cure. What you describe has been going on since the beginning of time (or at least as far back as the Aztecs!), and yet, it continues. Why do economists happily assume the role of modern day Shamans? Because they can. Your post seems to conclude that having identified the disease, we need only will our way to health. Tell that to the legions of fat people that live in our midst.

    5. diddy wa diddy

      First off, I’ll try to study this again, someday.

      So far I find it deeply flawed, at best.

      Naturally, with some thought, empiricism, where it actually exists, which is probably much rarer than people like to think, is also a metaphysics, with values, moral judgments and who knows what other ‘rubbish.’

      The MMTers whatever that means, seem to be trying to describe ‘laws’ in almost the same sense Hegel was. It always depends on our human reason. Whether that reason has any objective value depends on the case, and the application.

      What is objective value anyway? A: empiricism. 9-)

      Hmmm, I’m afraid I’ve seen it before. A disparaging of metaphysics, that of course depends on adopting a certain metaphysics.

      Similarly, it’s hard to see any value in this kind of statement:

      ”
      Is this not a far better way of educating citizens? Let them know what can and cannot be done and then let them decide from there. Don’t fill their heads with theoretical and speculative rubbish about ‘ideal consumers’ and the like, but explain how the system works and let them decide how they should direct this system through the democratic processes that we base our societies on.

      [what? isn’t that what everyone claims to do, but no one does?]

      This would, of course, greatly restrict the power of economists. In policy circles today economists play the role of the court-priest. They deploy their esoteric and impenetrable ‘knowledge’ to tell policymakers what they should and should not do. To constrain economists to simply explain how the system works is to give them a role closer to that of the lawyer. The policymaker consults a lawyer to figure out what he or she can or cannot do and then makes a decision from there. Similarly, he or she might consult the economist, if the latter was seen as an operational role rather than as that of a seer.”

      What could be clearer than what should and should not be done depends in part on what you’re trying to achieve?

      Then that assumes the MMTers, or some other ‘seer’ actually know how to achieve it, which, metaphysically, I’m telling you quite seriously, is doubtful.

      1. nonclassical

        Action of doing=reality

        who, what, when, where, how (not why-if you know how, you know)=meaning

        reality + meaning=truth.

      2. attempter

        That quote’s great. Technocracy lives (the same technocracy which has already been proven to fail).

        I have a better way of educating citizens – encourage them to take back all that was stolen by them (including by the poster’s beloved technocrats), to take adult responsibility for themselves, and to finally assume their proper historical role ruling their own polities and economies. let them show the elitists “what can and cannot be done”. (Of course, the elitists will no longer exist, so that’s a moot point.)

      3. Bokononsmoothie

        And your criticism of metaphysics presupposes that you in fact exist. Let’s not go too far down the rabbit hole here… Take the article on face value and the author’s point is sound. Remove metaphysics (or morality or whatever you want to call it) from economics to the extent possible for better/more accurate results.

  2. craazyman

    thoughtful stuff Phil! per the general direction of your post about the pyschopathology of economic theology I will paste a comment below that I made some months back. I don’t like repeating myself, but since this is quite on topic . . . (I would like to comment further and tie this line of thinking to the notion of what money is at a metaphorical/energetic psychic level, but I just woke up and haven’t had coffee yet and my head is not working).

    even before the spanish came for gold the aztecs would rip the hearts out of prisoners at the tops of pyramids with obsidian knives, this was done by high priests who were quite pious individuals no doubt, with their big head gear plumes of feathers. I wonder what happened if the head gear blew off in the wind when they were up there on the pyramid. probably everyone gasped.

    the society did this because they thought it was necessary to sacrifice life spirit in ritual atonement to keep the larger life spirit of the world going. that’s the truth. they thought if they didn’t do this, nature would collapse and the world would die.

    why they believed this is complicated and deeply pyschotic, probably due to some atavistic brain stem energy backflow into the fish consciousness. but today, we have the same thing going on, in metaphor. the high priests of the elite money-blood run the banks and rip the money heart out of the peasants and the Fed presides over this ritual sacrifice like Montezuma, with grim determination to propitiate the gods of the money blood.

    And if somehow the whole thing stopped, they all believe that the world would die. And the ritual death of the peasants is a ritual sacrifice, the life energy that flies to the gods of the volcano-dollar feeds the greater life energy of the world, so they piously believe. this is a bit of an exxageration, for metaphorical illustration

    How the protean archetypes mutate like kaliedescopes (sp?) I would say there has been some progress from Aztec times, but not nearly as much as the high priests of the elite would believe. And as for the other elite. Most are drug addicts, alchololics, sex addicts, party animals, medicated like veal cows with medicine chests full of drugs, running from party to party to meeting to meeting, running, flying, running. I’m not sure they have enough of their act together to really control anything. They can’t control themselves even. But they know they’ve got the life-money-blood runnning in their bank-veins and that’s all they need to know walking down the street, that and where’s a good bar for 4 or 5 martinis where they can find a lonely bimbo who worships money. there we go. I don’t think it’s quite as much a conspiracy as it is a conspiracy of lost DNA radios blaring the insane show through the brain night and day, broadcasat from somne pyramid somewhere in hell. :)

    1. Cedric Regula

      Whenever I see the word Aztec mentioned, I get an irresistible urge to recommend the wonderful novel “Aztec” by Gary Jennings.

      I don’t know why that happens really. It may be my DNA Radios going online, if that’s the way it works. Or maybe the Leibniz Monads my DNA Radios are constructed from convert life energy obtained from the ether to wave-particles, driving my DNA Radios to act this way whether they intended to or not. Self determination is a thing not well understood, as I’m sure you are aware.

      But you can always read the novel anyway, whether you want to or not.

      1. Cedric Regula

        Then again, Monads are pretty trippy. Hard to believe this guy did calculus, but here is the Leibniz 90 point list of everything we need to know about Monads.

        But we can see how craazyman’s pioneering work with the DNA Radio has built upon and advanced the science of Monadology!

        Some samples:

        20. For we experience in ourselves a condition in which we remember nothing and have no distinguishable perception; as when we fall into a swoon or when we are overcome with a profound dreamless sleep. In this state the soul does not perceptibly differ from a bare Monad; but as this state is not lasting, and the soul comes out of it, the soul is something more than a bare Monad. (Theod. 64.)

        23. And as, on waking from stupor, we are conscious of our perceptions, we must have had perceptions immediately before we awoke, although we were not at all conscious of them; for one perception can in a natural way come only from another perception, as a motion can in a natural way come only from a motion. (Theory. 401-403.)

        24. It thus appears that if we had in our perceptions nothing marked and, so to speak, striking and highly-flavoured, we should always be in a state of stupor. And this is the state in which the bare Monads are.

        47. Thus God alone is the primary unity or original simple substance, of which all created or derivative Monads are products and have their birth, so to speak, through continual fulgurations of the Divinity from moment to moment, limited by the receptivity of the created being, of whose essence it is to have limits. (Theod. 382-391, 398, 395.)

        48. In God there is Power, which is the source of all, also Knowledge, whose content is the variety of the ideas, and finally Will, which makes changes or products according to the principle of the best. (Theod. 7, 149, 150.) These characteristics correspond to what in the created Monads forms the ground or basis, to the faculty of Perception and to the faculty of Appetite. But in God these attributes are absolutely infinite or perfect; and in the created Monads or the Entelechies (or perfectihabiae, as Hermolaus Barbarus translated the word) there are only imitations of these attributes, according to the degree of perfection of the Monad. (Theod. 87.)

        http://www.rbjones.com/rbjpub/philos/classics/leibniz/monad.htm

        1. Cedric Regula

          Dear Dr. Craazyman,

          I’ve been been studying the work of Dr. Leibniz this morning and find it extremely engrossing. It is easy to see why one of your considerable intellect would devote his life’s work to first the understanding of Monads, and praise the God(s), expand upon it’s concepts and lead us to the discovery of the compound DNA Radio. Dr. Leibniz would be most proud of you, I am sure.

          At first inspection, the work of Dr. Leibniz seems full and complete. There are 90 seemingly comprehensive items, and there is a happy ending.

          But as is sometimes the case, one sometimes has questions of science, especially when coming to grips with something as completely new and fundamental as a Monad.

          Dr. Leibniz quite clearly states that only God(s) is composed of perfect Monad(s). The rest of God’s(‘) Universe is built and populated from Monads of various degrees of imperfection. So this neatly fits our worldly observation of the occasional ungodly being; jerks, pricks, a-holes, rattlesnakes, and the like.

          My question is, and I sincerely hope you can help such a limited mind as mine, Dr. Newton found the need to split Classical Physiks in the static case and the dynamic case. Dr. Leipzig found no reason to do so, and we seem to have only static characteristics in Monads, tho their imperfection may vary from Monad to Monad, of course. Please correct and admonish me if I am wrong about this and missed it for being short of wit. But to return to my question, don’t we need dynamic Monads, and do you include them in your work? (not that I imply you made such a startling oversight)

          A Monad of dynamic characteristics would explain affectations of the mind, notably manic-depression, multiple personalities in the space of one body whilst sharing one tongue, and the possibility of just having a bad Monad day.

          I await your reply with both patience and eager anticipation.

          Your loyal admirer and student,
          always and unequivocally,

          Cedric

          P.S. I look forward with baited breath to learning more about your amazing DNA Radio!

          1. craazyman

            If I can’t channel it with half a bottle of Chote Du Rhone and 1.5 mg of Xanax it doesn’t end up in my work. Sometimes I’ll hit 3/4 of a bottle and take another 0.5 mg of Xanax if the Monad is too thick to loosen up with the mind wave. You know you’re hitting the God Signal when the Monad poly-furcates into a shimmering cloud of discrete intelligences who speak with the language of the angels — which is a wordless knowing that usually presents itself like a silent movie or a dream. The Monad is an illusion of thought — a slothful monument to human laziness, a trophy of our need to economize perception through categorization — and you need to get past it for the real truth. But if you try to get there with more than a bottle of wine and 2 mg of Xanax you can lose consciousness. Li Po expains it all better than I ever could. :)

          2. ambrit

            Sir;
            If Metaphysics isn’t your cup of tea, allow me to steer you towards Pataphysics as propounded by Baba Dada. As for DNA Radios, I think the man is just Jung at heart, and full of the wonder of life. (Liebnitz had his Monads, and Newton had his Book of Revelations. Each was still a great mathemetician.)

