Economics is Not Science but Ideology

What is Economics? Let us be honest about it: Economics is covert political ideology that aims in enforcing society to behave according to its principles rather than in determining based on which principles economies work and agents interact. Why economists have not been honest about this? It is because that inherent in economics lies deception, i.e. economics is a deceiving subject by its very own nature and a lot of people that are involved with this subject, but not all, like it because of its deceiving qualities, which are tied to power and control.

Let us start with the notion that societies do not operate based on rigid principles but their principles are shaped based on ideology, systems of values and education. Economic principles are not a primary phenomenon but an epiphenomenon of interacting agents. Based on their ideology about how they, the agents, should behave, or must behave, some principles emerge, from time to time. If the ideology changes, then the principles also change. A notable example is the former Soviet Union and its transition from a communist state with virtually no economic freedom to an anarchocapitalistic society. In that case the economic principles changed dramatically, virtually overnight. The same to a lesser degree is happening in China nowadays.

So what is this insist from the part of some economists that they analyze the production, distribution and consumption of good and services? Any analysis requires a series of assumptions. If the assumptions are based on what one is looking for to accomplish, this is called circular reasoning. This is one reason that most economists always conclude what their ideology is trying to enforce, i.e. they are trapped inside a tautology of some form that quite often fails to agree with reality, because reality is unforgiving. Yet, they go on and on repeating the same mistakes because Economics, as a subject, must exist, since it is a vehicle of inducing and perpetuating ideologies of how the world should be to the educational curriculum, then as an extension to society and key power positions, with the aim to later enforcing this ideology and reach the objective of a self-fulfilling prophecy: economists through their policies enforce societies to comply with economic principles impeded in those policies. Thus, economics is successful.

The weird thing, as I think more about it, is that I see nothing wrong with that in principle. This is how this world has worked for a long time. The world is a tautology, anyway. “What is, is”. What is wrong here is the ludicrous claim that Economics is a science. In reality it is a vehicle for enforcing ideologies on societies, something that was done in the past via more cruel means such as wars, for example. Economics does not aim to understand how the world operates because the world is not anything in particular in an economic sense and any explanation would depend on the assumptions anyway that lead to a particular world out of the many possible worlds. Economics instead tries to shape the world to be what it aims it to be.

Again, I see nothing wrong with the above because this is how these things have worked all along. Many years ago this was the task of religion, now it is the task of economics, after physics failed to capitalize on its popularity a few decades ago. What I see wrong is the scores of hopeless economists trying to convince the world that they are doing science. Some are so brainwashed that they cannot understand what they are doing. It is simply an amazing decadence. There is nothing wrong with trying to enforce a political ideology if you admit you are doing just that. But to claim you are doing science and come up with forecasts that warrant a specific policy and then claim this is the result of science it is simply deceit or immense stupidity, or both combined.

When I was in undergraduate Engineering school, before my operation research days and the involvement with forecasting and finance, it was not a secret that many students who could not cope with reality, math, laboratories and hard work dropped out of Engineering school and enrolled in Marketing and Economics. We considered those disciplines the “dropout hideouts”, places where people just talked about meaningless things and did no real work. Yet, those disciplines today control the fate of the world. Why? The answer is because they are the majority.  Everyone thinks he or she can do economics or can market a product. Just watch TV for just one day. You will see mostly economists parading and ads for products but you will rarely see an engineer or physicist explaining how reality works. The hot topic is always “the economy, stupid”. This is because everyone can talk about it and has the misconception that he understands what is being talked about.

What is being talked about when economists are involved is the hidden in most cases desire to enforce a specific political ideology on the world. The excuse comes in the form of a scientific discipline. But there is no reason that the world should work in this or in another way from an economic perspective. There is no apparent reason as to why agents should be rational and try to maximize utility or profit. This is what some specific ideology, mostly political, wants the world to be about. Maybe they are correct but some other ideology wants agents that do something else. That something else is often enforced by shaping values through education and applying policies. The result is an epiphenomenon and the primary phenomenon is the process of policy enforcement motivated by ideology of some kind, right or wrong.

In the south of Europe we see this phenomenon of prices rising or remaining stable on the face of an oversupply and collapsing growth. Agents will continue operating in this way because it makes sense to them to keep prices constant when profits fall or even increase them to try to recoup losses of lower consumption from those who absolutely need the good or services. The law of demand and supply does not work. Governments on the other hand do not want to see prices collapsing because that will cause a severe reduction in tax receipts, further borrowing and increased taxes, a vicious circle. However, those who implement the policies, the lenders, want to see an internal devaluation. What they actually want to achieve is a set of enforced policies that will cause those economies to comply with modern economics of demand and supply. But things do not work that way and the lenders impose higher taxes to exhaust the agents financially so they are forced to lower prices and consumption can increase The agents respond by shutting down their businesses because they feel at those price levels the lenders are aiming for they will be working for just a low salary. Here we have competing objectives and economics play little role. Only a fool would try to explain this situation with economics. This is a clash of ideologies. From one hand the ideology of demand and supply economics and from the other the ideology that someone does business to be independent financially and live well. As in the Soviet Union there was little incentive to produce and assume risks, this is now also the case in the modern era southern Europe. Pourquoi? There is no reason for taking risks of production and operating a business because the prices are going lower. This is not about economics. It is about ideology, it is about what kind of society people want to be part of. Anyone who thinks that economics can analyze or solve this type of a problem is a fool, in the best case.

Finally, in recent years Economics has incorporated some aspects of mathematical disciplines, like of operation research, a subject I studied in graduate school at Columbia University, New York, aspects of finance and related subjects. These are subjects that mostly deal with numbers, just like accounting. Economists cannot claim they are scientists by cannibalizing other disciplines that deal with numbers only and not ideology, political, social, economic or otherwise.  This fact also justifies the confusion of laymen who often call economists fund managers or traders. For quite some time, economists tried to associate themselves with the markets. As some studies indicate, they have been unsuccessful in predicting major market cycles at a 97% rate. When the markets collapsed in 2008 they turned to policies for dealing with debt, like austerity versus quantitative easing. This morphing is part of the deceit inherent in the economics discipline. Economists find what a hot issue is and morph their subject to its aspects. The task of economists should be to find ways to remove this inherent deceit and turn this subject to a more rigorous science by limiting its scope and application.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s