It's Spring In Frostburg...

... and a "Young" Man's Fancies Naturally Turn to...Economics and Religion

By Bill Neil

Introduction:

This will be one of my briefest “diary” postings, so cherish the moment. Some preliminaries are in order however.

I'm responding below, in the main text, to a column by Swedish economist Lars Syll, at the Real-World Economics website.  I'm allowed to comment there but not post articles since I am not a professional economist.  Hey, there’s a hierarchy even at good alternative economic sites.  Here at:  

  

https://rwer.wordpress.com/2015/05/17/piketty-and-the-non-applicability-of-neoclassical-economics/#comments

 

And here's the bio on Lars...  http://en.wikipedia.org/wiki/Lars_P%C3%A5lsson_Syll

I'm trying to talk the editors into allowing me to do a book review of Richard Smith's Green Capitalism: The God that Failed.  That's a story for another day, however.  Suffice it to say that apparently Smith’s book is too hot to touch for even these dissenting folks.  

So logically you might ask next, whose website is that, this Real-World Economics one, with the title implying that some other economists might not be living in “a,” or "the" real world, but an imaginary one (see below for details)?  

Well, the organization behind the website is the World Economics Association, a loose affiliation, as the song goes...with 13,500 members, founded in 2011, and it's safe to assume I think, that the force behind it was the Great Financial Crisis of 2007-2008, the grand and emphatic failure of 99% of the economics profession to see it coming, and the general unhappiness with neoliberal and neoclassical economics among dissenting thinkers. 

Let's ground this organization with some founders and members whose names you might recognize:  Dean Baker, Herman Daly, James Galbraith, Steve Keen, Richard C. Koo, Richard Parker, Anne Mayhew, Stephany Griffith-Jones, Heiner Flassbeck, Yanis Varoufakis (the Greek Finance Minister)...Ann Pettifor, Robert Skidelsky (Keynes' biographer and a member of the House of Lords, "Lord" Skidelsky), Michael Hudson, Mark Weisbrot...Dani Rodrik, L. Randall Wray, Peter Radford, Geoffrey Hodgson, Immanuel Wallerstein…

I leave comments at the site from time to time as the various postings cross my own areas of interest or contemporary events... and what follows is my comment after Lars has discussed a revealing interview with Thomas Piketty, now famous author of Capitalism in the 21 Century.  Piketty is saying he doesn’t believe in basic neoclassical theory, although he will employ some of its terms to keep a dialogue going.  And here was my response:

“Good post Lars, thank you very much. Micro theory, “the margin this and the margin that,” always reminded me of the trouble I had following the higher reaches of geometry, where I was being asked to imagine lines, intersections, angles and spheres that were presented as common sense everyday renderings, as if that were the way I visualized the world, real and imagined. Of course some of it was based on the physical realities of everyday life; but it soon ascended into something quite remote and abstract…I always had the feeling of being led over a cliff, step by step, further and further from my comfort with a world that I could know and grasp. Power: who holds it and how does it shape economic theory? How silly! How mundane, grubby even, when we could be literally walking on air, out there, suspended on the micro world of neoclassical assumptions.  

I wonder if any readers here are familiar with Mark C. Taylor’s 2004 book, Confidence Games: Money and Markets in a World without Redemption.  A fascinating author from Williams College and then Columbia, an atheist (or is it agnostic?  Atheist, I believe) head of the Religion Department and visiting professor of Architecture at Columbia, who handles economics with the best of the profession, having apparently drunk lots of coffee and other beverages across the table from some savvy inside players in the go-go “creative” world of investing and speculating that we all grew to love so much in the 1990-2007 era. (He's done a bit more than drink with hedgers, though, done a bit of reading and thinking I would venture...a bit of understatement here...here’s the amazing bio:  http://en.wikipedia.org/wiki/Mark_C._Taylor  )

Taylor is impossible to pigeon hole, he has no peer in the intellectual terrain he covers, and he is brilliant in helping us understand the grand hopes, Utopian hopes for the world of hedge funds as they developed: infinite leverage based on zero capital/collateral. An economic “perpetual motion machine.” Long Term Capital Management….chaos theory, “self-organizing, complex, highly networked systems,” then avalanches, and the Santa Fe Institute…it’s all there.

I’ve met one other person in my life who has read it. I still recommend it. 

And an additional thought to connect your post, Lars with Taylor’s Confidence Games, and the strange fact that here is a Religion department Chairman writing as fluidly about the most difficult parts of advanced economics as - well as… John Meriweather.

But here’s the thing: is not religion a vast extension, a vast series of walking out over the cliff based on a few fragments and hopes, a vast system built upon longings…economics has nicely filled the void for those who can no longer accept the old faiths…has assumed, among the powerful, the same role as consulting the auguries…whether it is built upon any more solid foundations, Lars is pointing out to us, as has Piketty,  what has been left out…the sociology of power, with just a hint that Marx was a better sociologist than economist…

And this delicious thought, that the Republican Right in the US is built upon a near religious intensity about the market and micro economics, and its alliance with the Religious Right, fundamentalists and the slightly more diverse evangelicals and their fierce intensities about matters religious and cultural…a strange alliance which buries class…for now…

Here’s Mark Taylor musing about the convergence of market fundamentalism and religion:

In the early twenty-first century, the world has become more complex than it has ever been and the rate of change continues to accelerate.  Many people still do not understand the far-reaching implications of this growing complexity.  Greater complexity brings more volatility and instability, which in turn create unavoidable uncertainty and insecurity.  As uncertainty and insecurity increase, there is an understandable desire for certainty, stability, and world order – be it new or old.  During the 1990’s, the longing for simplicity and clarity manifested itself in a resurgence of market fundamentalism… While claiming to be realists, these true believers imagine an ideal world at odds with the new realities emerging in network culture.  Their dream of a rationally ordered world where every risk can be hedged is as old as time itself.  All such schemes are designed to escape time and history and thereby overcome the inescapable insecurity of life.  In the final analysis, this dream is a religious vision in which the market is a reasonable God providentially guiding the world to the Promised Land where redemption finally becomes possible. 

That is not where we end up, however, not where markets are taking us.  No wonder James Galbraith notes in the Acknowledgements at the end of his latest book, The End of Normal – no,  he actually apologizes for his “fairly gloomy work…” -  for his having come to “these dire straits” of his “conclusions,” his recognition of Taylor’s world, a world finally “without redemption,” despite the Market Utopians. 

Cheers.

Bill Neil

Frostburg, MD