    2. dsmlsciprof

      Ahhhh, a fellow reader of the original greatest Economics book of all……Bernal Diaz “The Conquest of New Spain”…..
      It wasn’t just prisoners who had their beating hearts ripped out on a curved rock with obsidian knives, but also the children of the subjugated regions. The Obsidian knives have evolved, we now use Drones and B 2’s, so subjugated regions are global and children of Iraq and Afganistan can now be among the sacrificial.
      Cortez, and those who immediately followed, sacrificed the conquered in the mines for gold. The “Globalization” of markets is now sacrificing the “conquered” in the race to the bottom…..where production can go where externalities ( a polite economics word for
      working in a toxic environment that results in toxic by-products)…..that are….. ……..(Irony!!!) invisible to the beneficial working of the “Invisible Hand”.
      This nonsense about an Invisible Hand is Religious dogma and Religion has always been the “opiate of the masses”. The current High Priests {Sumners, Paulson, Greenspan, and Geitner, to name a few) by pushing this Dogma have wreaked more havoc on the masses than was ever possible during the crusades or Inquisition.
      Simple fact: the US lost almost half of its ability to produce during the Great Depression and yet grew in doubling of outputs during each year of WWII. Why? The resources were always still there . (sorry misogynists, it really was the women who came into the work force)The only thing blocking our emergence from this current Depression is the Religious fervor promoting the Dogma of Free Markets. ( Unless of course you are a TBTF financial entity, in which case huge Religious Indulgences will be granted).

    3. Anonymous Jones

      “why they believed this is complicated and deeply pyschotic, probably due to some atavistic brain stem energy backflow into the fish consciousness.”

      That was awesome. I’m so glad you reposted this comment; I must have missed it the first time.

  4. Foppe

    If you want to read a nice little book (~90 pages or so) that really tries to turn your thinking about economics as a discipline upside down, try reading Bruno Latour and Vincent Lepinay’s recent The Science of Passionate Interests. In it, they basically try to reintroduce Gabriel de Tarde as relevant to economics (though economics reconceived in a slightly different way. I found it very thought-provoking.

    1. Foppe

      To give you a hint of what you might find in the book:

      Latour & Lepinay point out some of the hidden assumptions that underlie the economics discipline, and clarify Tarde’s arguments about how economics should not be concerned solely with expressing the value of stuff in monetary units, but that it should rather try to develop lots of different measuring systems and devices that can be used to measure differences in people and in society, and that money should not be seen as the master measure into which all other values should be convertible.
      In all, a very refreshing book, with important implications for the foundations of economics and social scientific methodology more generally.

  5. Toby

    The MMTers stick to a wholly detached description of the way the economy works. They describe the actual working of the money and credit systems; they also describe how the system of national accounting works. There is no metaphysics here. This is just a description of how these processes work from an operational point-of-view.”

    Define “wholly detached”.

    It is not metaphysical to point out that the bible asserts that Jesus was born to a virgin, but so what? Are the “actual workings of the money and credit systems” the only possible way of distributing goods and services? Are these “actual workings” sustainable, good for the environment, just? Is national accounting sound? Valid? Helpful? Why should we just accept these things?

    Describing these systems is like a lawyer describing a body of laws. The lawyer – provided he is not a hack – is not going to tell you what you should or should not do, instead he lays out what you can and cannot do and lets you decide from there.

    I can murder people, steal money, embezzle, drive while drunk, and so on. I cannot breathe underwater, fly unassisted, grow food out of concrete, drink mercury without dying, and so on. I don’t understand your point here. Do I need a lawyer to tell me that I cannot breathe underwater? Obviously not. So I need one to tell me I should not murder, because if I get caught I either go to jail or get executed, depending on where I commit the murder?

    Again this circularity. Economics is bunk, so let’s just describe the economic system as it is, accept accountancy as is, and laws as they are. Let’s not be moral about this, heaven forbid, let’s accept the system’s morality unquestioningly and just list the details. Is that what you are saying? Is that what you think of as scientific? ‘Amoral’ descriptions of social systems? Let’s not contemplate whether the economy and its infrastructure are manifestations of an elitist system whose prime defense comes from economics, that would be unscientific. But would it?

    To call economics a religion, yet then go on to call for “wholly detached” acceptance of the very economic system economic jargon conceals, strikes me as a waste of time at best, disingenuous at worst.

    1. attempter

      To call economics a religion, yet then go on to call for “wholly detached” acceptance of the very economic system economic jargon conceals, strikes me as a waste of time at best, disingenuous at worst.

      Just another day at the Bureau of Misdirection and Dragging Out False Hope.

      1. ambrit

        Sir;
        I must agree. Tobys’ logic, (am I being too charitable?) is somewhat deficient. Has Toby been reading too much Von Daniken? Could it be a sign pointing to the psychic influences of the “Gods” from inner space? How else to explain that murder is dangerous because people try to stop you diong it because they rightly fear that they will eventually end up on the ‘list’ of victims? Even if knowledge is imperfect, it doesn’t follow that we should abandon what we have to returm to already discredited systems.

        1. Toby

          ambrit, you have completely misunderstood my comment, attempter’s too, and I suspect Philip Pilkington’s post.

          1. Anonymous Jones

            On the other hand, I *did* understand your comment.

            And I can assure you that it was stupid.

          2. ambrit

            Toby;
            OK, I’ll take that as a ‘go back to school’ comment and re read the pieces.

        2. Doc Sportello

          @Anonymous Jones

          On the other hand, you clearly know what you’re talking about.

          Feed me more!

          “In order to pass the time I told him the story of the German who ate the other German whom he’d met on the internet.” — Michel Houellebecq

      2. ambrit

        Toby et. al.;
        Alright, I’ve gone back and reread the lot, scratched both my head and my bum, and come up with:
        First: Despite my unfortunate lacks in education, Mr Pilkingtons assertion of ‘wholly detached’ MMTers approach to economics is consistent with a decoupling of the study of economics from preconceived notions of how society ‘should’ function. I take him to mean that preconceptions mould results in so called ‘scientific’ endevours regarding economics. So, subject economics to rigourous scientific observational study. (Let’s leave out Heisenbergs Uncertainty Principle.) If students of the dismal science can isolate forces and behaviours that act on economics independant of the social milieu, we have a start on truly objectifying the discilpine.
        Second: I find him to be decrying the tendency of ‘modern’ economists to conflate metaphysics and economics. It is the ‘modern’ economists who are applying circular arguement to the field. This could have many sources: personal belief, external propaganda, institutional biases, even an uncritical approach to ones intellectual environment outside ones specialty.
        Third: As an adjunct to Two above; much of present politics, and economics where it intertwines with it, is being run like a religious cult. Us and them arguements help poison the discourse. The Demonization of not only opponents, but anyone not actively supporting the favoured belief system, corrupts the dialogue. Opposing views are not argued and discredited, (if you’re lucky,) but dismissed unheard. Dogma is the enemy of understanding.
        Fourth: The concept of free will does indeed have its’ limits. But they are all physical. We can not invert the process. Unless you are willing to argue Phenomenology, the progress of progress is from observable, and replicable facts and processes, to theory. Once we learn the mechanisms that underlie and motivate the economic world, then we can try to mould them to carry out ‘Moral’ purposes. Defining those ‘moral’ purposes is another matter entirely, and the true venue for politics, much less Metaphysics.
        Fifth: The elitist system has perverted the practice of economics precisely because it has ‘captured’ the intelligensia and subtly instilled its own ‘brand’ of belief into the syllabus. I think Mr Pilkington adequately demonstrated that “Totem and Taboo” have pre-empted “Observation and Experiment” as far as ‘modern’ economics goes. To go a bit over the top, as it were, economics stands today at approximately the same point in its development as biology did just before Darwin. Despite the empiracle nature of his thesis, most of the attacks on Darwins’ theory were based in Religion. Religion is alive and well today, but so is evolution. The two spheres have come to an uneasy modus vivendi. Economics and Metaphysics will eventually have to come to a similar accomodation.
        Sixth: I am well aware thar ‘attempter’ doesn’t have a single sarcastic bone in his body.
        I remain sir, your humble and obedient servant.

        1. attempter

          My sarcasm was directed at the OP, which as I said is running a scam intended to misdirect attention from the brute fact of organized crime and the role of economics as nothing but an ideological justification and obfuscation of it. Similarly, the mirage of a “better” economics somewhere down the road is meant to drag out false hope and keep people’s thoughts on reforming the system (an impossibility) rather than renouncing it completely. Judging by the latter part of your comment, you’re still falling for that one: hook, line, and sinker.

          Other than blind faith, do you have any evidence for the faith that economics has progressed since the old split from political economy? Or is it one of those things where one must go through the valley of death before reaching the promised land? Is the blind faith that of being a progressive, which simply means things have to progress, and never mind empirical facts like the fact that this “discipline” has done nothing but regress? And that this regression has been the pure function of its serviceability for organized crime, which was its whole purpose in the first place?

          Not to mention, why would one believe in the “progress” of something so odious, when we can take our lives and our fates in our own hands whenever we choose? I always want to ask our elitist “progressives”: Where’s the progress if humanity never emerges from under the shadow of the rule of elites? It seems to me that to remain an elitist, of whatever nominal political stripe, is by now to be a rank reactionary.

