Saturday, March 9, 2013

‘Economics’ grew out of a fraud

Abstracting ‘economic’ and ‘political’ from social relations has been the way to enslavement of humanity.

What do words, ‘economic’ and ‘political’, mean?
If one reflects on this question, one would be hard pressed to reach any definitive senses.
That's because these two words are hollow coinages, like empty shells, so that they need to be filled inevitably, by the dominant people and classes, with whatever meanings that suit them.

That's why one can see these two words acquiring a wide variety of meanings in accordance with who is using them; there is variation in meanings of these words even within the dominant classes, in line with competing interests and difference of opinions within those classes.
So the reason these two words exist in our vocabulary is that they serve certain interests. Those interests won't have it without these empty shells.

And then the world that we live in is constructed on the dubious senses that they assign to these two words. And then the History is built on the world so constructed. And then we all and our children are taught -- with all the academic paraphernalia and pretense -- the two 'profound' disciplines of ‘economics’ and ‘political science’. And then we show off the precious degrees and pedantic terminology acquired through such an 'education' and imagine ourselves to be really 'educated'.

(Think of Edward Herman and Noam Chomsky’s Propaganda Model. Yes, education can be, and invariably is, the very effective means of propaganda, particularly in disciplines that make and remake the world and history.) 

It’s just society and social relations
The entire range of senses that are assigned to these two words can be replaced easily with the word "social" --- because there is absolutely nothing that we are talking about here other than human society and social relations.
Think about human society. It would be impossible for one to abstract whatever meaning one has in mind for 'economic' and 'political' from society and social relations.

(Imagine a small community of people conducting themselves in all aspects of their social relations. It would have absolutely no reason or need to divide and segregate its affairs into the compartments of 'social', 'economic' and 'political'. In fact, there is no evidence in studies of human communities through history that show that such a division is made. This hypothetical community can do everything, including production and distribution, without ever inventing the word 'economic' and inventing anything resembling a purely 'economic' theory. 'Economic' would just be inherent in its social relations. It can similarly run itself democratically, more and less, without ever inventing the word 'political'.)

So if one really wants to build a new society, one should not fall into this semantic fraud -- a deception that actually gets elaborated and ramified into horrible consequences for the entire world and the progress of history.

An un-abstract-able abstraction
The Western world too is becoming aware of this fraud whose one manifestation consists in academic disciplines of economics and political science, as is suggested above.
If one reads about some of the research coming out of Western universities in recent years, one may understand with great clarity how the powers-that-be in the West have been committing this fraud over the years by abstracting from society and social relations what is actually un-abstract-able and inherent --- thus carving a new discipline of 'economics'.
These powers-that-be are the same that carved out huge States out of much smaller human communities, thus reinforcing this unnatural process of abstraction.

One may like to read some of French academic Marcel Mauss whose book, 'The Gift', explains gift exchanges in traditional communities and Hungarian Karl Polanyi who explained further the traditional social relations and the three 'fictitious commodities: land, labour and capital.
The works of such social scientists became marginalized from 'mainstream economics' for obvious reasons.

(Here is an extract from Karl Polanyi's book, 'The Great Transformation'.
"The outstanding discovery of recent historical and anthropological research is that man's economy, as a rule, is submerged in his social relationships. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets.
He values material goods only in so far as they serve this end. Neither the process of production nor that of distribution is linked to specific economic interests attached to the possession of goods; but every single step in that process is geared to a number of social interests which eventually ensure that the required step be taken. these interests will be very different in a small hunting or fishing community from those in a vast despotic society, but in either case the economic system will be run on noneconomic motives."
-- Chapter IV, Societies and Economic Systems;

One may also like to see some recent research into the social basis of the so called 'economic' and  'monetary' relations, particularly by David Graeber, Michael Hudson and Cornelia Wunsch.

Graeber, Hudson and Wunsch have shown that there is absolutely no empirical evidence that any human society in the past or present has/had anything like the barter system as posited in the 'economic' theory that's currently taught across the world. Traditional communities have had various forms of gift exchanges embedded in their social relations. And ‘homo economicus’ has never existed.   

(The theory of barter system is used to build the entire foundation for money and debt-based monetary system. And the predominant ‘economic’ theory has been woven around the mythical ‘homo economicus’.)
There is large amount of research output available on how money equals debt -- which, in turn, equals slavery for people and societies -- in the world of today and how such a system came about.

About the mythical 'homo economicus', Joseph Stiglitz says the following in his book titled 'Freefall' (published by Allen Lane, Penguin Books, 2010).

"Most of us would not like to think that we conform to the view of man that underlies prevailing economic models, which is of a calculating, rational, self-serving, and self-interested individual. There is no room for human empathy, public-spiritedness, or altruism. One interesting aspect of economics is that the model provides a better description of economists than it does of others, and the longer students study economics, the more like the model they become."

