About

I am a UK based economics student who is skeptical of mainstream economics and is interested in potential alternatives. The name of this blog is provocative but is intended to convey an important point: standard economic theory is often taught without much critical engagement, historical, political and ethical context, or attention to other schools of thought. The result is that ‘economics’ is currently defined as a particular methodological approach, rather than by its purported object of study, and those who accept this framework find it hard to see outside its key tenets. Even those who do not endorse mainstream economics often find themselves unwittingly accepting some of its assumptions. If you want more detail on my views, please see my FAQ for economists.

Comments: I love comments and am grateful to have a number of intelligent regular commenters. However, I am not keen on double comments, irrelevant links/rants, flooding a comment thread or insults - any of these will be deleted without hesitation, and repeat offenders will be banned.

Apart from this blog, I also write for the website Pieria.

You can contact me at unlearningeconomics [at] gmail.com, with the proviso that I’m pretty slow at responding to emails. This is especially true if your email sets me a reading assignment.

 

  1. #1 by richard lawson on December 17, 2011 - 11:24 am

    “…finding it increasingly difficult to defend capitalism “.
    I personally find it better to avoid using the c-word, since, like “socialism”, it carries a massive emotional charge and near-zero informational charge.

    It is very clear that capitalism is crying out for radical reform, beginning with closure of tax loopholes and tax havens, followed by many other specific reforms. But “Smash Capitalism” as a slogan (I know you didn’t say that, but people do) is a slogan that suggests the smasher wants to go back to the old command economy.

    Maybe it is helpful to distinguish between mega-capitalism (which seems to be pretty toxic) and micro- and meso-capitalism, which might yet be harnessed to serve the interests of ecology?

    • #2 by nullified000 on August 14, 2013 - 9:17 am

      Why not leave both socialism and capitalism in its tracks? Like this fellow, I was formally trained in economics and totally reject its foundations and theory – in many areas. These things are important – this shouldn’t be a religion. Politics shouldn’t be a religion.

      What I’ve done differently in my blog is propose a new body of economic thought plus a new type of economic system that could really work, all details are easily hashed out. You may find it interesting – it even provides a new concept of ‘money’….

      http://aneweconomicstudy.wordpress.com

      • #3 by Marxian Martian on December 22, 2013 - 7:39 pm

        Though this isn’t exactly LTV Marx was 100% right about labor being the sole source of value. We can talk all day long about value deriving from demand but remember everything is not worth what the purchaser will pay, it’s what the seller will accept. In other words everything really only buys the actions, or inactions, of others. If I am at another’s store and I wish to take some goods out of that store I have to pay the cashier to not call the police when I leave with the items in question. QED

  2. #4 by Unlearningecon on December 17, 2011 - 12:11 pm

    Well a Socialist would argue that Capitalism inevitably becomes mega-Capitalism due to the constant accumulation of profit and the fact that it eventually corrupts the political system and uses it for its own gain. They would argue that Capitalist power structures mean that true reform is not possible.

    Given recent events, I’d find it hard to disagree with them.

    Also, the only two choices are not ‘command economy’ and ‘capitalism’. Market Socialism – true worker ownership of firms, but with the price system we currently have – sounds pretty good to me.

    • #5 by Marxian Martian on December 22, 2013 - 7:42 pm

      What of workers owning their own jobs by having ownership of property defined by use? You cannot perpetually own property that you give to others so they may use it. From there you merely work it out so that the owner of capital becomes an investor when that property is given to another for use, that person then working the property becomes the owner with obligations to the investor.

  3. #6 by bilbaoboy on January 20, 2012 - 1:36 pm

    A comment on ownership
    Here in the Basque country we have the Mondragón Coops (fairly well documented in the UK ) and many worker-owned limited companies (with a variety of disequal levels of ownership among workers). There are many types, capital and consumer goods manufacturing, services, banking; large and small..

    I work with both types and can assure you they can have many problems of their own and despite my sympathy I see no inherent superiority of the model. On the contrary, some Coop members consider themselves owners in the good times, employees in bad times..; extremely slow and/or poor decision-taking, lack of innovation, excess of business conservatism, losing rising stars to places where they can triumph (professionally) more easily and for greater reward (you don’t have to be greedy to want what your talent would get elsewhere).

    Attractive in theory, but more complex than it seems. Great when they work but not the solution to your worries.

  4. #8 by human mathematics on February 21, 2012 - 5:40 am

    [I'm] finding it increasingly difficult to defend capitalism

    Which capitalism?

    • #9 by Unlearningecon on February 21, 2012 - 1:24 pm

      Any form of private ownership of capital and the wage system, as it seems to be a breeding ground for corruption.

      • #10 by paul on February 3, 2013 - 2:25 am

        Even within hunter-gatherer societies with little obvious capital to hold as private ownership, similar greed to be found in those hunters who catching two edible prey consumed one, lay back to rest, then return with remaining one to their collective to receive credits for sharing their remaining profit from their hunt.

      • #11 by Unlearningecon on February 3, 2013 - 11:41 am

        I don’t think greed didn’t exist before capitalism, or will not exist after it. The question is: does the system amplify and reward it, or is it a marginal issue?

    • #12 by mulp on November 1, 2013 - 1:24 am

      Capitalism is the theory that capital assets can increase the productivity of labor by the sacrifice of consumption to devote some labor to building productive capital.

      In my lifetime, conservatives have fought to redefine capitalism as being pillage and plunder of the capital assets of others.

      Oil production is pillage and plunder – a corporation gains property rights to millions of billions or trillions in natural resources in exchange for paying 5% to 10% to the property owner, then invests labor and labor derived assets in generating a 20-50% profit on promoting the forever destruction of the oil, which is a capital asset. After an oil lease is played out some decades later, no one has increased their capital assets, even though huge amounts of labor were spent in the venture.

      On the other hand, if coal and iron and copper mining are combined with labor to build a wind farm, the capital assets in the aggregate have increased – the lost value of the mined land is offset by the greater value of the wind farm which generates income from power sales requiring small amounts of marginal labor input. Even when the wind equipment ages and becomes obsolete, the steel and copper has scrap value that with labor input can be restored to new productive capital assets.