          1. ambrit

            Mr attempter;
            In reference to “the mirage of a ‘better’ economics somewhere down the road,” you suggest a truly ‘radical’ break with the past in ” we can take our lives and our fates in our own hands.” Though admirable in theory, the implementation of such has severe drawbacks. In the first place, there is the inescapable fact of ‘physicality.’ We all need to eat, have shelter, have some free time to do our thinking in. This, I’ve found, is not a pure ‘gift of the gods.’ A lot of effort, constrained by limits to knowledge, and often pure luck, goes into these limiting conditions. The totally free actor also has to accept the often overwhelming fact of failure and personal extinction. The Aristocratic model of society was based on the ‘accident of birth’ as elaborated by those so favoured. Considering what is now being discovered about the relationship between ‘nature’ and ‘nurture,’ Genes and Memes, there is a faint hope that economics can be given an empirical underpining. Call it ‘Progressive Delusionalism’ or what you will, observable results will hold out the ‘last best hope’ for the perfection of human society. As in any ‘scientific’ endevour, replicable results are what matters. I suggest, and I think Mr Pilkington was too, that Keynsianism was succesfully groping towards that goal. The “New Deal” reforms did indeed save twentieth century, (nineteenth century?) political economics. The measure of that assertion is in ‘the greatest good for the greatest number,’ a wholly defensable goal. Aside from the ideological struggle inherent in this formulation, the plain old ‘social utility’ accruing to this program recommends it to any objective observer.
            As for the ‘Organized Crime’ nature of the present stage of economics, as I believe I asserted earlier, this is a function of the political dimension, not the economic one. Yes, things have regressed. However, I assert that this is a result of ‘capture’ of the ‘official’ science of economics, (or perhaps economists,) by a kleptocratic clique. Most of us reading here would agree that this development is the result of a long and corrupt process. If I understand you aright, you are asserting an inherent ability of the human being to seek and find the good. Well and good, if you can come up with an efective curb upon evil in the affairs of humans. Subscribe to what philosophical belief system you will, the fact of imperfection and corruption, I assert, is a limiting factor on the affairs of humans. To this extent, the scientific method is our best tool to effect ‘positive’ outcomes. I note and accept the caveat that ‘scientific method’ assumes perfectability in observation , and also that reality can be apprehended and described. Thus, my agreement with Mr Pilkington about the ‘Totem and Taboo’ formulation. It may be inevitable, given our human frailties, but it should not be ignored or ‘wished’ away.
            I am particularly interested in your theory concerning the “take our own lives into our own hands” phenomena. You suggest ‘hope we can believe in.’ Believe me when I say I want an effective hope too.
            Yours, the Brit.

          3. attempter

            You’re the one who seems to think food and shelter come as a gift from the gods, or at least from infinite cheap oil. But the fact is that the only way to maximize food production post-oil is on the basis of relocalized, diversified agroecology, and the only way this will be achieved is on the basis of mass land reform, smallholder and cooperative production.

            So even aside from the moral, spiritual, and political imperative, our very physical survival, which you cited as paramount, depends upon the transformation to positive democracy.

            Call it ‘Progressive Delusionalism’ or what you will, observable results will hold out the ‘last best hope’ for the perfection of human society.

            Yes, and the observable result of your endeavor has been nothing but disaster. I reject progressivism precisely because it’s been empirically proven to fail at spreading prosperity, equalizing wealth, empowering political participation, nurturing social stability, or ending wars of aggression.

            As in any ‘scientific’ endevour, replicable results are what matters.

            Yes, and your way has replicated nothing but, at best, an endless war of attrition, an endless cycle of capitalist aggression, crash, temporary reform, attrition, the reascendance of aggression, crash, and so on forever. The advent of Peak Oil and terminal kleptocracy means the end of this cycle, for better or worse.

            But even if it could continue, what human being could be so degraded inside that he’d want to continue it, when we can simply be rid of these criminals forever? There we see the fundamental inner wretchedness of the “progressive”, and where his reactionary elitism still forces him to want to go. He’d rather have banksters and economists than democracy.

            I suggest, and I think Mr Pilkington was too, that Keynsianism was succesfully groping towards that goal. The “New Deal” reforms did indeed save twentieth century, (nineteenth century?) political economics.

            As I just said, this is a wretched goal even if it were possible.

            The measure of that assertion is in ‘the greatest good for the greatest number,’ a wholly defensable goal.

            That was never Keynes’ goal. He wanted to save capitalism from itself. If that required him to seek a wider good than most capitalists would prefer in their short-sightedness, he’d hold his nose and advocate it.

            Aside from the ideological struggle inherent in this formulation, the plain old ‘social utility’ accruing to this program recommends it to any objective observer.

            The only social utility here is for those who have always benefited and will always benefit under such a dispensation: The parasitic criminal elites. Exactly those whose aggrandizement is the goal of both conservatives and liberals, as we see in the cases of our economist-defenders in this thread.

          4. ambrit

            My Dear attempter;
            To reply to your criticisms of my analysis of Mr Pilkingtons post:
            The very reason that the Earth has so high a carrying capacity at present is mainly the result of the application of ‘scientific’ advances in agriculture including but not restricted to: The development of synthetic fertilizers, the mechanization of farming, the guiding of accelerated evolution of food plants and animals, the economies of scale attendant on the ‘corporatization’ of agriculture, the scientific analysis of cropping patterns, etc. etc. Good or bad, these are observed factors underpining the present world population. While alternative social models have been shown to work in agriculture, they all required an extraordinary investment of personal will in some overarching social scheme. Studies have shown that the longest lasting and most efficient commune based agricultural endevours are religiously based. Whether Mormon Pioneers or Zionist Kibbutzim, the best and brightest on the land are performing the work for a higher goal then the work itself. From limited personal experience I can attest that farm work is long, hard, tedious, and not at all conducive to heightened states of consciousness. Also, as America discovered after WWI, “How you gonna keep them down on the farm once they’ve seen Paree?” There are severe limits to efficiency in agricultural labour. If you seriously propose ‘returning to the land’ you had better be prepared for a massive die off of the human population.
            Secondly, you say that Progressivism equals ‘nothing but disaster.’ This sounds suspiciously like one of those zero sum game arguements. A disaster compared to what? You’ve no doubt heard the old neo-con arguement that the Western ‘working man’ had better stop complaining because he has it a lot better then the Fellahim living along some Third World river. This is obviously a false analogy simply because the two cases are not in the least comparable. The assertion that modern progressivism is a ‘disaster’ because it has not ushered in the Millenium is an equally false comparison. This is a case where relativism is a perfectly respectable tool for arguement. Relative to the standards of living in the same culture X years ago, today is, by any standards you care to cite, better. So are the problems, but there you stray off into multiplying cases and the infinite regression of causes. To say that the system that has raised the standards of living of so many people is bankrupt because it hasn’t met the Aristotelian Ideal of the Perfect Society is to miss the point of the Greek concept of Arete, a constant striving towards perfection without the anticipation of achieving it, which I posit is plainly that the struggle is worthy, in and of itself. Thirdly:I state outright that Progressivism is not Neo-Liberalism. Progressives as individuals are prone to all humankinds faults. Who does not? But I assert that Reactionary Elitism is a priori Conservatism in its’ extreme form. As Progressivism is the ongoing work of old line Liberalism, how can anyone conflate it with Reaction of any sort? To say that Progressive ‘Elites’ are counter productive is valid. The proper response to this problem is to remove the elites, not the progressivism. Insofar as we are talking here about human groups and dynamics, the rule of entropy applies; “Things fall apart, the Centre cannot hold.” You are suggesting we scrap the whole process, built up over centuries out of struggle and conflict, and take a great “Leap into the Dark.” Perfectly reasonable when applied to personal inner development, but potentially disasterous when applied to entire populations. If your personal journey takes a wrong turn you can stop and backtrack and try to learn from the experience. In our social journey we cannot bring back the tens of millions of dead from starvation, pestilence and war that would follow. An objective example would be China and the Cultural Revolution and the Great Leap Forward.
            Fourth: As for “Social Utility,” the term has been kicked around somewhat of late, and I accept the blame for not being precise enough in my formulation of what I think it is. You have suggested that ‘Elites’ have hijacked the concept for their own ends. I am positing that it refers to the aforesaid “Greatest good for the greatest number.” The opposite of what the ‘Elites’ mean. At heart here is a hidden assumption. To wit, that whomever ‘wins’ the battle for the ‘ownership’ of a term in the public discourse defines the term to their interest. Words do indeed have power. This confuses the term with the underlying ‘reality’ it purports to describe. Of such is sophistry made.

          5. Toby

            Hi ambrit,

            you wrote. “The very reason that the Earth has so high a carrying capacity at present is mainly the result of the application of ‘scientific’ advances in agriculture including but not restricted to: The development of synthetic fertilizers, the mechanization of farming, the guiding of accelerated evolution of food plants and animals, the economies of scale attendant on the ‘corporatization’ of agriculture, the scientific analysis of cropping patterns, etc. etc.

            All true, and I think hygiene, sanitation, improved and cleaner hospitals, improved child-birth safety, and plumbing should be way up there.

            The problem is the pattern of growth. The money system, through usury, forces perpetual growth on us. ‘Idle’ resources must, at an ever increasing rate, be turned into commodities, a process the planet cannot sustain indefinitely. And peak oil is already an upset in this ‘growth’ pattern–not to mention (peak) debt–a pattern which has been aggressively exponential this last century or so. And then there is the poverty of the developing world, the starvation, the endless war. As I see it, those suffering billions are paying the price of a system which cannot care for them, while we lucky ones get to pontificate on NC.

            The challenge, which is enormous, is to address the systemic problems with some sort of grace before that opportunity slips away. I do not see it happening, but I try to draw attention to it anyway. Actually I am very pro ‘technology,’ but would say nature is technology; it is ‘creative’ problem solving which engenders new problems and challenges. A loop driving itself. But, within the paradigm of perpetual growth, within the false assumption of the Invisible Hand, technology/progress are driving us over the edge. That you can make the argument you just made, which is a fair argument, does not mean the pattern you describe can go on forever. The very science and technology that has made planetary carrying capacity expand to cope with so many billions (albeit in extremely different qualities of life) is also informing us of the slow death of all living systems. Yes, monoculture farming has produced enormous yields, but danger is built in as we destroy bio-diversity. We are making ourselves increasingly vulnerable to catastrophe as we destroy the environment’s resilience. Ecology (another form of technology) is showing us this very clearly, but because the progress you describe is so impressive, so glittering, and because the economics Philip Pilkington wants to leave untouched forces perpetual growth, progress is also deadly. Like a rocket magnificently launching in a blaze of fire, the fuel runs out eventually. Sadly, any attempts to point this out are met with, “But look at how magnificent the rocket is! Look how many people we packed on board!” All true observations. But not true enough.

            I don’t want a life of farming, and agree that repetitive work is not so good for human development, but I don’t believe attempter wants that either, at least not as you have represented it. Look into permaculture, which has very high yields and does not require that much work. Have a look at Sepp Holzer’s ‘discoveries’ on YouTube. Modern technology in farming is showing how to work with nature, our technological partner, not as an enemy to be beaten, to be conquered. It minimizes human input while staying in tune with nature’s rhythms. Once we have that sorted out, and it can be applied in cities too, once we’ve established wiser energy use etc., who knows what new wonders we can work!

