against econ
(2019) by david graeber via anarchist library [https://theanarchistlibrary.org/library/david-graeber-against-economics]
via David Graeber Institute tweet [https://x.com/Graeber_social/status/1728203967660704088?s=20]:
There is a growing feeling, among those who have the responsibility of managing large economies, that the discipline of economics is no longer fit for purpose. David Graeber’s 2019 article “Against Economics.” Read more: https://davidgraeber.org/articles/against-economics/
on econ ness: oikos (the economy our souls crave).. ‘i should say: the house shelters day-dreaming, the house protects the dreamer, the house allows one to dream in peace.’ – gaston bachelard, the poetics of space
notes/quotes:
There is a growing feeling, among those who have the *responsibility of managing large economies, that the discipline of economics is no longer fit for purpose. It is beginning to look like **a science designed to solve problems that no longer exist.
*red flags ness – if assuming this to be ie: responsibility ness and managing ness as cancerous distractions
**whole idea that life is about solving problems is a cancerous distraction
*A good example is the obsession with inflation. Economists still teach their students that the primary economic role of government—many would insist, its only really proper economic role—is to guarantee price stability. We must be **constantly vigilant over the dangers of inflation. For governments to simply print money is therefore inherently sinful. If, however, inflation is kept at bay through the coordinated action of government and central bankers, the market should find its “natural rate of unemployment,” and investors, taking advantage of clear price signals, should be able to ensure healthy growth. These assumptions came with the monetarism of the 1980s, the idea that government should restrict itself to managing the money supply, and by the 1990s had come to be accepted as such elementary common sense that pretty much all political debate had to set out from a ritual acknowledgment of the perils of government spending. This continues to be the case, despite the fact that, since the 2008 recession, central banks have been printing money frantically in an attempt to create inflation and compel the rich to do something useful with their money, and have been largely unsuccessful in both endeavors.
*all ie’s w any form of m\a\p
**cancerous distraction.. takes a lot of work ness and safety addiction ness
We now live in a different economic universe than we did before the crash. Falling unemployment no longer drives up wages. Printing money does not cause inflation. Yet the language of public debate, and the wisdom conveyed in economic textbooks, remain almost entirely unchanged.
same song if any form of m\a\p
One expects a certain institutional lag. Mainstream economists nowadays might not be particularly good at predicting financial crashes, facilitating general prosperity, or coming up with models for preventing climate change, but when it comes to establishing themselves in positions of intellectual authority, unaffected by such failings, their success is unparalleled. One would have to look at the history of religions to find anything like it. To this day, economics continues to be taught not as a story of arguments—not, like any other social science, as a welter of often warring theoretical perspectives—but rather as something more like physics, the gradual realization of universal, *unimpeachable mathematical truths. “Heterodox” theories of economics do, of course, exist (institutionalist, Marxist, feminist, “Austrian,” post-Keynesian…), but their exponents have been almost completely locked out of what are considered “serious” departments, and even outright rebellions by economics students (from the post-autistic economics movement in France to post-crash economics in Britain) have largely **failed to force them into the core curriculum.
**curriculum ness is ie of any form of m\a\p
As a result, heterodox economists continue to be treated as just a step or two away from crackpots, despite the fact that they often have a much better record of predicting real-world economic events. What’s more, the basic psychological assumptions on which mainstream (neoclassical) economics is based—though they have long since been disproved by actual psychologists—have colonized the rest of the academy, and have had a profound impact on popular understandings of the world.
Nowhere is this divide between public debate and economic reality more dramatic than in Britain, which is perhaps why it appears to be the first country where something is beginning to crack. It was center-left New Labour that presided over the pre-crash bubble, and voters’ throw-the-bastards-out reaction brought a series of Conservative governments that soon discovered that a rhetoric of austerity—the Churchillian evocation of common sacrifice for the public good—played well with the British public, allowing them to win broad popular acceptance for policies designed to pare down what little remained of the British welfare state and redistribute resources upward, toward the rich. “There is no magic money tree,” as Theresa May put it during the snap election of 2017—virtually the only memorable line from one of the most lackluster campaigns in British history. The phrase has been repeated endlessly in the media, whenever someone asks why the UK is the only country in Western Europe that charges university tuition, or whether it is really necessary to have quite so many people sleeping on the streets.
The truly extraordinary thing about May’s phrase is that it isn’t true. There are plenty of magic money trees in Britain, as there are in any developed economy. They are called “banks.” Since modern money is simply credit, banks can and do create money literally out of nothing, simply by making loans. Almost all of the money circulating in Britain at the moment is bank-created in this way. Not only is the public largely unaware of this, but a recent survey by the British research group Positive Money discovered that an astounding 85 percent of members of Parliament had no idea where money really came from (most appeared to be under the impression that it was produced by the Royal Mint).
Rather than loans being based in deposits, in this view, deposits themselves were the result of loans.
The one thing it never seemed to occur to anyone to do was to get a job at a bank, and find out what actually happens when someone asks to borrow money. In 2014 a German economist named Richard Werner did exactly that, and discovered that, in fact, loan officers do not check their existing funds, reserves, or anything else. They simply create money out of thin air, or, as he preferred to put it, “fairy dust.”