      The wealth of the US is largely the knowledge accumulated over the centuries that is freely available to all (but that we generally employ to greatest benefit because we produced and reuse it) plus the accumulated productive assets of roads and bridges and school buildings and telephone and power lines and right of ways and market places. All of these capital assets are constantly depreciating, so constant labor input is required just to stay in the same place.

      To argue that roads and bridges are not capital assets is to buy into the logic of the conservatives promoting pillage and plunder. Only by having property rights to roads and bridges can profit be made from plundering them, ie; charging tolls without labor input to sustain and improve them. The argument made is that ownership by everyone is ownership by no one. But then again, most corporations are close enough to ownership by everyone and thus ownership by no one so managers feel free to pillage and plunder – neither the shareholders nor the laborers are in control so the managers can extract hundreds of millions of revenues for themselves, money that belongs to the shareholders, but who are so numerous they are no one.

      But again, capitalism is the simple observation that spending time making tools, say striking rock into hammers, axes, scrapers, spear heads, one can be more productive in the labor of hunting and gathering than spending all labor to stalking and grabbing and ripping with bare hands and teeth.

  5. #13 by Christopher Rogers on April 6, 2012 - 7:00 pm

    Sir,

    May I say your blog is a welcome relief and most informative for those of us who do not claim to be economists and are sick and tired of being bewildered by terminologies and theories that by right should be consigned to a dustbin.

    Your assault on the foundations of neoclassical and neoliberal economic orthodoxy are clear, concise and easy for a layperson to understand – indeed, coming from a politics/history background one is reminded of the the struggle for the Reformation and Catholic Churches response to Luther.

    Well done and I now look forward to reading your input on a regular basis.

    • #14 by Unlearningecon on April 6, 2012 - 7:12 pm

      Thanks a lot for the kind words.

    • #15 by paul on February 23, 2013 - 1:17 am

      All systems possess greed, albeit sometimes one may need closely follow the creeds in a system to recognize them.

      Our first challenges is to accept some greed as human whim, whilst disliked within a range reason will require only verbal admonishment.

      The second challenge is to clarify then educate so clear is the point exercise of greed will cease to be ignored for all to be aware – hopefully recognize, the point at which such greed and those practising it shall be dealt with by society.

      Then is task to accuse, to judge, then appropriately and reasonably deal with those felt to exceed the reasonable.

      • #16 by paul on February 23, 2013 - 1:44 am

        Doubt most calls for radical reform, radical reform more like an earthquake or tsunami, rather accept change as part of living, change is ongoing, less disturbing so more acceptable when gradual.

        Gradual is a product from democracy, democracy also ensuring all are able to become involved in the discussion and determination of what changes to take place.

        Those who chose not to become involved thus less room to argue.

        Those with most to lose from closure of tax loopholes, tax or other advantages, shall resist “reforms” though hiding their opposition under other covers.

        Challenge is to ensure discussions include clear notice of where attempts to advantage or disadvantage are being hidden.

  6. #17 by daveianhickey on May 23, 2012 - 11:49 am

    Just subscribing

  7. #19 by jp on May 27, 2012 - 6:56 pm

    Hi, just want to say, I wouldn’t worry much about being “negative”.
    In a time where neoclasical theories not only still prevail, despite having failed epically, but are taken to even more extreme conclusions (by the austrians etc.) your blog provides a valuable service.

    Adorno (the german philosopher) called “constructive criticism” groveling criticism and said that by defining and stating precisely what is wrong, one already points in the direction of an improvement of the current conditions.
    I think your blog does this and, as pointed out above, in an easy to understand way.

    • #20 by Unlearningecon on May 28, 2012 - 2:25 pm

      Good points, reminds of a quote from JKG about the conventional wisdom. Something along the lines of “the conventional wisdom should not be conceded to, accorded any reverence, etc.” Unfortunately I can’t find it online and don’t have time to pore through my copy of The Affluent Society.

  8. #21 by Kristoffer on June 11, 2012 - 6:28 am

    I’ll wright this here as I don’t se an e-mail adress to contact yo on. I very much like your blog and read it regularly and as a Twitter user I figured i’d follow you on Twitter too. But I can’t. When I try to enter your account I can’t even read your tweets. It just says ”

    Loading Tweets seems to be taking a while.
    Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.”.

    And then nothing happens. This happens every time I try to enter your account. So I was wondering if you have heard this from anyone else or am I the first?
    I’ve never experienced this before. Could you have blocked me perhaps? If so why?

    • #22 by Unlearningecon on June 12, 2012 - 10:57 am

      Not sure what’s going on there – I’ve never heard anyone mention this problem before. What’s your name on twitter?

  9. #23 by Kristoffer on June 12, 2012 - 5:46 pm

    Yes, I do seem to be blocked. That’s what it says when I push the “Follow” button (“Sorry, you can’t follow this user (because they’re blocking you.”).

    @pelle_jons

  10. #25 by Dennis Leech on July 1, 2012 - 2:24 pm

    I have tried to send a tweet in reply to your question: “Is it true the founding fathers only supported the vote for property owning white males?” but it has not appeared in the conversation. I don’t understand why a reply does not appear as such but as a new tweet.

    The point I wanted to make is that the US constitution of 1787 was worse than is implied in your question: it is taken for granted that the franchise would be restricted to white males. The constitution laid down the rules for apportioning seats in congress to the various states which read as follows:

    “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.” (Article 1, Section 2)

    So a slave counted as 3/5 of a person, which meant that the votes of white males in southern slave states counted more than those in the north. This fundamental lack of democracy was therefore built into the USA from the start and it was not amended until 1868 after emancipation. (Native Americans were still excluded if they paid no tax, even then.)

    Dennis

    • #26 by Unlearningecon on July 1, 2012 - 10:07 pm

      Hi Dennis, thanks for the response. That’s pretty horrifying and serves to strengthen my lingering feeling that Marx was right about political debate and visions of ‘justice’ simply being a reflection of conditions at the time.

      3/5ths of a person is also oddly specific. Any reason fort his or was it just arbitrary?

      • #27 by SM on August 27, 2012 - 12:17 am

        3/5ths was a compromise between the north and south over representation/taxation. The south wanted all slaves to be counted towards representation while the north wanted none (since slaves were seen as property) and they compromised on a 3/5ths solution. It is sometimes argued as something positive because for the first time a slave was considered to be a person and not property (according to the anti-slavery constitution crowd).