            We have done so much, so quickly (this last century), learned so much, and none of it (the good stuff) need be thrown away, unless we stay dazzled for too long by our accomplishments and fail, for this narcissistic reason, to recognize how close we are to destroying ourselves, and carry on blindly with the systems we have. If we bring eco-collapse down upon us–and we are very close to this as I understand it–then the squalid life you an I fear will be forced on us, if we’re lucky. Changing the money system and with it our socioeconomics, embracing sustainability, renewable energies, etc., are at the heart of averting that catastrophe. Doing all this would be technological accomplishments per your definition, and would be progress. But the cultural impediments are enormous. Humanity has never faced a challenge like it.

          6. attempter

            I never asked for progressive capitalism to achieve “the millennium”, as your straw man would have it. I asked for it to achieve what it and the “invisible hand” promised, and which could easily have been achieved with humanity’s accumulated wealth, if the whole thing hadn’t been a lie.

            And today you either wish to continue believing the lie, or else you’re among those telling it.

            Your vaunted corporate agriculture is a case in point. With a huge one-off injection of fossil fuels, agriculture temporarily increased yields.

            (But as the science has demonstrated, even at its peak these yields aren’t superior to those of diversified organic agroecology. So even on your own terms you’re factually wrong.

            http://www.srfood.org/images/stories/pdf/officialreports/20110308_a-hrc-16-49_agroecology_en.pdf

            http://www.mindfully.org/Farm/Small-Farm-Benefits-Rosset.htm )

            It only did this by building multiple Towers of Babel atop one another – the looming ecological disaster of total soil collapse your synthetic fertilizers shall inevitably bring, the crop failures guaranteed by your GMO dependency (on account of the total vulnerability of such a hermetic monoculture; the biological arms race with superweeds it intentionally engenders is just the most obvious such vulnerability), and the guaranteed failure of the antibiotics regime which is the only thing which maintains your factory farms in existence. On top of food system failure, this shall lead to a lethal pandemic. That’s not an “if” but a “when”.

            You forgot to stipulate those in your rosy analysis. (I called all those things “yours” because you proudly affirmed corporate agriculture.) That’s typical “progressive” thinking – latch onto some factoid (usually a lie anyway) like the alleged increase in food production and ignore the structural insanity of it.

            Economically, this alleged food bounty was never used to feed the world and was never intended to do so, although many were and still are gullible enough to believe that lie. But in fact this alleged increase in the earth’s “carrying capacity” really meant a great increase in the population of the food insecure, while the West temporarily benefited from lower food prices. This was just another aspect of the West’s temporary debt economy which was meant to misdirect middle class attention away from how their ultimate liquidation was being structurally prepared. Of course today’s food stagflation is the sign that this particular party’s over.

            Finally, you forgot to mention that the so-called Green Revolution was simply the massive one-off application of fossil fuels to agriculture. With Peak Oil and energy descent, agriculture shall return to its pre-fossil energy baseline. We do have the choice to apply the right political and economic dispensation, along with the knowledge we’ve achieved, to maximize food production post-oil, and even to do so in such a socially more fruitful way that we end up making a virtue of necessity.

            But you exemplify the “progress” ideology in choosing to refuse to face this fact and this choice, and instead to sneer, flat-earth fashion, at it. But the fact is that it’s your way which would choose to make the farming future as hard and horrible as possible, by refusing to take responsibility for it today, instead choosing to continue to repose faith in elitist “progress”, including the delusion of a continuing improvement of elitist economics (which was your faith that triggered this exchange).

          7. Toby

            I just want to add, because this is an important conversation, that the current system is horrifically profligate. In the myth of itself–that it so successfully disseminates via the Economics Religion Philip Pilkington wants to leave unquestioned–this system is efficient. ‘Free’ markets are touted as efficient distributors of societal product. They are not. They are efficient movers of money around the globe, in pursuit of more money. This system is excellent at making money from money, which it falsely calls generating ‘liquidity.’ But waste of real resources is everywhere evident, from the enormous quantities thrown away by companies and individuals alike, to the obscene amounts of unnecessary consumption demanded of us by advertising (which is everywhere), to the implicit and perverse assumption that resources are in infinite supply, which stands in such odd contrast to the artificial scarcity the system then purposefully generates and loves to highlight.

            A quick, though small, example. A test was performed recently on how what we see influences how much we eat. It was found that blindfolded people eat 30% less food than they do ordinarily. And that’s on top of the waste that occurs at every step along the way, from harvesting to retail. Then there’s our energy consumption, the inefficiency of our transport systems, our houses, city design, the rat race itself, and almost every other sphere of our lives.

            Waste is everywhere precisely because this system’s focus is on money, not the environment, with the explicit assumption the Invisible Hand will take care of it. It is assumed that money, or price, is good and true information about cost. But of course it is not, for various reasons, many of which are listed in the article. Until we fix our socioeconomics, the waste will remain concealed by the myth, and continue unabated.

          8. ambrit

            Dear Toby and attempter;
            It,s a new morning, I’m feeling rested, the birds and squirrels are doing their interactive foraging in the back yard, and, after some good old fashioned Maoist ‘Self Criticism’ I’ve decided that this subject is indeed important. (Whether or not I can make a useful contribution is another matter.)
            As I see the arguement so far, the core issue boils down to Management. All of our points point toward failures of the present system to make decisions that support the generality. I am in perfect agreement with you here. A lot of the public debate has been steered towards questions of labeling: Who is a Patriot?, Who is Green?, Who is a democrat and whom a reactionary? These ‘questions’ are smoke screens, distractions at best. The willfully ignored question is “Who runs the Show, and for what end?” Here is where our definitions matter most. To steal ideas from better people than myself, how one defines a system or process essentially defines the results of that system or process. This formulation could be used to entrap us in an unending cycle of phenominal abstraction. Fortunately, (depending on your view of course,) Nature intrudes in a most emphatic way. Naturasl processes exhibit an internal logic that is observable, but generally not reformable. No one has yet made rain fall back into the sky, although lots of confidence hucksters would try to make it ‘seem’ so. This conman process generally falls into the category of “Magic” and, yes, I have to say it, “Economics.” Clarkes’ Law applies here of course: “Any sufficiently advanced science will be indistinguishable from magic to primitive peoples.” Hence, I, and I believe Mr Pilkington also, believe that Economics is struggling to escape magical thinking and enter the realm of science and logic. Yes, the aforesaid exhibits a strong faith in science and technology, but I think we all agree that, by themselves science and technology are neutral. The uses that they are put to are what we are really interested in, so, Management.
            As for population pressures and the planets carrying capacity, two things come to mind. First is that the Green Revolution was a response to percieved crises in the world of the time. It’s a bit of a ‘Chicken and Egg’ question, but which came first, rising childhood survival rates and extended lifespans, or expanded food resources, reveals one of the dangers of unguided ‘development.’ The Law of Unintended Consequences applies here with a vengance. Second is the unknown effects of technology growth. Solar photovoltaic systems are predicted to cross the costs of ‘conventional’ power generation systems and become cheaper per kilowatt within the next decade. This massive disaggregation of the population will have yet more unforseen effefts on social organization. I asked some time ago on another thread, “What are the uses of this new information technology? Isn’t it harming us as a society?” I got very positive and persuasive feedback, and had to “go back to the drawing board” and rethink my stance. The Dialectic had struck, and worked. I had to change my mind on this because I had been presented with compelling evidence that I was wrong. The flight from the power grid will have even greater consequences. The management of this transformation, or its managed demise, will be a determining factor in future social structures. (Note how many of the giant energy companies are trying to coopt ‘alternative’ energy production. It’s no accident that, when you ‘go solar’ in a big way, the power company gives you an either or choice, no inbetween. Either stay connected to the power grid, and stay that way all the time, or disconnect, and stay that way all the time. No middle ground is offered. This is a subtle bit of coersion, are you with us or against us? The question is bogus, the intent is not; social control.) I must admit I do not know enough about the new agricultural movement to intelligently comment on it. What I can observe and comment on is how widely or not it has taken hold. Is it a Movement, or a Fad. (As we can see here, I’ve framed the question in a somewhat questionable way. Bias is observable but manageable.) For my own biases, I grew up in a Technocrat household. So, I often give too much weight to the technical side of things. Others of you seem to come from Managerial or Beureaucratic households. (Sort of like Castes in other cultures, only more flexible.) Hence, other concerns predominate. So, the big trick here is to find the proper and useful balance between the interests, always keeping in mind that Nature usually acts like a capricious God or Goddess. That’s where the scientific method comes in, and is useful. There’s more to say, but I’m being told to get ready for church. My wife is religious and acts as a counterweight to my tendency to fly off into Materialist Heaven.
            Keep working on it folks. Our survival depends on it. (Think Sixth Extinction Event.)

        2. Toby

          The ‘objective’ (“wholly detached”) observation of society you appear to think possible, I believe to be impossible. The ‘tools’ we learn, with which we are socialized, which we bring to the task of analysis, come from the society we seek to analyze (typically). It’s like a blind spot. Also, society is inescapably concerned with ‘should’ and ‘shouldn’t’ from the outset (assuming for a moment there is a clear outset). Setting up society, to the extent such can happen deliberately at all, will always involve preferences, ideas, interpretations, learned morality. So far no group of humans, as far as I know, have built a society according to scientific principles, coolly, dispassionately, ‘value free.’ The society we have before us and around us today was ‘constructed’ out of ignorance, suspect morality, incomplete understandings, with the powerful able to defend their positions far more than the weak. To leave that unexamined is unscientific.

          Thus a call to accept the economy, accountancy and law as they currently are, simply to detail their functioning, is no more scientific than spelling someone’s name. Though obviously it’s a start. It just doesn’t go far enough.

          An economics that would interest me would concern itself with soil fertility, planetary carrying capacity, sustainable energy generation and distribution, that is, the actual workings of the planet and its ecosystems and how human society might best live within those parameters. I would add, from my own morality, that it ought to have an impulse to prevent poverty, maximize freedom of movement, minimize the chances for war, and so on. But its foundation should be the reality of the planet’s carrying capacity, cycles of renewal, actual resources, you get the drift. That is absolutely not the economics we have today, and I don’t see MMT, which offers plenty, attempting that. So I have my doubts about it.

