Hate Mail - Economics Is The Biggest Academic Brothel Of Them All

Good grief, someone is whining about me having said, economics as practiced and taught in academia has never been more than an extension of materialist Mammonism, in what I posted yesterday.   What part of the past forty-five years of economics as a political entity, pushed by neo-classical economists, from such venues as The U. of Chicago and the Ivy League universities did they miss? Economics is a brothel almost exclusively serving the interests of those with wealth and or power, despite those outliers who don't see their role as that and who, generally, don't seem to move up in the field or stay in it.

Last month when the mathematician John Forbes Nash died in a car crash,  I was kind of puzzled to get an e-mail pointing out that you know who snarked that I would rejoice in his death because he was an atheist.  I ignored it at the time, as I ignore most of those pieces of hate mail I receive.  But, since the e-mail also quoted the regulars at Duncan Black's blog who were mourning the loss of him as a great man, I was even more surprised at that.   Black has a PhD in economics and is a critic of neo-classical economics, as I recall from the dim past when he actually wrote blog posts he was somewhat harsh about the claims of the Chicago boys and others that people make rational decisions in such areas as purchases and investments and the such.   I'd have thought, since Nash played a huge role in the adoption and pushing of such tripe in economics, which has played such a big role in such things as Republicans trying to destroy Social Security by "letting people manage their retirement accounts" because "they were the best ones to make those investment decisions," Nash wouldn't be seen by Black's blog community as some kind of liberal hero.  I mean, did they even read him at all?

Considering that about 100% of those blog commentators who were going all weepy over Nash had no deep understanding of his mathematical contribution to economics, if any at all,  the source of his Nobel, or as I generally think of it, his Fauxbel in Economics, I have to conclude that what they knew was based soundly on  a somewhat fictionalized bio of him from Hollywood,  A Beautiful Mind, stared the admittedly beautious Russell Crowe but a source of reliable information, it wasn't.   Thus is the depth of so much of the blog discourse one reads, such is the status of even those with college degrees as rational consumers of information, as seen on DVD if not premium cable TV.

I don't claim to understand Nash's mathematical work, knowing little about game theory, I doubt that a majority of university economists really do, never mind your average blog babblers.   But I do know that it played a large part in the sales pitches of neo-classical economics, the economics that has brought us to the grotesque situation we are in today.   This paper, giving a history of Nash's theories in the history of academic economics, quotes an academic economist who is frank about that:

As Aumann (1985:43) states:

"The Nash equilibrium is the embodiment of the idea that economic agents are rational; that they simultaneously act to maximize their utility.  If there is any idea that can be considered the driving force of economic theory, that is it."

By the mid-1970s economics was ready for a new paradigm.  The heyday of research into Walrasian markets was over, and graduate students were looking for new topics on which to write their dissertations.  A game-theoretic revolution in economics was about to take place. 

Oh, yes, how well I remember how economics shifted and its role in the shift of politics and the media which happened just about that time.  And it was mostly a cynical ploy to rob people, such things as trying to get their Social Security in the safe hands of Wall Street, to steal from people who those pushing that line hardly saw as human, certainly not as rational players but as gullible dupes for the taking.

I also knew nothing about Nash's personal story, not having seen the movie* or having read the book it was supposed to be based on.   I do, though, know that any liberal should start out by being skeptical of the motives of professional economists.  In a section of the same paper about why those theories were, originally, rejected by most mathematical economists, including such figures as John von Neumann, that reason is made clear, though that wasn't the intent of the author.

The reason for this, it seems clear, was the normative orientation of mathematical game theory.  True to its origins, game theory in the 1950s still sought to advise players of how best to make their strategic decisions.  Nash equilibrium failed to generate unambiguous advice, since many non-zero-sum games possess a multiplicity of equlibria that are not interchangeable.  The best advice being received by the other, even if both are being advised according to Nahs's theory, and so we arrive at yet another strategic impasse.

Social scientists, of course, are not concerned to advise people how they ought to behave, but rather to understand how they do behave.  They required a positive theory of games.  Nash equilibrium served this descriptive purpose perfectly.

Indeed, even Luce and Raiffa (1957:105) tempered their criticism of Nash with the observation that:

"Even if we were to reject equilibrium as a normative theory for noncooperative games ... it may still be that the notion is relevant as a description of behavior."

If there is one thing that is certain of  liberalism, it is concerned with how people OUGHT TO BEHAVE.  If a liberal is merely concerned with "scientifically" describing how people behave as they do, now, instead of changing behavior in support of the foundation of liberalism, equality, justice and preserving peoples' lives in decent and humane conditions and, as well, the entire planet in a viable condition, they aren't a liberal, they are some kind of neo-liberal libertarian.   Any assumption that people can't be either convinced or, being unwilling to do so, compelled to behave in a way that produces better than the status quo is giving up on the whole reason for liberalism to exist as something distinct from conservatism.

The role of the social sciences, especially economics, has generally been conservative, in support of the economic status quo at any given time, assigning to present conditions the status of some, unchanging, unchangeable atavistic force, whatever attempts at changing things, which things will always revert to. There have been exceptions, few though, temporarily, influential.

That is especially problematic in economics where what it studies is largely artificial, the product of laws and systems invented by those with more money for the purpose of keeping it and having more of it, twisting any political and legal aspects impinging on their desires to their ends.  Thus have money and economics always been artificial human constructs, not natural phenomena.

But the conceit of the social scientists, that they are revealing hidden aspects of unchanging nature, will always guarantee that their results will be presented that as if that were not true..  Considering the histories of the various social sciences, their hardly enduring theories, their frequent upheavals, casting down reigning schools with their universal and dominant declarations of what those facts of nature are, to often be replaced by opposing claims, their claims to find unchanging laws of nature are absurd.    What they do do is support whatever the dominant political and financial interests want to hear.  The liberals in social science were successful with such brief political-legal entities as the Warren Court, the Kennedy and, especially, the Johnson administration and the post-WWII generation which had been given such enormous reasons to not want to repeat what they'd gone through in the depression and that war. They had gotten the short end of the stick of classical economics and they didn't especially like it.   As their influence began to wane, for various reasons, economics and other social sciences served new masters, economists who said the lines they liked gained influence.  That time line for when Nash's ideas began to take hold in economics, the mid-1970s, immediately preceded the Reagan years in the 1980s and, since then has served those who have given the top 1% of the world ownership of more than half of the world's resources, with the resultant impoverishment of many and the destruction of middle-classes, not least of all,  in the English speaking countries.   Those things aren't just coincidences.

Economics as If People Mattered**, such as became briefly popular in the 1970s was swamped by economics as if people were variables in equations and as optimally rational actors in games.   I have no idea to what extent that Nash, a socially dysfunctional schizophrenic, after all, was aware of who he was serving in his mathematical games.  I know who he did serve in real life.  Our political and economic opponents.

*  Anyone who thinks they know something about a real person or history based on movie bio-pics is, in almost every case, buying a line of tripe.   In this case, it's apparently people who frequent a blog which officially is opposed to neo-classical economics, taking one of its cornerstones as a hero.

**  When's the last time you heard anyone talking about  the former best seller E. F. Schumacher?


Note:  Due to time constraints on me today, I didn't have time to type out the passages from the pdf of that paper.   Those generally paste into blogger with breaks in the line that I find impossible to fix.   I'll try to get back to that tonight.