        Also note women had the right to vote in Rhode Island until 1808 and it was taken away.

      • #28 by Ragweed on September 10, 2012 - 9:58 pm

        I believe the 3/5ths compromise also had to do with taxation – the southern states wanted slaves to count for representation, but not for taxes, and vise-versa.

        As for the issue of sufferage, it was left up to the states to determine sufferage. Generally state consitutions limited the vote to white males with certain property qualifications, though I think some states allowed free blacks to vote if they met the property qualifications. Also, there were often religious restrictions. I recall digging up the qualifications for Massachusetts and a couple of other states a few years back, but I cannot find it easily now.

        One of the interesting aspects of these laws was that citizenship was often NOT a requirement for voting, though they usually had a residency requirement (for Mass it was 1 year, if I recall).

        New Hampshire was the first state to eliminate the property requirement in 1792, and most states followed in the 1830-1850 period, though I don’t think it was fully eliminated until the 14th Amendment.

  11. #29 by Marco on August 8, 2012 - 9:58 am

    Hi,

    How are you?

    We recently ran the article ‘20 New Economic sites you should read’ on Mindful Money which featured your blog. http://www.mindfulmoney.co.uk/12649/knowledge-bank-/20-new-economic-sites-you-should-read.html

    The piece was part of a wider series exploring the ‘New Economists’ and their ideas for alternative approaches to neo-classical thinking. The series was well received but only scratched the surface of an area that we feel deserves a wider and continued discussion than currently exists in the mainstream media.

    So to do that, we’d like to pick up where we left off, starting with a brief Q&A with some of the major players and would really appreciate it if you had a few minutes to answer our Q&A. It will be published on the homepage of Mindful Money and form part of our wider coverage in this area. And of course we would keep you informed of any further discussion it stimulates.

    I look forward to hearing from you,

    Marco

    • #30 by Unlearningecon on August 13, 2012 - 2:34 pm

      Hi Marco, thanks for the note. I’ve been on holiday so apologies for the late reply.

      I’d be happy to talk about this with you via email, sounds like a good idea but I’d like to know roughly what to expect. You can email me at
      unlearningeconomics@gmail.com

  12. #31 by Tarik on August 15, 2012 - 10:04 pm

    John C. Bogle is an interesting case of a low-cost mutual ownership that appears to benefit the investor. Do you feel this is a good example of how a company can be structured so that corruption is minimized? Is this what you mean by “market socialism?”
    From a recent NYT article:

    http://www.nytimes.com/2012/08/12/business/john-bogle-vanguards-founder-is-too-worried-to-rest.html?smid=pl-share

    I found these two paragraphs interesting:

    “Strategy follows structure,” he says, explaining that with no parent company or private owners to siphon profits, Vanguard can keep costs lower than anyone else. That was always his goal. “The only way anyone can really compete with us on costs is to adopt a mutual ownership structure,” he says. “I’ve been waiting all these years for someone to do it, but no one has.”

    One reason is surely that there’s no profit in it. Despite Vanguard’s size and success, Mr. Bogle is no billionaire. For comparison, Forbes lists the personal wealth of Edward C. Johnson 3rd, the chairman of Fidelity, as $5.8 billion. By contrast, Mr. Bogle says his own wealth is in the “low double-digit millions.” Most of it is in Vanguard and Wellington mutual funds in which he invested via payroll deduction during his long career.

    ——-

    • #32 by Unlearningecon on August 23, 2012 - 7:35 pm

      It is, yes, thank you for the link.

      That actually contains the primary rebuttal to the glibertarian point that ‘if worker ownership were so great, it would have happened already.’ Even if it is good for overall efficiency, it isn’t for individual profits.

  13. #33 by Jacob Richter on October 6, 2012 - 8:36 pm

    You should consider supply-side political economy of another sort. Maybe Post-Keynesians won’t admit this, but much of their economics borders on supply-side political economy from a labour perspective. “Increasingly difficult to defend capitalism”? A Reaganite once called Marx a supply-side economist. He was right and wrong: supply-side political economy for labour.

    Also check out Guy Standing’s Precariat book, though it has notable policy shortcomings.

    • #34 by Unlearningecon on October 7, 2012 - 12:45 am

      I’m not exactly sure how post-Keynesian economics is similar to supply side economics in labour or any other area?

  14. #35 by Franz on November 28, 2012 - 7:48 pm

    “Any form of private ownership of capital and the wage system, as it seems to be a breeding ground for corruption.” Feb 2012

    And there wasn’t corruption before capitalism? Even more egregious corruption than with capitalism ?

    • #36 by Unlearningecon on November 28, 2012 - 7:55 pm

      No? I didn’t say that.

      • #37 by Franz on November 29, 2012 - 4:57 am

        On Feb. 21, 2012?

      • #38 by Unlearningecon on November 29, 2012 - 2:05 pm

        I said what was in the quote. What followed was your own construction.

  15. #39 by Franz on November 30, 2012 - 2:52 am

    Yes. I understand that. I was asking my question based on yourearlier comment. (I wasn’t registered at the time so the reply button would not appear, hence I asked in the manner.)

    Nevertheless, wasn’t there corruption before capitalism? And wasn’t much of that corruption more egregious then under capitalism?

    My thought is that currently so much of our corruption In the U.S. is either enabled by the governmentor a result of government (Note: I believe government is to protect rights and establish laws which prevent corruption, but that is absent in the current milieu, hence corruption has increased greatly.)

    • #40 by Unlearningecon on November 30, 2012 - 11:35 am

      Yeah, corruption can exist without capitalism. I am not aware of the empirical facts on corruption before capitalism, but I don’t think it necessarily matters as long as a significant degree of corruption still exists.

      My thought is that currently so much of our corruption In the U.S. is either enabled by the governmentor a result of government

      By definition this is true. I’m guessing the difference between me and you (and libertarians and the left in general) is that I see government as a part of capitalism rather than something of an outside interference.