          2. Frank Powers

            Toby,

            you should be writing pieces for NC instead of Mr. Pilkington. That would be an improvement for everyone.

            Keep up the good work.

          1. ambrit

            Sir;
            Thanks for the vote of confidence. The battered old ego needs to bask in the suns refulgence occasionally. (I do have the odd base motive.) I have just had one of those, who do you think you are moments. I worked up and typed out a reply to attempters last reply to my comment, and saved it in a folder, only to have both copies enter the land of the lost. Oh woe is me! (Cue the violins.) I’ve taken your advice and dug out my copy of Capital. Now to look into Chapter Three. Be of good cheer.

  7. jake chase

    All of economics is not rubbish, but only the rubbish offers careerist opportunities for toadying to the elites and their public relations approach to social control. Veblen analyzed this completely in 1904. His Theory of Business Enterprise is all the economics anybody needs. The Federal Reserve and the Income Tax cemented business control of the American “republic”. We have enjoyed a war and bubble economy and a national security state ever since.

  8. Samana

    The Tao is the law. Man can either align with it or suffer. When man makes his own morals, either through myth or economics, he goes against the Tao, and suffers begins.

    1. Valissa

      “The more laws and order are made prominent, the more thieves and robbers there will be.” – Lao Tzu

      “To know yet to think that one does not know is best; Not to know yet to think that one knows will lead to difficulty. – Lao Tzu

      By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest. – Confucius

      “Man suffers only because he takes seriously what the gods made for fun.”
      — Alan Watts

        1. Valissa

          Not sure what to make of bitcoins. First read about them about a month ago. The idea of “decentralized money” is intriguing. As always I find myself suspicious… to paraphrase a classic question “Whom does the bitcoin serve?”

          Clearly the rebel forces are pro-bitcoin…
          WikiLeaks Asks For Anonymous Bitcoin Donations http://blogs.forbes.com/andygreenberg/2011/06/14/wikileaks-asks-for-anonymous-bitcoin-donations/

          When contemplating the nature of money, I always come back to this piece by The Onion…
          U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion http://www.theonion.com/content/news/u_s_economy_grinds_to_halt_as

  9. Bruce

    I don’t understand how washing hands is ritualistic.

    I also didn’t get the connection as to how the invisible hand theory arises out of a moral system. It’s fairly well documented that people respond to incentives. E = MC^2 isn’t a moral theory, nor is marginal utility. It just is.

    Very interesting article overall.

    1. Toby

      The Invisible Hand is supposed to deliver social good. It advises against ‘interfering’ in the market, ‘interfering’ which can only do social harm. When we judge social good and bad our judgments are based on our morality. Scientifically speaking, there’s nothing wrong with suffering, poverty, war, they are simply phenomena that occur, just as there is nothing right about maximizing social good, eliminating poverty, preventing war, and so on.

      Should you say, “I will eradicate poverty, because it is a social plague on humanity,” you are expressing a moral sentiment and a desire to do something. Thereafter you might decide to leave the market alone and hope The Invisible Hand works its magic, or you might follow a different course, perhaps a scientific course. Either way the original impulse is moral.

      1. Bruce

        I am sorry I just read the entire wiki on the “invisible hand” theory and it is a theory about how markets elf-regulate and individuals maximize. I didn’t see any discussion about how the throy itself is part of a given moral framework.

        without a doubt the theory is used to make all kinds of moral arguments, but the theory itself is not, as far as I can tell part of a morality.

        1. Toby

          Why is the invisible hand, market ‘self-regulation,’ better than an alternative? What is the reasoning, do you think? What is ‘self-regulation’ delivering that humanity might want or benefit from?

        2. scraping_by

          Yes, it is a theory in itself.

          But a theory can be proved or disproved by observed fact. Where’s the proof, the times and places a purely unmonitored market self-regulated? And looking around at all of economic history, not just the cut-down version that makes it into scholarly articles, economic life without fiscal cops is nasty, brutish, and short. The contradictory facts are profound, pervasive, unavoidable. How much higher do you want to pile the disproof?

          And yet, free market advocates continue the carnival barking. No amount of contradiction can still the free market squawk, and the continued failure to predict, or even describe, is ignored. The free market is taken on faith, rather than proven as a scientifically valid theory.

          Therefore, it’s a theory that has been reworked into a religious tenet.

      1. Aquifer

        Hmm, the answer to your question is posted just above – the invisible hand must have moved it …..

        1. Just Tired

          Thanks. I was wondering why no one replied to my invisible reply. I suspect that the invisible hand moved that too.

    3. JakeS

      Actually, Bruce, any first-year anthropology student will be able to tell you that marginal utility “theory” is complete and utter garbage with no redeeming virtues of any kind. To compare it to the phlogiston theory of fire would be unkind to 17th century chemists.

      – Jake

  10. Roland Weary

    Philip Pilkington: “The MMTers stick to a wholly detached description of the way the economy works…. just a description of how these processes work from an operational point-of-views…Is this not a far better way of educating citizens?”

    Perhaps Obama, Geithner, Summers, Bernanke, Rubin, Blankfein, et al, could take turns holding weekly fireside chats with the American public and that way explain MMT to them and how these processes work from an operational point of view? God knows they’ve been trying everything possible to serve the public interest.

    They could hold these educational fireside chats right after Dancing with the Stars when they would have most of the nation’s attention. The only problem might be if Geithner and Bernanke were seen as competing with strong performances such as Kirstie Alley’s Cha Cha or Ralph Macchio’s Foxtrot.

    So maybe they should hold the fireside chats only after low scoring contestants such as Wendy Williams or Tony Dovolani, who were first put on the short list for elimination, before they were sent packing.

    That would’ve been a good time for Team Obama to step in with an educational talk on the floating exchange rate, or the way in which MMT rejects the mainstream idea of the money multiplier.

  11. Dave of Maryland

    Metaphysics is the study of how the invisible, non-material world precipitates the crassly physical world as a by-product. It is a most fascinating study, you might want to take it up sometime. For a parlour trick, you can study how a living human ends his life, transits through an invisible world, and is then reborn: Ghosts are metaphysics at its best.

    So let me get this right. Economics, which started with numerical analysis, drifted over time to become just another religion?

    So the solution is to repurify, reconsecrate along PC lines? So far as economics goes, why not just study Marx?

    1. ambrit

      Dear Dave;
      I think you’ve got the cart before the horse. The thesis is that Economics started out as Metaphysics, and has yet to fully graduate to real science. Keynes made a start at the de-mystifying of the discipline (that word alone should alert you to the problems inherent in studying the field,) but the forces of ‘Orthodoxy” are valiantly battling back.
      Ghosties are another matter, as I have yet to see ectoplasm traded on any bourse or exchange.

  12. nick gogerty

    As an anthropologist and hedge fund specialist. I agree with the article. If it isn’t empirically falsifiable in the Popperian sense it isn’t science, it is narrative. Most of what passes for science is narrative.

    Most economics is either non-falsifiable or exists within the closed but highly exacting narrative of mathematics, which is itself tautological not empirical.

    1. Sufferin' Succotash

      So the logical course for economists is to give up the scientific pretensions and focus on narratives. In other words, economic history. Of course, the study of history has its own methodological pitfalls–for further details see David Hackett Fischer’s “Historians’ Fallacies”–but it does involve working with verifiable evidence. Grain prices in Amsterdam in 1650 aren’t going to change, though our interpretations of those prices might.
      Full disclosure: I teach college-level history.

      1. monday1929

        You might enjoy the Socionomics Institute’s complementary
        June 7th article “Back to the School of Hard Knocks?”.

        It shows a possibly completed 5 waves up from the 1700’s in various educational measures. The graph of GPA “inflation” is great, as is Yale’s tuition wave pattern. The education bubble- 800% in ten years, outstripped even the credit bubble. How does one Short Harvard?- easy- just short the Emerging Market funds their endowment is again loaded up on.

        Mr. Prechter would say that economists theories (narratives) merely bend to the shared social mood, if they wish to be (financially/career) successful, just like the Shaman’s.

        As far as the invisible hand goes- I saw the invisible hand, at a Religious Retreat in Davos after 3 days of fasting
        (the caterer messed up), so don’t tell me that is a myth. The bearded man next to me saw it too.

        1. ambrit

          Dear Horologist;
          Was that bearded man by any chance Gurdjief?
          Strictly speaking, the ‘Hidden Hand’ is indeed a myth, or an attempt to explain something apprehended but not comprehended.
          As for Shamans, most narratives concerning them I’ve read state that they report being ‘posessed’ by the spirits, not the other way around. If economics is to become a real science, it needs to develop tools and processes that verifiably effect the outcomes of economic events, not just try to explain ‘what just happened.’

          1. Dan

            Adam Smith used the construct of “The Invisible Hand” to explain to people why they wouldn’t be losing jobs to foreigners.

            “By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

            The word for that is ‘Nationalism’ and it’s patently obvious in the modern economy that it was a load of bullshit.

  13. Dan Duncan

    $= -(k log w). Bitch.

    I’ll say one thing for Pilkington—this guy is a fantastic writer.

    As to the content…

    Pilkington misses the point. Economics isn’t metaphysics. Rather Economics is Newtonian Physics in an Einsteinian universe.

    The problem lies with the conception of money. And it’s in this conception that Pilkington and all MMT’ers are oblivious.

    Money is not some arbitrary concept. Money is NOT an illusion. No, money is information…in the most fundamental Claude Shannon conception of information.

    As such, money is negative entropy. [Hence the play on the famous Boltzmann equation S=k log w.]

    Entropy is a (probability) measure of unavailable energy. Information–and, therefore, money–is the negative of entropy.

    And here’s the crux of the problem: Information comes in more than one form.

    First we have information on physical, concrete systems. This is “Information as Action.” In this classical world, information is a reference. How hot is this steam chamber? How fast is the train moving? Where, exactly is the satellite located?

    It’s in this physical information system that we have developed our classical, Newtonian concept of money. What is the price of oil? What is the going rate for a roof repair?

    But, as Shannon showed, there is another form of information: Information as Knowledge.

