Sunday, May 27, 2012

Peter Soos — Time to stop rewarding economists for bad behaviour

According to conventional economic theory that the majority of economists advocate (neoclassical economics), these assets bubbles should not be forming. Supposedly, the more market-oriented an economy becomes, through deregulation and privatisation, the more efficient it becomes at pricing assets, resources, goods, services and labor. Thus, there should be little to no bubble activity within a freer market economy. History, however, has revealed the opposite.One would think that given the wide gulf between theory and reality, the economics profession should have performed some sort of self-assessment.
Read it at Steve Keen's Debt Watch
Time to stop rewarding economists for bad behaviour
by Peter Soos

Well actually mainstream economists did self-assess and concluded that markets were not free enough to equate price discovered through markets with real value of assets and goods. That's the problem with the theory; there is always an explanation as to why predictions didn't work out as expected by the theory.

The conclusion mainstream economists drew is that the solution lies in removing barriers to laissez-faire, even though all evidence points to concentration of income, wealth and power at the top echelon owing to economies of scale and removal of restrictions on anti-competitive behavior. The result is "monopoly capitalism,"* in which the apparatus of power falls into the hands of a plutocratic oligarchy that controls all principal institutions, essentially replicating the landed aristocracy in a feudal agriculturally based order. The consequence is neo-feudalism with capital playing the role of land in feudalism.

Ravi Batra points out in his work how in eras ruled by acquisitors, the acquisitors corrupt the intelligentsia to theoretically and morally justify their rule as being of the natural order of things, using the carrot of professional status and access, and the stick of exclusion from the debate and exile to minor status and remuneration.

* See Monopoly Capital and the New Globalization, John Bellamy Foster Monthly Review,  2002, Volume 53, Issue 08 (January)

Monopoly Capitalism, Paul M. Sweezy, Monthly Review,  2004, Volume 56, Issue 05 (October)


Trixie said...

Tom, don't get me wrong, I am fluent in typonese. But 'self-asses' totally works, even though it shouldn't.

Tom Hickey said...

@ Trixie,

Sometimes you get lucky with the typos. :)

JOhn Zelnicker said...

Tom -- The link goes to Dr. Housing Bubble, not Steve Keen's Debtwatch?!?

Tom Hickey said...

Thanks, John. Fixed now.