  16. #41 by peter darley on December 7, 2012 - 9:36 am

    Hi,
    Since I retired, I have studied, with increasing perplexity, economics. Now you are telling us to unlearn economics. Rather than a multi-page book by Steve Keen, I can debunk economics in a few words—what is the value of labour?
    I recently concluded that the whole ‘science’ of economics has a fatal flaw—it has never been able to objectively value labour.
    Since labour is the prime cost of any economic activity (tracing back through the antecedents a la Bastiat), it is depressing to realize that we actually ‘know’ very little about anything—most of what we think we ‘know’ is merely opinion and perception.
    Of course, books make money while sentences do not.
    You recall the extraordinarily stupid statement by Angela Merkel—”The primacy of politics over markets must be enforced”— during the Greece Debt Debacle, 2011. This is what happened in East Germany, Angela, with results that we all know. If economics (such as it is) is the science of how society produces and distributes scarce resources and politics is the means of distributing the economic product, it should be obvious that distribution cannot occur without prior production.
    Maybe a different starting point should be considered.
    If you go back to your high school physical chemistry you will discover Lavoisier’s Law of the Universe, which states: “The total amount of matter in the universe is unaltered, whatever changes take place in its distribution. Nothing can be created, and in every process there is just as much substance before and after the process has taken place. There is only a change in the form of the matter.”
    Everything made by man eventually returns to the dust from which it came.
    Regards
    Peter Darley

    • #42 by Unlearningecon on December 7, 2012 - 12:58 pm

      Well, Marx obviously had a lot of work on the value of labour, and you will see Keen has addressed this argument.

      I don’t really consider economics analogous to physics – there’s no reason for an equivalent, of, say, the conservation of mass. If anything it seems more analogous to biology, with it being human-based and all.

      In fact the problem Merkel identifies (though she does not practice what he preaches) is the fact that existing economics separates political from the market, where the two are actually inseparable. All markets are governed by laws and collective, institutional or individual rules that we do not notice or choose to ignore.

  17. #43 by freedomthistime on December 23, 2012 - 1:41 pm

    “I’d characterise myself as a post-Keynesian, but one who is finding it increasingly difficult to defend capitalism given recent events.”

    Props to you for writing that. Most economists seem to simply assume the existing distribution of power and particular forms of major institutions as some kind of inevitable (and mostly unmentionable) background upon which to analyse the economy “positively”. Pointing out that the background exists is not the done thing in polite company. Going a little further, one might see mainstream economics as little more than a rationalization for this existing distribution of power – and argue that this is the reason why the latter supports it. I don’t know if I would necessarily go quite that far, but I think the tendency is there. To me, concepts like the Efficient Market Hypothesis and Pareto Optimality, to the extent that they migrate over from purely academic exercises to “informing” public policy making, have echoes of Voltaire’s “All is for the best in the best of all possible worlds”.

    Anyway, I’d be interested in what you make of current ecological arguments against capitalism as a system. Marx defined capital-ism by the M – C – M’ sequence of capital accumulation, so let’s go with that definition for the sake of argument. I see a potential (and I think actual) conflict here between ongoing capital accumulation / ongoing economic growth (which is a non-negotiable structural requirement of the system, as Marx and others would have it) and ecological limits. Mainstream economists seem to implicitly acknowledge this tension; they will take economic growth as a given and then attempt to placate environmentalists with arguments about “decoupling”. But I don’t think the arguments make much sense. I had a go at briefly explaining why I think so here: http://steadystate.org/economic-theology/

    What do you think? Do ecological limits mean the end of growth? Does the end of growth mean the end of capitalism? That’s what Marx’s detention seems to imply – how could you thereafter accumulate capital? Are attempts at “green capitalism” thereby fundamentally misguided? Is capitalism constitutionally incapable of becoming “sustainable” – just as one could not make a lion into a vegetarian?

    • #44 by Unlearningecon on December 24, 2012 - 12:41 pm

      Yes, absolutely. Capitalists will always look to cut down their work force to lower costs. If there is no expansion they will rely on cutting costs more to increase profits. The result is unemployment, as we see every time there is a recession. Hence, an attempt at ‘sustainable capitalism’ would have to entail vast restrictions the activity of capitalists which of course would not work.

      There is a possibility that sufficiently strong social attitudes might quell the rise of unemployment, as in Japan where firms generally take workers on for life. But even there, there are problems with youth unemployment (and there has, of course, been some growth). Not to mention that that kind of thing is a historical anomaly.

  18. #45 by sandjar on February 19, 2013 - 5:21 am

    Dear Author,
    I take issue with the way you position these discussions as “Unlearning Economics”. Some of your posts suggest that we should throw economics out the window and find something else. There are even some fancy new terms I’ve never even heard of before. I appreciate how you challenge conventional wisdom in economics, but you have to admit that fundamentally you are trying redefine or reframe economics. We are still talking about resources, choices and behaviors which is what economics has always been about since Hommurabi. So let’s stop with sensationalist headlines starting with the title of your blog.

    • #46 by Unlearningecon on February 19, 2013 - 9:29 am

      It’s not a sensationalist headline, it has a genuine and specific meaning: studying economics, in my opinion, instills people with certain assumptions and framings which it is very difficult to ‘unlearn.’ For example, they see the economic sphere as special and take things such as minimum wage effects, comparative advantage, lump of labour etc. to be self evident truths that need no evidence. There are also other things – I document my thoughts on the matter here. The purpose of this blog was to escape this mental framing.

      • #47 by sandjar on February 19, 2013 - 2:40 pm

        Thanks. I like @moiracathleen’s response to that post. I can’t comment there for some reason so I’ll just post here. You say that government vs market framing is flawed, but you don’t offer an alternative framing. At least it wasn’t very apparent to me.

        I spent a lot of time in various econ schools (US, Europe & Central Asia). I agree that economists have a tendency to be elitist with respect to their discipline and have a “you just don’t get it” attitude. But that attitude is no more or less arrogant than any other academia especially in social sciences. That’s a problem of academia in general, not just economics. Economics just happens to be very powerful (rightfully or not) in impacting how we govern our society.

      • #48 by Unlearningecon on February 19, 2013 - 4:09 pm

        You say that government vs market framing is flawed, but you don’t offer an alternative framing. At least it wasn’t very apparent to me.

        I don’t, but if you have a map that is wrong, you don’t use it, even in absence of another.

        Elsewhere, I have suggested class.