    Information as Knowledge is non-referential. This is NOT information that has meaning in a system. Rather, this is information which reflects mere observation of a system.

    The distinction is extremely important: Just as information has this duality, so does modern money. And it’s from this duality that Western Civilization is disintegrating.

    Our entire civilization has evolved on the basis that money measures the heat of our economic system. Money served us well in this world—as a commodity. Money in this realm gave us workable information on valuing labor and valuing goods. It made sense. Economics was designed for this Newtonian, classical use of money.

    But no more…because money has also evolved into the observational distortion of Meta-Money. Once again, The Uncertainty Principle reigns supreme.

    Guess which form of money Wall Street and sovereign governments are using? Of course, at these mind-boggling sums, it’s money as “knowledge”–which is nothing more than an observation on the use classical money. This kind of money is almost ethereal. It exists on a different plane–in the cyber-kinetic ooze. This is money for the powerful and the connected.

    Even though this kind of meta-money exists in a different dimension, it still has real impacts on the rest of us. Thus, we are left with the same bit of information–money–as being used to measure two very different things. It’s an intolerable state of affairs.

    The exchange of classical money for a barrel of oil for instance has real entropic consequences. The energy of the oil is used as work and our environment deals with the entropy (in this case pollution) of the newly unavailable store of this used energy.

    But now comes Meta-Money—in the same unit as classical money! It’s causing massive distortions. We’re not prepared for this entropy explosion.

    Yes, the Economics Profession is antiquated. It’s using slide-rulers in a relatavistic quantum world.

    But the next time you read the MMT bullshit, know this: It doesn’t matter if they are Autrian or Keynesian—it’s still a theory cooked up by out-of-touch economists.

    MMT’ers are utterly oblivious to the duality of money. What’s worse: MMT’ers support a system which is causing massive disruptions and distortions in the lives of every living creature on this planet…for they are advocating an unbridled, exponential explosion of entropy.

    2. MyLessThanPrimeBeef

      Interesting.

      I always wonder about the different behaviors, across the monetary equivalent of the space-time continuum, between the classical money and non-Newtonian money.

      People act strange when they have fast money or just a lot of it. They also do when they have very little money.

      What happens when you concentrate a lot of money into one tiny person? Does it create a black hole? I think it’s immoral not to prevent that.

      Another puzzle though. When you put money in any Shrodinger bank, it’s both good and no good. You won’t konw when you open your box to withdraw. That’s kind of weird – too dependent on you. Maybe there are two parallel universes, i.e. a bi-verse: one where your money is still good and another where your money went down the drain along with the bank, both existing at the same time. I think people can argue endlessly about that.

      1. Cedric Regula

        What happens when you concentrate a lot of money into one tiny person? Does it create a black hole?

        It did when we were on the gold standard, as anyone with a magic lamp would attest to, if they could.

        But we’ve changed to electronic and it no longer has any mass.

        Schrödinger Bank

        I hear ya. Schrödinger investing sucks too.

    3. Foppe

      If you want a process-philosophical, relational account of what money is and does, turn to Marx after having read A.N. Whitehead’s Process and Reality and/or “the concept of nature”. (Or, for easily the best modern reading of Marx, which heavily emphasizes and explains the process-philosophical aspects, see the work of David Harvey, e.g. Limits to Capital (2007).

      1. Just Tired

        My bad. I didn’t realize that anyone would take that post seriously. Now that you have enlightened me I can see clearly that the invisible hand exists in the parallel universe that you all inhabit. As for me, Beam me up Scottie and warp speed back to earth. (And don’t forget to take your meds!)

        1. Foppe

          *shrug*
          I’ve learned long ago that people buy into the most abstruse types of metaphysical theories while still thinking they are on to something, and still thinking they are interested in describing reality. And rather than keeping silent, I prefer trying to point people in a direction that is at least potentially useful.

      2. ambrit

        Deare Foppe;
        Whitehead! Ye gods man, you’ll be having us plow through Eddington and Jeans again! (You think Joyces’ “Ulysses” was hard, do ye?)
        Anyway, I’ll try to get a copy, (this is Mississippi after all,) and start in on it in the near future. Sounds interesting.

        1. Foppe

          Ambrit,
          No astronomy today, don’t worry.
          Having said that, the reason I mention Whitehead is mostly because the way Marx never really talks about causation, but rather about networks of (reciprocal) influence. (Therefore, suggestions that Marx is a social or technological determinist are much more indicative of failings in the reader than failings in Marx’s texts.)
          However, if you are ‘merely’ interested in the discussion on money and its uses, simply pick up volume 1 of Capital, and read chapter 3. (If you want a hint of what to expect, see this lecture.)

  14. Michael Palatas

    Toby:
    I agree, to not admit moral decisions into a social system is tantamount to making a moral decision.

    Bruce:
    The suppositions of marginal utility theory are derived from a utilitarian philosophy, which is itself morally bankrupt and fundamentally asocial. John Stuart Mill recognized this failing of utilitarianism and tried to rectify it without leaving the realm of utility theory. He failed because the baby must go with the bath.

    Utility vs labor theories of value:
    Utility theory comes into being during a time of great strife in the social system wrt the labor versus capital and intended to compete with the labor theory of value, as well as resolve the debate as to the possibility of gluts.

    Leaving behind the social and class aspects of economic doctrine I would like to address the naive argument wherein marginal utility theory is likened to Einstein’s theory of relativity and thus scientifically irrefutable. Marginal Utility theory has never been able to account for how a self correcting market can be presumed as any more likely than a market constantly trying but failing to reach equilibrium. For simplicity we will stay in a Walrasian framework wherein no one market can be in disequilibrium without having other markets being in disequilibrium of equal magnitude but in opposite direction. The assumption of perfect competition implies firms are price takers. From where does the market price originate? From the Crier. But how does the crier know the correct equilibrium price? If he does it’s a miracle, but if he doesn’t it is presumed that the current disequilibrium will be automatically adjusted by the next round of crying. However, given that many markets are in disequilibrium why is it reasonable to suppose the second iteration, or any subsequent iteration, will achieve equilibrium? Unless the fictive crier is one hell of a central planner one must take the assumption of eventual equilibrium on faith.

  15. jenahill

    A parallel but more confounding problem is that while economists have served as shamans to our elite the ground level mind control has been through simplistic and ongoing deluge of stories about who we are as Americans such as Horatio Algers Rags to Riches myth. In the early 19c and prior there were threatening morality stories (A Pilgrims Progress) flowing around where regular folk would hear them, in church or around the town, and they became the moral fabric of regular peoples beliefs. Man was the worm, the sinner, and government was to be eyed with suspicion because the real rewards, Gods rewards would be made only to those who pleased him. Man was always the stupid victim of his own decisions, and people believed their only path to freedom was through specific acts (ie the ritual, behaviors, tithing etc) and it also meant that financial success began to equate moral success as commerce grew. Our system was different in that it allowed for the accumulation of private wealth, there was no common wealth here, no Monarchy to support, and no Vatican rule. Religious belief, piety, individual adherence to the moral code fit well with the capitalist system, and capitalism was taught not as a theory, but a science (thanks deist shamans) that certain acts will bring wealth prosperity, and that the market was a benevolent force that would always bring balance to our economy. The lines between goodness and wealth were blurred, and public piety required little principled action from the master, work was slavery for many, but the worm had to take his hits because he is the sinner, unworthy. The unsuccessful worms had to depend on the sadistic winners, who then abused their position and that scenario has played out until today.
    Economists are a sideshow, a distant abstraction from the current daily drudgery of the masses, they speak a foreign language, but mega churches and common sense speakers on talk radio have their complete attention because they speak directly to them. That is how this moral issue plays out for the regular guy – those who are holy are winners those who fail are sinners.

  16. Tao Jonesing

    The only thing better than the delusion of perfect rationality is the smug, self-congratulatory pronouncement that one has embraced that delusion.

    In the 1940s and 1950s certain anthropologists and philosophers began expounding an interesting collection of ideas. They saw societies as being wholly structured around certain laws and customs. This was perfectly in keeping with the theories of the classical anthropologists at the turn of the century, who noted that primitive societies organised themselves around what they referred to as ‘totems’ – that is, myths about origins – and ‘taboos’ – that is, customs that were so deeply ingrained in the psyches of tribe members that to violate them was simply beyond comprehension. The newer generation of anthropologists – referred to as the ‘structuralists’ – expanded this to all walks of human life. The structuralists argued that even in modern society there were certain habits of thought that were so deeply ingrained that for the individual to violate them would cause enormous psychological discomfort.

    Wow. Anthropologists and philosophers sure are slow learners. Institutional economists – referred to as the “institutionalists”- had made similar observations fifty years before. I guess they had never heard of Thorstein Verblen or Gunnar Myrdal. Pity.

    But here’s a question: to what extent is economic theory – I mean: the ‘highest’ tenets of economic theory – an arbitrarily constructed, yet extremely intellectually sophisticated moral system? By that I mean: a system of postulates constructed to limit and restrict our actions and thoughts.

    There is absolutely nothing “arbitrary” about the neoliberal economic theory that defines modern societal values. Neoliberalism was purposefully constructed as a movement to bring together some of the best and brightest philosophers, lawyers, economists and other social scientists to design a new type of liberalism that would be free of the communistic fiction of classical liberalism that encouraged the masses to rise up against the elites when the Invisible Hand of laissez-faire capitalism seemed intent on beating down the little guy instead of benefiting all.

    By that I mean: a system of postulates constructed to limit and restrict our actions and thoughts. And if we find that economics is simply an arbitrary system of thought, no different in essence from the theologies of yore, is there an alternative approach that won’t have us slipping into dogma?

    The answer is no. Any description of the way the world is, if accepted, becomes a prescription of the way the world ought to be. The human brain craves certainty and has built in mechanisms to confirm that everything is as expected, the way it ought to be. These cognitive biases lead to what George Soros describes as “reflexivity” because the human animal is blind to the reality of the world, preferring the picture of the world it already holds in its mind.

    One school, however, has managed to keep to the operational way of viewing economics. I’m talking, of course, about the Modern Monetary Theorists (MMTers, to use the jargon).

    Don’t break your arm patting yourself on the back, Mr. MMTer.

    The MMTers stick to a wholly detached description of the way the economy works. They describe the actual working of the money and credit systems; they also describe how the system of national accounting works. There is no metaphysics here. This is just a description of how these processes work from an operational point-of-view.

