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Economic theory is not neutral, and the results when it is applied owe much to the implicit and explicit assumptions embedded in a particular theory. That such assumptions reflect specific ideologies is most obvious in the case of the neoclassical economics that underlies neoliberal economic policies.

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Lebowitz concludes in his article,

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Endogenous development is possible—but only if a government is prepared to break ideologically and politically with capital, only if it is prepared to make social movements actors in the realization of an economic theory based upon the concept of human capacities. In the absence of such a rupture, economically, the government will constantly find it necessary to stress the importance of providing incentives to private capital; and, politically, its central fear will be that of the “capital strike.” The policies of such a government inevitably will disappoint and demobilize all those looking for an alternative to neoliberalism; and, once again, its immediate product will be the conclusion that there is no alternative.

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The article usefully deals with embedded ideology in the practice of "science", the failure of Keynesianism and social democracy, and "capital strikes" and what to do about them.

As far as I'm concerned, everything before the last paragraph was filler. This would have been a real contribution if he had started with the last paragraph and had tried to explain what "an economic theory based upon the concept of human capacities" would look like.

[ 03 May 2004: Message edited by: Oliver Cromwell ]

[ 04 May 2004: Message edited by: robbie_dee ]

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What I don't understand is why this line of thought hasn't managed to make any headway in the past 150 years. Is anyone keeping count of the number of critical surveys of mainstream economics listing the reasons to look for an alternative? And then, once the intellectual gauntlet is thrown down, a call for someone else to pick it up?

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So, Oliver, why don't you do it?

But I am reading up on Participatory Economics.

[ 06 May 2004: Message edited by: Oliver Cromwell ]

Two old classicists who remained adamant about the value of free trade and the stupidity of any deviation from their model were Jacob Viner and Gottfried Haberler. I didn't find them very convincing, but they had their own self-contained mental universes.

He points out that the entire discipline of economics is skewed by this bias...

I suppose that is how you are supposed get rich - artificially ignore your best instincts!

Sorry, I am a hedonists and relatively wealthy by virtue of my great good fortune and the kindness of my loved ones.

[ 09 May 2004: Message edited by: Boinker ]

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were the founders of embryonic capitalist institutions in the Middle Ages lectured because they didn't have a "clear vision" of a post-feudalist society?

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Apparently they were.

Polanyi points out that the definition of the Greek word "metadosis" used repeatedly in Aristotle's works on politics and which meant "sharing of goods" was actually misinterpreted by enlightenment translators to the meaning "exchange for goods" in the sense of bartering, i.e. trade. This was then interpreted to mean that in ancient society the central community function was "free trading" that is a "market" when in fact it was communal giving - a huge difference.

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Originally posted by Oliver Cromwell:
Markets existed long before economists had anything substantive to say about them.

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But if you can imagine communal charity and gift exchange as the basis of distribution of wealth then you will begin to understand the broade meaning of economics.

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I'm not aware of any laws proscribing altruism.

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Well apparently there were at the outset of the market system. The idea of what we call stste welfare goes back to ancient times. It was in 1835 that the Poor Laws were abolished in England in order to solve the "labour problem". Apparently the rapdily decending peasant farmer preferred welfare than the sweat shops of the industrial revolution.

But this is beside the point entirely. The idea of communal sharing of resources is not altruism for the "primitive" society it is good practical sense and is "good economics". More peolple can buy into the societyexpress freedom and enjoy the creative pursuits of culture building.

Today we call this time honoured "normalcy" altruism?

For example: "What if pure altruism (as opposed to enlightened self-interest) were innate?"

As a first pass, I'd guess that such a model would predict that billionnaires would spend much of their time distributing $100 bills to passers-by on the streets. The fact that we don't observe this sort of behaviour would be considered evidence against this theory.

[There are of course more plausible theories of altruism: the Barro/Becker endogenous fertility model is entirely based on the hypothesis that parents behave altruistically towards their children.]

And the "system" was worth comment by some note worthies the likes of Marx and even Einstein getting in on the fun saying that capitalism would experience sharp periods of growth followed by more frequent and severe periods of economic recession. That certainly was true with the Great depression at the turn of the century and of 1930's depression era before Keynes wrote The General Theory. German's were tired of seeing dirty faces on children. British and American factories were silenced, and millions rode the rails in search of work. A moribund American economy saw average wages of a dollar day. Thousands lost their farms to the banks, and few could afford to buy very much other than staples of life. Laissez faire's invisible hand was the equivalent of sacrificing people to non-existent Morlocks for the sake of the economic gods. Consequently, the laissez faire temple lost most of its flock.

And it was especially so as Chile repeated the experiment with a fully deregulated economy on the advice of "Chile Con" Friedman in the 1970's and '80's. It worked to shovel the bulk of Chile's national income to the elite, but deficits soared and unemployment raged, at one time, 39%. Only five other Latin American economies did worse in the same 16 year period as leftists and union leaders simply "disappeared" under fascism. Commentators said that Milton Friedman's Chicago School economics and democracy were incompatible. The Bank of England abandoned Friedman's monetarism in 1986 with rising unemployment becoming a permanent feature of Britain's economy. The American "Fed" gave up on monetarist policy in 1982 as they observed the monetarist disaster unfolding in Britain. Keynesian policy was implemented, and several months later the American economy roared back to life in a period of growth lasting seven years.

In brief, Polanyi said that people are not one dimensional prisoners of our own greed. Smith's "Homo Economicus" isn't representative of all people. We are certainly capable of the full range of human behaviours, like empathy for the poor, civic mindedness and desire to contribute to something greater than ourselves - society.

And on another diff but related topic, I think it's a terrible irony that the American right wing believes it has anything to teach Iraqi's, descendants of a people who created the first civilized societies in world history.

cheers!

[ 12 May 2004: Message edited by: Fidel ]

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Markets existed long before economists had anything substantive to say about them. If you're going to try to understand how resources are allocated, then it seems sensible to try to learn something about the mechanism that produces many/most of the outcomes we observe.

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I find it fascinating that people can refer to "markets" that existed under completely different social political conditions and still believe them to be comparable constructs. Markets have never allocated resources access to resources have been determined by social, political and economic power. The fact that social political forces control resources may be constant but the way these forces operate change.

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For example: "What if pure altruism (as opposed to enlightened self-interest) were innate?"

As a first pass, I'd guess that such a model would predict that billionnaires would spend much of their time distributing $100 bills to passers-by on the streets. The fact that we don't observe this sort of behaviour would be considered evidence against this theory.

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This is a good example of what poor psychologists economists make. First of all you make the assumption somehow that the social forces that influence people are somehow "natural". Also you would make the assumption that the billionaires behaviour would be representative of human behaviour in general. Neither would be particular accurate assumptions.

Also "enlighened self-interest and altruism are not necessarily mutually exclusive. Only if you accept the Capitalist concept of self interest which involves a pathological pattern of consumption that endangers the well-being of the entire planet. This is hardly "enlightened" or aware behaviour rather it is compulsive and self destructive.

In terms of human behaviour it is more accurate to note that both greed and generosity are natural and greed only becomes dangerous to our well-being when it is promoted and encouraged as the defining feature of our species or even as of personal well-being.

[ 09 June 2004: Message edited by: N.R.KISSED ]