        I spent a lot of time in various econ schools (US, Europe & Central Asia). I agree that economists have a tendency to be elitist with respect to their discipline and have a “you just don’t get it” attitude. But that attitude is no more or less arrogant than any other academia especially in social sciences. That’s a problem of academia in general, not just economics. Economics just happens to be very powerful (rightfully or not) in impacting how we govern our society.

        Yeah, this is true. It has been said that debate is so vitriolic in academia because the stakes are so low. Unfortunately, in economics, debate seems to be bitter but the stakes are actually very high.

  19. #49 by W on March 6, 2013 - 7:52 pm

    I´ll write down here my own mainstream-economics´ definition: \displaystyle\lim_{n \to\infty}{1^n}=1^1=1.

    If you found Latex code to be troublesome within your blog´s philosophy (scope or even, academic adversaries´stance against the blog, so to speak), just don´t post this comment at all (delete it at once!). Greetings!!

    • #50 by Unlearningecon on March 7, 2013 - 1:38 pm

      I understand your comment as saying economics is circular/tautological. Joan Robinson regularly asserted this, and I think her criticism carries a lot of weight wrt utility, marginal productivity and capital.

      • #51 by W on March 7, 2013 - 2:53 pm

        Thanks for the references on the topic!! I wonder whether the problem lied within the matching of the limit (math) process concept, and the frameworks within which the limits are taken (broadly, lets say: in the given example, the problem remains that of pretending that the function 1^n should work when that´s not the case). This approach could obviously be worked at large…

  20. #52 by Anthony Migchels on March 26, 2013 - 3:22 pm

    Unlearning economics is a great goal. It’s also reasonable that an independent appraisal of Marx can sidetrack one momentarily when slowly climbing down the rabbit hole.

    But Marxism is just the other pole of the Dialectic Capitalism vs. Communism.
    Both sides are owned by the same people. They both centralize power and both are materialistic.

    Relearning economics focuses on Interest-Free economics.

    • #53 by Unlearningecon on July 22, 2013 - 5:43 pm

      I disagree. Existing communism involved centralised power but it must be understood in its historical context, which was that they were effectively at war – covert and overt – with either imperialists or fascists for their entire existence. Also note that Marx believed socialism was only suited to industrial countries, but it occurred in less developed countries and under hostile conditions, which led to Leninist theories.

  21. #54 by freedomthistime on March 27, 2013 - 3:55 pm

    Hi Unlearning,

    This is a reply to your comment to me on 25/3 on your recent interest rates blog. Sorry for putting it here, but you closed comments on that blog! So…

    _______________________________________

    Hi again Unlearning, I didn’t intend my comment as a criticism of your blog/data, I just wanted to mention/recommend an interesting book I’d read.

    To answer your question, Werner definitely looks at long term rates – see fig 6.4 (for Japan) and fig. 6.7 (for the U.S.) which clearly shows these long term interest rates following growth, not leading it. I thought monetarist theory said that interest rate changes would lead (to) money growth changes ? Isn’t that the entire basis for central banks officially stated policy of fiddling around with decimal places on interest rates, supposedly to slow or encourage growth? e.g. we have a lot of central bankers now lowering rates down to effectively zero (and even talking about going negative) to try and (they say) get the banks lending again. Werner says this won’t make any difference – it didn’t in the case of Japan through the 90s (which the early chapters of his book show) – because interest rates are largely irrelevant to the macroeconomy.

    The next paragraph after those I originally quoted is this:

    “The enigma of the interest rate also means that when the next central banker asserts that he is raising rates to slow growth, or that he is lowering rates to stimulate growth, we know that he is talking nonsense. Since rates, especially those set by central bankers, are the result of economic growth, they cannot at the same time be the cause.”

    • #55 by Unlearningecon on March 28, 2013 - 10:37 am

      Yeah, it does that automatically after 30 days. It’s annoying sometimes, as with now, but saves me responding to random comments on god knows what post I’d forgotten about.

      It is possibly not a textbook position, but it is the monetarist position of, for example, Milton Friedman. For them, the quantity of money in circulation is what matters, and interest rates will rise or fall depending on ups and downs (respectively) in the economy. Scott Sumner is the modern expositor of this story.

      It’s funny, the reason I was resistant is because it actually seems to go against my framework more, which is the one where the CB sets the interest rates and the money supply responds endogenously through private credit creation. Nevertheless, evidence is evidence and I’ll take a look.

  22. #56 by Magpie on April 5, 2013 - 6:35 am

    Unlearning

    This is probably a very unusual request, but perhaps you could help me with this.

    Partially inspired by a challenge Prof. Nick Rowe issued to critics of mainstream economics, partially inspired by your own example, I’ve decided to give mainstream economics a fair hearing.

    So, I’m studying, little by little, on my own, about microeconomics and I’ve come across the so-called “law of the diminishing marginal product” of production theory (one variable, one fixed input).

    This is supposed to be an __empirically observed__ regularity in production. But no book I’ve seen ever mentions any _empirical evidence_ for this alleged law, which is, let’s say, puzzling, given that this is supposed to be an empirical thing.

    I was wondering, do you know of any empirical study covering this subject?

    Thanks in advance.

  23. #59 by Magpie on April 5, 2013 - 4:13 pm

    Thanks guys for the links! They are much appreciated.

    Okay, it seems there aren’t many studies on this matter and what little empirical evidence exists in support of the MPL seems rather underwhelming.

    Let’s try something more basic: is there any study supporting the “law of diminishing marginal returns”?

    I imagine that, as it purportedly reflects a technical relationship between inputs and outputs, if the law of diminishing returns is valid, then it should be easily documented.

    In fact, it would seem easy to design an experiment to that effect. Say, in agriculture (as Unlearning mentioned), an agronomic study could divide a plot of land into equal subplots (presumably equally fertile and subject to the same weather), control for water and seed quality; and assign work teams of increasing size, using the same technology, so as to measure the resulting crop.

    Is there any study providing evidence in support of the alleged law of decreasing marginal returns?

    • #60 by Unlearningecon on April 6, 2013 - 12:01 pm

      Honestly, all I have seen are just-so stories. Sorry I couldn’t be of more help.

      • #61 by Magpie on April 6, 2013 - 1:55 pm

        No need to apologize and thanks anyway.