    Laughable. Look, I’m not saying there isn’t a lot of merit to MMT. From what little I know of MMT, it is a great improvement over the quantity theory of money, which is bunk.

    But the problem you have is that MMT does not start from the beginning but in the middle. That is, it accepts much of the underlying tenets of economics as true, and then reasons from there. Big mistake.

    Economics is politics. Period. If MMT is ever adopted as the orthodoxy, Minsky’s “financial innovators” will quickly succeed in breaking free of the blindspots that MMT will create in everyone else, and MMT will thus be “falsified” by the next instantiation of kleptocrats. And as the victims of the latest kleptocracy clamor for relief from predation, the sage MMTers will doggedly claim that everything is as it should be, that there is nothing to worry about.

    Thus will MMT be consigned to being just the latest purely scientific exposition of economic theory that coddled and perpetuated the existing power structure to the detriment of the rest of the world.

    1. Frank Powers

      Bravo, Tao. You’ve hit the nail on the head. Always a pleasure to read comments like yours. That’s in fact why I read Pilkington’s articles at NC at all: for the elaborate coments one may find underneath, the real treat.

  17. meli

    ” All actions were thus tending toward a certain outcome that he could, in a sense, work out in his own mind. Hegel reached these conclusions through grandiose logical arguments with almost no reference to reality.

    The problem with this sort of reasoning should be clear: its rubbish. It is, when you look at it closely, just an intellectual system that is worked out by some guy sitting in his study.”

    Starting with Plato and the realization that our senses could utterly fail us, working through Descartes (I think, therefore I am) who sought truth and realized the only reliable truth was reason, the idea that something is only “in our head” and therefore rubbish is, well, rubbish and the product of an anti-intellectual thread that threatens to destroy us.

    I’m curious how anyone can claim to describe these systems and what they do when we all know that the bulk of economic activity at this point is well out of sight. They’ve accounted for all the hedge funds, the cdos, the funds squirreled away in foreign accounts? Sheesh.

    1. Sufferin' Succotash

      Yep. How can we begin to discern anything approaching the truth in William James’ “blooming buzzing confusion” unless we formulate the right questions? Marc Bloch called it interrogating the data. To my mind that’s where rationalism makes sense. Where it doesn’t make sense is when one mistakes the questions for the answers–Hegel for example.

  18. bookit

    It is not true that MMTers avoid what you call metaphysics. What they do is a better-than-average job of recognizing when they are doing metaphysics. In Bill Mitchell’s book about the abandonment of full employment, for example, it’s quite clear that he understands that his position that human beings have a right to work is a value judgment and not necessarily a truism compelled by MMT.

    Put another way, MMTers know the difference between positive economics and normative economics. When they describe how the monetary system works, they know they are doing positive economics. When they go beyond that and advocate certain policy proposals, such as the jobs guarantee, they are doing normative economics.

    In my view, avoiding metaphysics is a fool’s errand since even “I have no metaphysics” is itself a metaphysical argument. Contrary to what some early modern philosophers thought, we cannot step outside the flow of reality (or whatever it is) in which we find ourselves and look at it “from the outside,” so to speak. So the careful thinker’s trick is not avoiding the metaphysical so much as recognizing it, and specifically recognizing when we are speaking of it and when we are not. On balance, the MMTers are pretty good at this and the neoliberals are not. The Austrians are hopeless.

  19. Cahal

    ‘arbitrary assumptions (that are probably untrue)’

    Why the probably? :)

    From what I know about academic economics, I am reminded of an experiment that many here might have heard of:

    A group of monkeys were placed in a room with a pole. Every time one tried to climb the pole, the experimenters blasted the monkeys with water. Soon the other monkeys began to attack ones that went near the pole.

    The experimenters proceeded to remove the monkeys from the room one by one. Every new monkey would become accustomed to the tradition. Eventually the entire room was replaced, and the monkeys would attack anyone that went near the pole, despite the fact that the hose had been removed an none of them knew why.

    Academic economists seem to know individually that a fair amount of economics is stupid, but you have to ‘play the game’ to get anything published. Everybody participates, but nobody knows why.

    1. psychohistorian

      And none go on to question issues like private ownership of land and inherited wealth.

      Sorry Philip but if you don’t address issues like I brought up then your narrative, IMHO, is seriously lacking much worth in the world I live in.

  20. Jim

    “If we find that economics is simply an arbitrary system of thought, no different than theology of yore, is there an alternative approach that won’t have us slipping into dogma?”

    Great Question.

    I would argue that there is an alternative approach–but not the one you have choosen–which seems based on the assumption that there is such a thing as a purely inductive inquiry.

    I would argue instead, that pure induction is pure nonsense.(Take a careful look at Hume especially “A Treatise of Human Nature”).

    In order to know what we are looking for certain things have to be posited and not merely inferred.

    How we frame a slice of experience is never totally determined by the experience itself.

    There is always an antecedent choice or decision about where to conceptually frame one’s focus and consequently experience is never totally determined by the experience itself (i.e. the experience does not transparently reflect a situation that exists independently of our formulation).

    Consequently “descriptive” statements and “normative” statements are not two contrasting categories–the descriptive is already normative in order to follow through on its project of being descriptive.

    Alternative Approach

    One can posit that there is no body of neutral fact that can be uniquely captured by an objectively appropriate theory or conceptualization.

    Therefore none of our intellectual schemata(in whatever field of inquiry) have an unreserved claim to truth which, if it exists, is beyond us and elswhere.

    We may actually exist in a condition of not knowing for sure, a proposition that goes against the lurch of both modern politics and economics.

    But the saving grace of such a position is that all of us seem to end up united–in our ignorance.

    Then it becomes a quetion not of what we know but of what we do.

  21. Fed Up

    For the author, about the sectoral balances, and from:

    http://neweconomicperspectives.blogspot.com/2011/06/mmp-blog-2-responses.html

    “On to substantive comments.

    Accounting Identities. I knew we would have our skeptics. There are two types of complaints.

    First there are those who are skeptical of identities altogether. To them it looks like we put two rabbits into the hat and then pulled out two and expect applause. Or, it is like saying 2+3=5 and in base 10 math it cannot be anything different. Surely we rigged the results?

    Well, in some sense, yes we did. We first rule out black helicopters that drop bags of cash into backyards in the dark of night. We also rule out expenditures by some that go “nowhere”—that is, expenditures that are not received by anyone. Finally, we rule out expenditures that are not in some manner “paid for”.”

    I take the phrase black helicopters that drop bags of cash into backyards in the dark of night to mean creating more medium of exchange with currency/demand deposits with no loan/bond attached.

    1. Philip Pilkington

      “I take the phrase black helicopters that drop bags of cash into backyards in the dark of night to mean creating more medium of exchange with currency/demand deposits with no loan/bond attached.”

      No. Reserves are issued without bonds. But these appear on bank balance sheets, not in backyards, so they are accounted for in the sectoral balances.

      On another note: does that quote show that the approach is ‘theoretically loaded’? I don’t think so. It’s just, as far as I can see, establishing a means of good accounting.

  22. SH

    I am probably repeating here. There are a lot of comments and I’m sure every base has been covered, but to compare the merits of MMT monetary analysis to the current legal system should speak for itself. Yves does her daily work to exonerate the US’ legal system.

    More philosophically, isn’t the civil/common law argument more relevant? This article definitely praises anglo common law, but you cannot discern the difference. That argument is more analgous to the ideological/empiricle economic point he makes, but the ideologoues are anlgos in this case.

    Finally, as always, the crux of MMT is the power to tax. The system works on that basis alone so maybe the argument is not on how the system works, but why it works. It works becuase people value their current money. The real question is what could disturb that value relationship. I don’t think MMTers have an answer other than a fully employed, complacent populace. Have we not seen that dream before?

  23. Dr. Oh

    Dear Anyone– People — Humans — MMTer’s, and metal-physicians — ironworkers — Christopher Christie– and his moral, metal-physical, Money penchant for “keep my girls away from the Leviti–cussian rumble that ramble in Trenton when some– not all– stand to lose a Modern Monetary amount of non-theorectical real stuff that is required to take his girls to see a doctor,use the local urban school in which the now defunct air-conditioning does not work, but more importantly, the beautiful waltz in which African Americans moved to the “Non Racist North” e.g., New-ark, only to experience for 2 or more generations, jobs that my stubents turn down– minimum wage was dramatically higher in 1966 than 2011 — [ my students go to a “ghetto school” — meaning a majority of their classmates have similar backrounds– like Christie’s kids attend a ghetto School– mostly pale people with pension funds, portfolios, padded …SORRY: THE WALTZ– and thethis great migration was also greeted with the shiney end of that club — my first name is Billy, so that term hurts, in more ways than one–expertly wielded and then yielding red stuff — “Hey Joe, did you know that “THEY” have red stuff too?”
    Anyway, when so-called degreed people start using the genenral, generic terms like “human-beings” and “people seek to limit” and similar phrases in social-class structured, highly, highly unequal social systems, with groups of ruling elites, dotting the map of the world, these elites having the power, at the very least, to think {ha} write — and circulate THE IDEAS they hope will be regarded as TRUTH?– and yes there is some range of thought from the ruling elites, within economics, from Keynes to the new freer than free thugs of “NON-FREE ENTERPRIZE” believe or not, not all human being have the same power, nor have they had a reasonable opportunity to

    “DEVELOP, YES DEVELOP” the range of inter-related cognitive skills required to cognate a cognitive letter to the BASTIONS of locations that circulate the various ruling elites different notions that all this torture, inequality, starvation, muder, etc, yet all within the orbit of “yea, capitalism” which, beginning with the Intrebid Explorer, Christobo Columbus– I mean rapist, enslaver of 5000 people,observer of his boys from Spain, you know — the CIVILED PEOPLES OF THE WORLD– checking the blades of their kniives by slicing the arm of some dark-skinned dope with no weapons– imagine, a group with no weapons,

    ECONOMICS— always constructed by humans raised within the socialness of what it means to be human– whether it is called meta or beta or bet-cha or got-cha or any cha, the range of choices spans the Keysian-lets-save-capitalism-because-I have a ton of money in the stock market, i.e., sometimes spending falls a tad short, especially the confused billion-aire-heads — do I need a 12th car of a house in Stella Wright Housing Projects in Brick City– darn, they have been torn down–to Uncle Milty Freed-man — claiming free enterprise– yo Milty, what the hell is free and where is it located?? left to its own devices, aptly CHARACTERIZED AS “LEGALIZED STEALING”– free enterprise will function with only minor disturbances!! like the top 1% received about 37% name thirty seven percent — that is a relavtily small number 1% of about 100 million households– so this slightly unequal distribution may lead to “aggregated Demand problems…”

    Anyway, this human being? i.e., is rambling on. One last Truism for Jersee Guys and Girls: IF EVERY COUNTRY ON EARTH, IN EVERY STUDY, THERE IS A DIRECT CORRELATION BETWEEN INCOME LEVELS AND THE SCORES BY “DICK AND JANE” ON STANDARDIZED TEST SCORES OF A SUFFICIENT DEGREE OF DIFFICULTY.

