15 Principles Against Economics

These are briefly stated objections to classical economic theory, which can be a powerful mode of criticism. Somewhat like the '95 Theses,' they intend to point out some glaring flaws in the way we think about markets. You may find some of them more successful than others.


Texan99 said...

15 unfortunate things about reality that classical economics doesn't address with 100% success, and alternatives to classical economics address with even less success.

(1) Information isn't perfect. Unfortunately it's even worse in a command-and-control economy.

(2) People behave badly. Ditto.

(3) People aren't rational. Ditto; those guys running the C-in-C economy are crazy, too.

(4) People aren't smart. Ditto.

(5) Classical economics ignores children. Yes, it applies to transactions between adults who are relative strangers. I hope no one ever thought it was supposed to substitute for all intimate human relations.

(6) We might change our mind. Um, yes?

(7) People aren't robots. See (5).

(8) Some people have more power than others. And they don't in other systems, which somehow address this problem better? Or has someone dreamed up a system that equalizes the power of everyone on earth? How about horses? Microbes?

(9) Information is uncertain. See (1).

(10) Financial markets are unstable. Yes, even more so in C-in-C systems. Check out the bazillion percent inflation rate in, say, Venezuela. There are systems that make them stable, are there?

(11) Transaction costs are bad. Apparently they exist only in classical economics, or somehow the C-in-C people confront them more honestly?

(12) Markets struggle to achieve perfect efficiency when confronted with the horrifying realization that some good things are distant in time and space. I don't even understand what the point of this one is.

(13) The tragedy of the commons, or something. Again, better in some way in a C-in-C or any other system? What if we make the whole world a commons, will that help?

(14) Word salad, no idea what it means, unless the idea is that no one should have individual input into what standards he thinks are important for a price, and we all need a nanny to set them all centrally.

(15) People don't think ahead and can't comprehend what's really safe for them. And?

What a lot of balderdash. He might as well say the problem with classical economics is that scarcity and choice exist in the world and he can't imagine for the life of him what might be done to eliminate them, short of returning to the womb.

Roy Lofquist said...

"Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…"

Winston Churchill.

This applies in spades to a free market economy.