economic theory for scientists and engineers

jayhanson | POLITICS:

n 1: social relations involving authority or powerThe members of the American economics profession, as Arnold contended, performed a vital practical role in maintaining this unique system of corporate socialism American style. It was their role to prevent the American public from achieving a correct understanding of the actual workings of the American economic system. Economists instead were assigned the task to dispense priestly blessings that would allow business to operate independent of damaging political manipulation. They accomplished this task by means of their message of “laissez faire religion, based on a conception of a society composed of competing individuals.” However false as a description of the actual U.S. economy, this vision in the mind of the American public was in practice “transferred automatically to industrial organizations with nation-wide power and dictatorial forms of government.” Even though the arguments of economists were misleading and largely fictional, the practical — and beneficial — result of their deception was to throw a “mantle of protection ... over corporate government” from various forms of outside interference. Admittedly, as the economic “symbolism got farther and farther from reality, it required more and more ceremony to keep it up.” But as long as this arrangement worked and there could be maintained “the little pictures in the back of the head of the ordinary man,” the effect was salutary — “the great [corporate] organization was secure in its freedom and independence.” It was this very freedom and independence of business professionals to pursue the correct scientific answer — the efficient answer — on which the economic progress of the United States depended. — Robert H. Nelson, REACHING FOR HEAVEN ON EARTH

The problem is, of course, that not only is economics bankrupt but it has always been nothing more than politics in disguise ... economics is a form of brain damage. Hazel Henderson

Henderson is certainly correct; universities teach politics in disguise. I can cut through the jargon, math, and explain economics in just one sentence: economics is the publishing of political propaganda with agendas hidden in assumptions.

I attribute the absolutely brilliant tactic of using assumptions to further political agendas to one man: Milton Friedman. Friedman lied on the Allais paradox in 1952 and then told his students to lie as he did:

“To be important, therefore, a hypothesis must be descriptively false in its assumptions... ” Milton Friedman, 1953

Friedman is correct: economic propaganda must lie to be effective. Friedman’s efforts hid the true nature of economics from the public for 50 years! Four important aspects of economics prevent it from becoming a true science:

Aspect #1. Economists select known-to-be-wrong-hypothetical assumptions so they can mislead the public into supporting their political agendas (e.g., Homo economicus, advertising, money). You may call it what you wish. I call it “lying.”

Aspect #2. The economic method is “correlation” (this happened before that happened, and thus, must have caused it). Correlation is also called “magical thinking” for the obvious reasons.

Aspect #3. The economic unit of measure is “price” — which is a “transitory effect” — not a “cause.” For example, a dollar’s worth of oil today will not be a dollar’s worth of oil tomorrow. Thus, today’s economic Nobel-Prize-winning discovery (correlation) may be worthless tomorrow.

Aspect #4. Economic articles and texts are always “political” (they always imply how we should behave). Every economic theory claims to know what is best for us. Economists always publish to support specific political agendas.