But at a certain point, demanding that the technocrats charged with running the system base all policy decisions on false assumptions about something as elementary as the nature of money becomes a little like demanding that architects proceed on the understanding that the square root of 47 is actually π. Architects are aware that buildings would start falling down. People would die.
Before long, the Bank of England (the British equivalent of the Federal Reserve, whose economists are most free to speak their minds since they are not formally part of the government) rolled out an elaborate official report called “Money Creation in the Modern Economy,” replete with videos and animations, making the same point: existing economics textbooks, and particularly the reigning monetarist orthodoxy, are wrong. The heterodox economists are right. Private banks create money. Central banks like the Bank of England create money as well, but monetarists are entirely wrong to insist that their proper function is to control the money supply. In fact, central banks do not in any sense control the money supply; their main function is to set the interest rate—to determine how much private banks can charge for the money they create. Almost all public debate on these subjects is therefore based on false premises. For example, if what the Bank of England was saying were true, government borrowing didn’t divert funds from the private sector; it created entirely new money that had not existed before.
One might have imagined that such an admission would create something of a splash, and in certain restricted circles, it did. Central banks in Norway, Switzerland, and Germany quickly put out similar papers. Back in the UK, the immediate media response was simply silence. The Bank of England report has never, to my knowledge, been so much as mentioned on the BBC or any other TV news outlet. Newspaper columnists continued to write as if monetarism was self-evidently correct. Politicians continued to be grilled about where they would find the cash for social programs. It was as if a kind of entente cordiale had been established, in which the technocrats would be allowed to live in one theoretical universe, while politicians and news commentators would continue to exist in an entirely different one.
Still, there are signs that this arrangement is temporary. England—and the Bank of England in particular—prides itself on being a bellwether for global economic trends. Monetarism itself got its launch into intellectual respectability in the 1970s after having been embraced by Bank of England economists. From there it was ultimately adopted by the insurgent Thatcher regime, and only after that by Ronald Reagan in the United States, and it was subsequently exported almost everywhere else.
It is possible that a similar pattern is reproducing itself today. In 2015, a year after the appearance of the Bank of England report, the Labour Party for the first time allowed open elections for its leadership, and the left wing of the party, under Jeremy Corbyn and now shadow chancellor of the exchequer John McDonnell, took hold of the reins of power. At the time, the Labour left were considered even more marginal extremists than was Thatcher’s wing of the Conservative Party in 1975; it is also (despite the media’s constant efforts to paint them as unreconstructed 1970s socialists) the only major political group in the UK that has been open to new economic ideas. While pretty much the entire political establishment has been spending most of its time these last few years screaming at one another about Brexit, McDonnell’s office—and Labour youth support groups—have been holding workshops and floating policy initiatives on everything from a four-day workweek and universal basic income to a Green Industrial Revolution and “Fully Automated Luxury Communism,” and inviting heterodox economists to take part in popular education initiatives aimed at transforming conceptions of how the economy really works. Corbynism has faced near-histrionic opposition from virtually all sectors of the political establishment, but it would be unwise to ignore the possibility that something historic is afoot.
One sign that something historically new has indeed appeared is if scholars begin reading the past in a new light. Accordingly, one of the most significant books to come out of the UK in recent years would have to be Robert Skidelsky’s Money and Government: The Past and Future of Economics. Ostensibly an attempt to answer the question of why mainstream economics rendered itself so useless in the years immediately before and after the crisis of 2008, it is really an attempt to retell the history of the economic discipline through a consideration of the two things—money and government—that most economists least like to talk about.
Always we see the same sequence of events:
- The government adopts hard-money policies as a matter of principle.
- Disaster ensues.
- The government quietly abandons hard-money policies.
- The economy recovers.
- Hard-money philosophy nonetheless becomes, or is reinforced as, simple universal common sense.
In fact, there’s absolutely no reason a modern state should fund itself primarily by appropriating a proportion of each citizen’s earnings.
..microeconomics itself was completing a *profound transformation..**from a technique for understanding how those operating on the market make decisions to a general philosophy of human life. It was able to do so, remarkably enough, by proposing a series of assumptions that even economists themselves were happy to admit were not really true:..t let us posit, they said, purely rational actors motivated exclusively by self-interest, who know exactly what they want and never change their minds, and have complete access to all relevant pricing information. This allowed them to make precise, predictive equations of exactly how individuals should be expected to act...t
*not profound.. rather.. same song
**yeah.. but doing that since forever.. mitchell garden law et al
*Surely there’s nothing wrong with creating simplified models. Arguably, this is how any science of human affairs has to proceed..t But an empirical science then goes on to test those models against what people actually do, and adjust them accordingly. This is precisely what economists did not do. Instead, **they discovered that, if one encased those models in mathematical formulae completely impenetrable to the noninitiate, it would be possible to create a universe in which those premises could never be refuted..t (“All actors are engaged in the maximization of utility. What is utility? Whatever it is that an actor appears to be maximizing.”) ***The mathematical equations allowed economists to plausibly claim theirs was the only branch of social theory that had advanced to anything like a predictive science (even if most of their successful predictions were of the behavior of people who had themselves been trained in economic theory)..t
*simple we need: sans any form of measuring, accounting, people telling other people what to do
**of math and men.. graeber violence/quantification law.. lit & num as colonialism ..et al
***graeber unpredictability/surprise law.. black science of people/whales law.. but again.. since forever
This allowed Homo economicus to invade the rest of the academy, so that by the 1950s and 1960s almost every scholarly discipline in the business of preparing young people for positions of power (political science, international relations, etc.) had adopted some variant of “rational choice theory” culled, ultimately, from microeconomics. By the 1980s and 1990s, it had reached a point where even the heads of art foundations or charitable organizations would not be considered fully qualified if they were not at least broadly familiar with a “science” of human affairs that started from the assumption that humans were fundamentally selfish and greedy.