        “Honestly, all I have seen are just-so stories.”

        The same here.

        Somehow, the lack of data doesn’t surprise me…

      • #62 by Magpie on April 20, 2013 - 11:03 pm

        I’ve kept digging as much as I could on this matter and my preliminary findings reveal some quite interesting things.

        Intellectual honesty forces me to admit something: the experiment I proposed, to the best of my knowledge, was never performed and for a very good reason: strictly speaking, it cannot be performed.

        In the paragraph above I made the same mistake John Bates Clark made. Either this means that I am as “smart” as he was, or that he was as stupid as I am.

      • #63 by Unlearningecon on April 21, 2013 - 12:39 pm

        You’ll have to elaborate on exactly which experiment and mistake you mean.

      • #64 by Magpie on April 22, 2013 - 9:27 am

        The experiment I mentioned above, in #54, to measure the diminishing returns of labour in a farm.

        In that experiment, strictly speaking, one cannot isolate the variable “labor” (say, measured in men-days) from the variable “capital” (say, measured in $).

      • #65 by Unlearningecon on April 22, 2013 - 1:47 pm

        Yes, absolutely true. So all you have are fables, coupled with denials that it doesn’t matter whether firms actually do this, they behave as if they do, and a complete whitewashing of the empirical literature!

  24. #66 by Engineer on April 17, 2013 - 12:35 am

    Read “Economics in One Lesson” by Henry Hazlitt. It’s a rather short book and quite cogent. I think you’ll find that you’ve been taught a lot of bunk and drawn the wrong conclusions.

    For instance, Keynes didn’t say what you think he said. He never said that massive constant monetary inflation was a good solution, he said it was only good in slumps, but then you had to unwind it afterwards.

    Yet our government has no interest in ending the inflation, they just continue it… and that is bad for the economy.

    Here you are blaming “capitalism” for the results of monetary policy.

    Of course you are doing this because you’re a liberal, and you’ve drank the koolaide. But if you look at history, it doesn’t agree with you.

    • #67 by Unlearningecon on April 17, 2013 - 1:07 am

      I always cringe when someone appeals to Hazlitt seeing as the guy barely even understood economics, yet, armed with only a year of college he decided to write a condescending, simplistic book claiming to teach it to those far better educated and more intelligent than him (eg Keynes).

      Speaking of Keynes: my idea of Keynes is based on reading Keynes first hand – I know precisely what he meant, which was that the rate of interest should be kept low to stimulate private investment and stabilise the economy; in the case of depression, public programs were required to boost the economy.

      Of course you are doing this because you’re a liberal, and you’ve drank the koolaide. But if you look at history, it doesn’t agree with you.

      Ouch! That’s quite an insult. I’m actually a socialist, and to us being called a liberal is pretty damning indeed.

    • #68 by BFWR on July 21, 2013 - 9:22 pm

      Engineer,

      Focus your engineer’s perspective on the data to be found in the cost accounting figures of any going business concern, and the ratios between total individual incomes produced and total prices. That ought to enlighten and please you if you’re really interested in solutions to our monetary and economic problems as that engineer’s perspective is meant to do.

      Hazlitt is a favorite of Libertarians who unfortunately are some of the most ideologically narrow and orthodox “thinkers” around. The only ones who who even come close to matching then are the confirmed socialists. Google Distributism and Social Credit. You might find a genuine and thoroughgoing alternative to the false duality of capitalism versus socialism.

  25. #69 by swedishpotato on May 5, 2013 - 8:44 pm

    Interesting blog this. I’m now following. Looking forward to reading a few more articles.

  26. #71 by Corey on May 31, 2013 - 3:57 pm

    Please make a blog post on The Positive Mony group. Id love to read your take on this movement, which has gathered steam and political support in the uk.

  27. #73 by saiful azhar rosly on July 12, 2013 - 4:37 am

    Dear Sir, you may have heard about Islamic economics, which has its roots in the Quran and Prophetic traditions where man’s behaviour is governed by these Divine rules, where philosophy, ethics, theology and physcological elements are in play with individual choice. what is your honest view on this? tks

    • #74 by Unlearningecon on July 15, 2013 - 1:28 pm

      I’m not religious at all so it isn’t exactly a natural point of view for me, however I am aware of the Islamic empires at the turn of the first millennium (AD) who prohibited usury and encouraged charity to great effect. This is certainly something I could get on board with – do economic views in contemporary Islamic countries follow similar lines of thought?

  28. #75 by The Hat of the Three-Toed Man-Baby on July 22, 2013 - 5:27 pm

    It is unfortunate that you are not embarrassed by your pitiful understanding of economic theory, despite your many inaccurate public statements about it. I am saddened by your stupidity, and pray to the FSM that you never have any decision-making authority that involves other people’s money.

    • #76 by Unlearningecon on July 22, 2013 - 5:32 pm

      I’m so sorry to hear about your unsubstantiated opinion of me. I will stop posting immediately.

  29. #77 by Tank18 on July 31, 2013 - 7:47 am

    Do you have any recommendations on how an Economics undergraduate should approach his/her studies in Economics? Its not that fun when you are being forced to learn something and take it as a fact even though you know its flawed

    • #78 by Unlearningecon on July 31, 2013 - 12:56 pm

      Well, I would say that you should attempt to be open minded, though of course when you are learning Walrasian equilibrium that is a bit difficult. I myself have found that econometrics is not too bad.

      I just approach my work as mathematics, mostly. Learn how to do it, do it, don’t even bother trying to relate it to the real economy. If you want to know anything about the real economy, read the news.

      • #79 by ishi on September 20, 2013 - 12:29 pm

        that’s a great comment and approach, with 2 caveats.
        1. one can read other things than the news to learn about the real economy, and even simply observe the world around you without relying on words produced by others to mediate it.
        2. given that one recognizes the math and (theoretical) economic approach has (to me) a weak connection the ‘the news’ or ‘reality’, if one is ever (as a credentialed economist type) asked to comment on ‘reality’, etc. one might try to be humble as opposed to posing as a god-like figure who can issue commandments others should (or must) heed.

        (ps. i got here from the SMD post by lars sybyll; i disagreed with you and agreed with ponteus.) I consider SMD tyo be part of standard econ’ debreu wrote the classic stuff with arrow after all. this is no different from saying that chaos (indeterminism) is part of what is considered classical newtonian determinism. Newton just didnt have computers.)