'Economics' turned into an orthodoxy
In fact, the entire 'economic' paradigm -- the so called 'neo-classical economics' -- has been discredited. The models around which this 'economic paradigm' has been built bear hardly any resemblance to the real world or how people behave.
(One may like to do some online reading, such as on 'post-autistic economics', now called ‘real world economics’ --
Other than reasons of power, 'economics' has no reason to be carved out of social studies. Like other social sciences, 'economics' is about subjective judgments , not following some 'exact science' or orthodoxy.

Part of the fraud, in recent years, has been to treat 'economics' as a kind of 'science' and orthodoxy, through such means as 'Nobel Prize in Economics Sciences' which were set up in late 1960s.
This fraud has also meant that 'economics' has been turned into a weapon for enslaving humankind. That is 'Economics' is not just lording over democracy, it is killing democracy.

And it should be easy for one to see -- if one is familiar with elementary democratic theory -- as to why 'economics,' which is just one aspect of social relations, must be completely subservient to the free will of a democratic community. (We will decide how we want to relate to each other. A theory of an aspect of social relations will not decide how we should relate to each other, live and work.)

If one has the stomach for some blood-curdling stuff, one may like to read how neo-liberal ideology has been imposed on the world in the last 40 years, particularly Latin America and the rest of developing world, including India.

Material available online includes introductions and reviews of 'The Shock Doctrine' by Naomi Klein. One may also like to see some recent research into (and critique of) the predominant 'economic' paradigm, called 'neo-classical economics' of which 'neo-liberal' ideology is considered a part, particularly by Joseph Stiglitz, David Harvey, Steve Keen, Philip Mirowski, Colin Crouch, etc.

It’s easy to see that neo-liberal ideology has hardly anything to do with even 'economics' as an academic discipline.
There are also some Renegade Economist videos on YouTube

Words fool us
Let's not get fooled by semantic fraud. That's the lesson I have learned from Noam Chomsky.
In today's world, as Chomsky explains, most words used in 'educated' discourse, like ‘democracy’, ‘capitalism’, ‘free trade’, ‘free market’, 'investment', 'socialism’, 'aid', 'governance' have multiple meanings. And all the dominant meanings are invariably imposed by the dominant people.

In India, for example, the 'informal economy', also called 'unorganized sector', is really the system that comes closest to a 'free trade' or 'free market' or 'laissez faire economy'.
The so called 'formal economy' (organized sector), on the other hand, is not only unfree, manipulated and rigged from top to bottom, but also scrounges shamelessly on the informal economy and its hard-working, poorly-paid work force.
In fact, the 'formal economy' is being built by destroying the 'laissez faire economy'. So we are moving progressively from relatively freer and laissez faire relations to unfree, enslaving, manipulated and rigged relations.   

Post script 
The discredited 'economic' theory (neo-classical model) would have us believe that government budgets are like household budgets, i.e. the governments run out of money, especially when they have to provide for  the pressing needs of the society (not when they have to forgo taxes, worth huge amounts in revenues, on the wealthy or provide tax breaks for the rich).
That, of course, is a fraud, as my friend Warren Ross from Australia explained it to me in a message, the relevant part of which is reproduced below.  

(Warren Ross quote) One point, I literally meant what I wrote about Governments not running out of their own currency. The empty pockets is a game played with their own population. As owners of the currency (creators using keyboards) how can they run out of money?
Governments play a game with their local populations where they set a budget (this role is performed by the Congressional Budget Office in US). In Australia, we have had both Government and Opposition being "hairy chested" and saying we will keep the budget in surplus as though a Government budget was similarly constrained as a household budget is. This is not true unless in your household you have a printing press in your basement.

Governments can never run out of their own currency. What they can do is create too much of it causing inflation but this is harder to do than is made out. The inflation bogey is used by money markets and by conservative politicians to keep government spending to a minimum and keep their influence out of the market.
There has been a demonizing of government for the private sectors own ends. When government is kept out of the market, any money that is needed must be borrowed from the private sector with interest. That is how they like it. In much the same way, we are seeing toll booths placed on every level of education as education is increasingly privatized.

The real point of this phoney game governments play in pretending to be fiscally constrained is managing /limiting the expectations of their local populations. If people knew there no limit to money, then they would expect everything now.
Don't take my word for it. Paul Samuelson (the writer of just about every introductory text book provided to high school student ensure they never understand economics) will tell it better:

“I think there is an element of truth in the view that the superstition that the budget must be balanced at all times [is necessary]. Once it is debunked [that] takes away one of the bulwarks that every society must have against expenditure out of control. There must be discipline in the allocation of resources or you will have anarchistic chaos and inefficiency. And one of the functions of old fashioned religion was to scare people by sometimes what might be regarded as myths into behaving in a way that the long-run civilized life requires. We have taken away a belief in the intrinsic necessity of balancing the budget if not in every year, [then] in every short period of time. If Prime Minister Gladstone came back to life he would say “uh, oh what you have done” and James Buchanan argues in those terms. I have to say that I see merit in that view.” (Warren Ross Unquote)

Here is, by the way, more empirical evidence as to why 'economics' is a fraud -- an article about the works of Joe Henrich, Steven Heine and Ara Norenzayan, of University of British Columbia.


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