  24. Dr. Oh

    went to sleep– got cut off

    if the country, the state, the world does not address the growing Christian, Islan, Jewish, secular, pagan notion that rich people are smart by nature and poor people are straight up stupid….

    Let me start over— we cannot throw money at thee “school problem” — but we must throw money— to find talented, qualified, dedicated people who NEED THE MONEY TO BEGIN TO HELP. But hte problem is larger– the median family income in Newark is $35,000 and in Summit it is $140,000– schools canot close this gap. Only a real Islamic, Christian, Jewish, secular, pagan society that believes in real democracy– we all own and we all work and we all grow up learning about cooperation, snaring, don’t let thigh brotyher, sister, anyone, go hungry— once we really follow Muhammad, Jesus, Moses, me, etc. then many problems will go away.
    Within the militaristic, racist, unequal, non-democratic, sham of its former sham, we be going backwards. Good Night & Good Luck

  25. Ransome

    No mention of William Graham Sumner, who wrote extensively about folkways, social Darwinism and economics (decidedly a MMT)

    “In 1881 Sumner wrote an essay entitled “Sociology”. In the essay Sumner focuses on the connection between sociology and biology. He explains that there are two sides to the struggle for survival of a human. The first being a “struggle for existence”, which is a relationship between man and nature. The second side would be the “competition for life” which can be identified as a relationship between man and man. The first being a biological relationship with nature and the second being a social link thus sociology. Man would struggle against nature to obtain essential needs such food or water and in turn this would create the conflict between man and man in order to obtain needs from a limited supply. Sumner believed that man could not abolish the law of “survival of the fittest” we could only interfere with it and produce the “unfit”.”

    Quite contemporary thinking. The conflict between “social goodness, a long term worldview”, “individual fitness, a short term worldview” and irreversible exploitation, no worldview. A Taoist might say you need all three in balance, the husbandry of nature, the fitness of the individual and the nurturing of society. When is enough, enough and when is it time to share, in a sustainable manner?

    MMT fails because of its short term worldview, lack of sustainable considerations and lack of appreciation for diversity which nature requires for survival. The social Darwinists were obsessed with the perfect individual, the perfect race, the perfect economy, the perfect (unequal) society that evolves. The socialists simply reversed the priority, constructing society, with race loosely defined as individuals with similar folkways or values. Both use conversion and elimination during transformation.

  26. Schofield

    I don’t believe the development of MMT was ever intended to address evolutionary issues other than it too is an adaption. Its purpose is to correctly describe an existing financial mechanism.

  27. frances snoot

    “It is like the 15th century sailor being told that there are, in fact, no dragons beyond a certain point on the map. To do so is to disrupt the ‘symbolic boundaries’ that he has erected in his mind to structure his world. Extreme disorientation is likely to follow and from that, fear and anger.
    So, it is only gradually – very gradually – that we can expect this to change. But change it must.”

    Why? The thesis was constructed around the predicate that the range within the domain of human thinking is provided by words: words maintained within the pretext of hegemony. Of what sort, then, is the alternative totem/taboo system being proffered to the ‘rest of us’? Is is not just another Eurocentric attempt to categorize human intention through the manipulation of will and desire?

    Who has the right to play god?

    Let’s face it. Words are arbiters for force: nothing more, nothing less. It is force that will be applied to human flesh to render the desire of the few within the will of the many. And so always.

    Another act, another scene, new costumes–providing the backdrop for greed.

    It is the willingness of man to lay aside dominion theology (the idea that combining theology and philosophy in an amalgam distills and perfects) for one of surrender (not over nature but to nature) is the only real work.

    Four words to the winds reap the whirlwind: “and of the son.” Logos personified: reticent death.

  28. frances snoot

    There are many voices and many ways tried upon the soil. Are we being led by the nose to a place where all of man’s mistakes are merely magnified by the power of one?

  29. allis

    The most important questions for any society are the questions that are never asked.

    In the Middle Ages, men debated the nature of God, how he should be obeyed, etc. etc. No one ever asked Is God? (or if they did they’d have better not asked it out loud)

    Nowadays we debate the nature of money. Does anyone ever ask Is Money?

  32. Skippy

    Take the marsupial challenge, investigate, expand and extrapolate on the basis of economics being the driving force behind the written word…example:

    Cuneiform script was at its very beginnings, a means of accounting, a physical record of important stuff, by some of the earliest great regional traders…cough…cradle of western thought.

    The cuneiform script proper emerges out of pictographic proto-writing in the later 4th millennium. Mesopotamia’s “proto-literate” period spans the 35th to 32nd centuries. The first documents unequivocally written in the Sumerian language date to the 31st century, found at Jemdet Nasr.

    Some ten millennia ago the Sumerians began using clay tokens to count their agricultural and manufactured goods. Later they began placing the tokens in large, hollow, clay containers which were sealed; the quantity of tokens in each container came to be expressed by impressing, on the container’s surface, one picture for each instance of the token inside. They next dispensed with the actual tokens, relying solely on symbols for the tokens, drawn on clay surfaces. To avoid making a picture for each instance of the same object (for example: 100 pictures of a hat to represent 100 hats), they ‘counted’ the objects by using various small marks. In this way the Sumerians added “a system for enumerating objects to their incipient system of symbols.” Thus writing began, during the Uruk period c. 3300 BC.[2]

    http://en.wikipedia.org/wiki/Cuneiform_%28script%29

    Now bounce that off of other early regional proto-writing forms.

    Skippy…things that make me go ummmm.

    1. psychohistorian

      One of the problems that I have is that some idiots think that because we maybe have a few years of recorded history that it is prudent to saddle 300 thousand years worth of future humans with care of our nuclear waste.

      1. skippy

        Input *values*…eh.

        Skippy…A world diminished, species eradicated, future potential reduced and all for the lack of input values that acknowledge—the future—as an organic system, rather than an act of accountancy (which is put before all others ie. engineering, physics, medical, etc…etc).

      2. ebear

        What makes you think we’ll get through the next ice age? That’s less than 300K years from now.

  33. Tom Hickey

    Philip: “So, what is the relevance of all this? Well, what if this is what many academic economists are doing today? They sit around universities, as the shamans sit around their tents, constructing cryptic intellectual systems that few outside the circle can understand which lends these systems a certain gravitas.

    What if the shamans were a whole lot more perspicacious that contemporary economists?

    “Primitive” people were not intellectual but rather holistic and grounded in reality, or they didn’t last long. The shamans were not simply anointed but gained their position from demonstration of superior wisdom. This is a lot more than can be said of contemporary economists.

  34. K Phil

    “Let them know what can and cannot be done and then let them decide from there.” Isn’t this also an arbitrarily constructed ideology? That it is possible to simply describe what people can or cannot do without implying about what they should and shouldn’t do? and that it is desirable to do so?

    I find the post insightful but the normative conclusion too hasty to be plausible.

  35. Defining Quality

    I have been of the continuing opinion that corruption was the Defining Quality of all government, especially Capitalism, when in fact its religion! Combine religion, belief without proof and the myriad of economic distortions created by capitalism, and what do you get – the corrupting influence of human Fear and Greed and the Will to Power!

  36. Shenpen

    This is one those articles that sound very smart yet offer very little of an actual argument.

    Yes, econ comes from a historical background that is shot through with metaphysical elements because, news at 11, pretty much everything does. Look at the history of chemistry and you find alchemy. Read Newton in the original and you will find a seriously meant argument that besides gravity it is divine providence that keeps planets revolving just right. Our modern classification of species can be tracked to one Aristotle proposed who considered biology as a hobby when he was too tired of metaphysics, ethics or politics. So?

    Yes, there are certain statements of fact that kind of sounds judgemental or moralistic. Such as that you will fuck up your liver if you keep on drinking too much. Certain drunkards and certain bleeding-heart types interpret it as hating on drunkards. So? Then we shouldn’t have medicine?

    We live in a kind of universe where what we do and the choices we make actually matter and have effect on our lives – both on a personal and a social level. Exploring such causal relationships is often seen as judgemental by those deeply confused types who want actions not to have consequences, but this isn’t that kind of reality. If one tries really hard to sound morally neutral and non-judgemental one has to give up factuality or accuracy in the name of tact or political correctness or telling people what they want to hear. Telling people eating yourself up to morbid obesity or having unprotected sex with many different partners has no consequences would be bad medicine. Whether some obese or lustful people consider that too judgemental and moralizing is their problem, because reality and causality will not ignore them the same way they try to ignore it. We can debate whether econ is a science but one thing is clear: that sort of thing would make it even LESS of a science.

    The articles the author recommends about “operational” and “not metaphysical” and therefore we would expect some shining tower of scientific objectivity, are chock full of political rhetorics of the “the conservatives who hated public activity” which have little place in anything called a “theory”, and basically their main argument is that if you borrow for infrastructure investment it is OK because the gains from it will pay for it. It doesn’t even mention that at most by the time the infrastructure is depreciated to 0 (25 to 50 years) the original debt is better be repaid. Really, is that all?

    A somewhat related remark: the father of all such “theories” is Keynes’ General Theory, which I gave up on reading when I realized Keynes does not even understand the word “function” – he really wrote “the sales of a company are a function of the number of people it employs”.

    Realistic economics cannot be based purely on money and numbers expressed in money. Money is a tool, what really matters is labor, capital goods, raw materials, products, services and leisure time.

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