These, then, were the “microfoundations” to which the neoclassical reformers demanded macroeconomics be returned. Here they were able to take advantage of certain undeniable weaknesses in Keynesian formulations, above all its inability to explain 1970s stagfl
The problem, as Skidelsky emphasizes, is that if your initial assumptions are absurd, multiplying them a thousandfold will hardly make them less so..t Or, as he puts it, rather less gently, “lunatic premises lead to mad conclusions”:
taleb center of problem law – iterating on cancerous distractions.. need to get at root of problem
expo ness we need – nonjudgmental expo labeling .. so we can try/see the unconditional part of left to own devices ness
In other words, we were obliged to pretend that markets could not, by definition, be wrong..t—if in the 1980s the land on which the Imperial compound in Tokyo was b.
ha.. nice phrase.. like voluntary compliance.. manufacturing consent.. et al.. graeber obliged to pretend law
At this point, we have come full circle. After such a *catastrophic embarrassment, orthodox economists fell back on their strong suit—academic politics and institutional power. In the UK, one of the first moves of the new Conservative-Liberal Democratic Coalition in 2010 was to reform the higher education system by tripling tuition and instituting an American-style regime of student loans. Common sense might have suggested that if the education system was performing successfully (for all its foibles, the British university system was considered one of the best in the world), while the financial system was operating so badly that it had nearly destroyed the global economy, the sensible thing might be to reform the financial system to be a bit more like the educational system, rather than the other way around. An aggressive effort to do the opposite could only be an ideological move. **It was a full-on assault on the very idea that knowledge could be anything other than an economic good.
**yet.. intellectness as cancerous distraction
Even at the height of the eventual recovery, in the fifth-richest country in the world, something like one British citizen in twelve experienced hunger, up to and including going entire days without food. *If an “economy” is to be defined as the means by which a human population provides itself with its material needs, the British economy is increasingly dysfunctional. Frenetic efforts on the part of the British political class to change the subject (Brexit) can hardly go on forever. **Eventually, real issues will have to be addressed.
*need – oikos (the economy our souls crave).. ‘i should say: the house shelters day-dreaming, the house protects the dreamer, the house allows one to dream in peace.’ – gaston bachelard, the poetics of space
**aka: need to org around legit needs
Economic theory as it exists increasingly resembles a shed full of broken tools. This is not to say there are no useful insights here, but fundamentally the existing discipline is designed to solve another century’s problems. The problem of how to determine the optimal distribution of work and resources to create high levels of economic growth is simply not the same *problem we are now facing: i.e., how to deal with increasing technological productivity, decreasing real demand for labor, and the effective management of care work, without also destroying the Earth.t This demands a different science. The “microfoundations” of current economics are precisely what is standing in the way of this. **Any new, viable science will either have to draw on the accumulated knowledge of feminism, behavioral economics, psychology, and even anthropology to come up with theories based on how people actually behave, or once again embrace the notion of emergent levels of complexity—or, most likely, both..t
*rather just 2 missing pieces .. need 1st/most: means to undo our hierarchical listening to self/others/nature as global detox/re\set.. so we can org around legit needs
**rather.. drawn on what’s already on each heart.. ie: imagine if we listened to the itch-in-8b-souls 1st thing everyday & used that data to connect us (tech as it could be.. ai as augmenting interconnectedness as nonjudgmental expo labeling)
*Intellectually, this won’t be easy. Politically, it will be even more difficult..t Breaking through neoclassical economics’ lock on major institutions, and its near-theological hold over the media—not to mention all the subtle ways it has come to define our conceptions of human motivations and the horizons of human possibility—is a daunting prospect. Presumably, some kind of shock would be required. What might it take? Another 2008-style collapse? Some radical political shift in a major world government? A global youth rebellion? However it will come about, **books (texts) like this—and quite possibly this book (text)—will play a crucial part.
*intellectness as cancerous distraction we can’t seem to let go of.. need: legit use of tech (nonjudgmental expo labeling).. to facil seeming chaos of a legit global detox leap.. for (blank)’s sake.. and we’re missing it
also.. takes a lot of work ness as cancerous distraction
**lanier beyond words law.. graeber model law.. et al
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be you. 