  30. #80 by AlienObserver on August 13, 2013 - 2:40 pm

    “I’d characterise myself as a post-Keynesian, but one who is finding it increasingly difficult to defend capitalism given recent events. I’m open to new economic ideas, though, no matter where they come from.”

    Have you ever looked into “the ascent of humanity” and “Sacred Economics” by Charles Eisenstein?
    I am a blogger from germany (mostly about the madness of infinite growth)

    I assure You, the title may sound esoteric, but Eisenstein is a very profound thinker.

    He takes Marx critique on the alienation of capitalistic production further and roots it deeply into a philosophy of money, that very much worth rerading (or listening too).

    Go check it out. http://charleseisenstein.net/

    • #81 by Unlearningecon on August 19, 2013 - 9:52 pm

      Thanks for the link, he looks good – does his view of money take a similar form to David Graeber’s?

  31. #82 by Steve on October 30, 2013 - 5:44 am

    Those who run across this blog certainly get more than they bargained for when they type the search terms “unlearning economics.” If most are like me, they probably expected a brief summary, a simple manual on what is wrong with economics. Instead, find a passionate and indignant exposition of the flaws in economics and how these perpetuate and intensify social injustice that destroys human lives.

    It’s easy to see why this blog was voted most influential economics blogs. You show us how the intellectual life of the ideology underpinning the global economy has been particularly unaffected by the writings of Pareto, Robinson, and Marxian critiques of that ideology. Your blog in a sense forces a rediscovery of truths already known, but it is the context in which you do this that sets your blog apart from everything else most of us read. The contextual placement of your analysis right at the point where economics, law, and politics intersect enables you to communicate the illustrative material with a freshness and incisiveness that challenges us to reframe the debate—a noteworthy achievement.

    What makes your blog so readable and likable is the rare blend of soaring idealism and no nonsense realism. You have not been disillusioned by the unsatisfactory deficits that plague mainstream economics. In fact, the message that underlies all of your posts seems to be that if reasoning men (and women) get their heads together, they can make economics a workable tool for creating a better world. You have high hopes of humanity’s capability for moral improvement. The prospect of the future you envision is in sharp contrast to the miserable condition we find ourselves in today. You are attempting to discover and analyze economic formulas while also making observations on what you have seen and felt in your contact with the writings of economists, both old and new, both inside and outside the classroom.

    One day, what you have done here might serve as the outline for a lesson in practical economics, one that does not serve an ideology that debases all human relationships by reducing everything to monetary value and assumes that humans are perfect calculating machines making rational decisions to extract maximum monetary gain out of all transactions.

    I look forward to reading your future posts.

    • #83 by Unlearningecon on November 2, 2013 - 5:54 pm

      Well, what can I say? Other than thank you for a very nice comment!

      Also, I am interested in your characterisation of Pareto. I have never read him first hand – could you elaborate on your point a bit, please?

      • #84 by Steve on November 7, 2013 - 4:57 am

        Yes, I received your e-mail, but I think due to some machination or what have you, the text was not delivered. I was waiting for you to resend. Someone directed me to this comment, which I had not seen.

        In response to your question:
        As you know Pareto was something of a dynamic individual, he went through several transformations as he went from engineer, to economist, to social reformer. At the foundation of all of this—math. What intrigues me about Pareto is what Thurman Arnold once proclaimed: “Pareto discovered that there is no reality behind political and economic theories.”

        Pareto based his theory of human behavior on what he characterized as a distinction between “logical actions” and “non logical actions.” Logical actions, “logically conjoin means to ends.” Non-logical actions, “seem logical to persons performing them but are mere manifestations and instincts.” Pareto believed human beings “have a very conspicuous tendency to paint a varnish of logic over their conduct.” To him, this was a way of rationalizing theories to make non-logical conduct appear logical to human actors. I am curious to know what you think about all of this.

        To Pareto, non-logical behavior followed by rationalization was an essential attribute of human behavior. This idea was central to Pareto’s theory of elitism and political and social order. Contrast with Marxist ideology, that situates false consciousness within a specific historical context. I do not know whether Pareto would disagree with this or whether he thinks it is significant. Please enlighten me.

        Does Pareto’s introduction of ordinal analysis and non-comparable points have significance?

  32. #85 by Steve on November 7, 2013 - 5:10 am

    Unlearning, It is worth noting that Pareto influenced the approach of Thurman Arnold in significant ways. Arnold’s two mid-1930s books: “The Symbols of Government,” and “The Folklore of Capitalism.” I saw that you had posted a link on twitter to an excerpt from the book “Tyranny of Words,” by Stuart Chase, who Arnold mentions throughout his books. These two were somewhat mystified at the way symbols of governance controlled the public.

    Arnold was studying the way symbols or formalistic models restrain our ability to organize and respond to problems. Take for example this excerpt from his book Folklore of Capitalism:

    “The whole political campaign of 1936 in the United States might have been called a holy war between Capitalism, Communism, and Fascism. Capitalism was championed as the good system in which the individual has freedom. Every practical scheme proposed had to be tested to see whether it was leadings to Fascism or Socialism, and for some reason it was better to humiliate the unemployed or to waste natural resources rather than take steps, which would change the capitalist system…. That holy war became the greatest obstacle to practical treatment of the actual day to day needs of the American people (credit agriculture, soil preservation are tainted with Communism)…. It is a fixed idea that any society has a free-will choice to make between these systems.”

    You may find, like I have, a common thread between his work and your own. Arnold was not the conventional realist. While realists sought to debunk symbols, Arnold sought to take these symbols and use them to reframe the debate. Arnold sought to synthesize symbols and institutions of governance to create a universe of principles. Does this strike you as familiar? Your earlier posts on this blog take exactly this approach. More recently you seem to be taking the approach of conventional critics, getting into this practice of debunking symbols, rather than reframing the debate. Which do you prefer? I would be interested in seeing more of your work that touches on the ways assumptions, ideologies, and institutions compel social structures and responses to problems.

    I’ll leave you with another excerpt:
    “In our rational and sophisticated age the Devil and Hell become very complicated. The true faith is Capitalism. Its priests are lawyers and economists. The Devil consists of an abstract man called a demagogue. He is the kind of person who refuses to be moved by sound economists and lawyers an who is constantly misleading the people by making the worse appear better than reason.”

    • #86 by Unlearningecon on November 12, 2013 - 12:04 am

      I get the impression that Pareto’s approach was a typically reactionary “hah, well, that’s the way it is – you can’t change it, so deal with it!” This much strikes me about his ’80/20′ law of wealth distribution and it seems to be applicable to his rationalisation ideas, too: people rationalise their actions so take their word and model them as rational; no point fighting it. He once spoke of his theory as the “one true theory” as it was “logical…beautiful”, so perhaps his aim was simply to gloss over the vagueries of human behaviour with maths, which is why he adopted ordinal analysis.

      As to your point about framing the debate, well: I am actually just reading a book called “Economists and the Powerful”, which explores the issues you seem to be concerned about: where ideas come from and how they filter down through society, controlled by those with money and power. It’s not a conspiracy theory (sadly you have to affix all attempts to expose corruption with this statement); just a description of how those with power tend to promote ideas that are in their interests and this affects everyone: not just directly through the implementation of the ideas, but also through affecting how people think and behave.

      I suppose this blog has gone through stages and I have changed when I’ve run out of things to say on a topic. I start with framing and general statements, then moved on to specific critiques of neoclassical economics and also a lot of critiques of libertarianism. More recently I’ve started to discuss alternative theories, and you may also have seen that I am slowing down the blog now, largely because the drive to make criticism #156 is far lower than it was with criticism #9. However, I am still going to post and your point is well taken: perhaps more discussion about how economics affects debate is due for a return. I may even do a review of the book mentioned above.

      • #87 by Steve on November 13, 2013 - 12:17 am

        Shall I wait for your review of “Economists and the Powerful” or take it up on my own? You’ve left me suspended.

        I was hoping you could help me uncover why Thurman Arnold regarded him so highly. From what you tell me, it seems there interests would diverge. There might be more to Pareto. Perhaps not. I leave it to you.

        Your posts on how economics impacts debate are key. These posts would lead you in the right direction for both criticizing existing models and developing alternative models. When you hit a block, always always revisit the basics. I can appreciate that it might seem boring, but it saves so much time and usually gets things flowing again fairly quickly. You may find what you have covered with your criticisms and alternative models leaves you with something to add to those posts that you did not have before. Seems your critics could use a refresher course. An arduous task to keep up with the constant stream of criticism. Surely will be good in the long term.

        James Madison wrote the Federal List Papers before he reached the age of 31. I do not know whether you have had the occasion to study these, but those papers proceed as a dialogue of analysis between various political groups, similar to what happens on this blog. What interests me the most is analyzing the various levels in terms of consensus: points where they strongly agreed, points where they agreed, points where they disagreed, points were they strongly disagreed. You could apply this modality to economics as a discipline as it would help you pinpoint the wrong turn of the discipline as a whole. You could add whatever meta level to those mentioned above. If you ever publish, the work you have done in the comments section should be incorporated into the texts of the posts. No easy task, but it would put all your work product to use. And it provides a outline of the dialogue I just mentioned above. It’s extraordinary really.

        I have e-mailed you some of my own writing. Have you had a chance to review it? Do let me know what you think.

        Try not to burn the candle at both ends.

      • #88 by Unlearningecon on November 14, 2013 - 5:29 pm

        I probably wouldn’t hold your breath waiting for a review, but I would strongly recommend the book. It starts strong with the history of the discipline, then withers a bit on the financial crisis (if only because we’ve heard it all before), then gathers pace again with executive pay and the workplace.

        Those Madison papers sound interesting and I will see if I can find them, thanks. I understand your point about framing the debate and I think I have a couple of relevant posts I might like to make at some point.

        I have not received your email – send to unlearningeconomics at gmail dot com, please!

  33. #89 by Carles Sirera Miralles on February 9, 2014 - 3:33 am

    Lovely blog. I’m trying to do the same in Spanish in “Historia versus Economía” (http://simicar.blogs.uv.es/). I’m doing social history of science to fight against economic imperialism.

  34. #90 by Steve on April 21, 2014 - 9:03 pm

    I was unable to reply to your comment on Unlearning the History of Capitalism. I am pleased you have stumbled upon the lesser known works of Marx. Did you also find the collection of his works examining the revolutions in various places around the world from the same period, including what he called the counter-revolution in the United States? Any thoughts on his use of the term counter-revolution? I think it would be not only interesting, but particularly useful to study current world events through the same lens. Any thoughts on that distinction? Are you aware of any scholars in the world today that are investigating these issues in a similar way? I note your use of the word “practical.” Do you think there is a gap between what the majority of people understand and refer to as Marxism and what Marx actually aimed to achieve?

    • #91 by Unlearningecon on May 8, 2014 - 10:57 pm

      Sorry for the late reply.

      No, I do not have those works, although I am inclined to agree with (what you say is) his perspective on the US revolution. A bunch of white slave owners rebelling because they don’t wanna pay taxes, well…that’s not a revolution.

      Do you think there is a gap between what the majority of people understand and refer to as Marxism and what Marx actually aimed to achieve?

      Absolutely. Marxism is, in essence, a lens through which to view the world and is for the most part more descriptive than prescriptive. Yet when most people hear ‘Marxism’ they just think of the USSR. In fact, my aunt recently described Marx as a “Russian dictator”! I have previously written on the popular straw men of Marxism. I’m also semi-planning something briefer and more accessible on the same subject.

  35. #92 by Gaz on May 3, 2014 - 4:55 am

    If anyone thinks the capital controversies are an obscure, irreleveant intellectual diversion, be assued that policymakers adopt the Cambridge, Mass., view lock stock and barrel. And expect today’s students to do the same:

    eg: http://www.rba.gov.au/econ-compet/2014/

    The RBA believes Solow’s model tells it like it is.

    Also, the Australian Productivity Commission sees no problem in valuing capital, and hence deriving capital and multi-factor producitivity.

    http://www.pc.gov.au/__data/assets/pdf_file/0008/135935/productivity-update-2014.pdf

  1. 2013: Year In Review | Unlearning Economics
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