THE TRUTH
By J. Adams
(Go To *Spirit Of Truth* Page)
(Go To *Spirit Of Truth* Page)
From: *Spirit Of Truth* WWW Page
Newsgroups: sci.econ
Subject: Re: Death of Neoclassical Economics
Date: Thu, 05 Oct 95 09:54:52 EDT
>Mark Witte (mwitte@casbah.acns.nwu.edu) wrote:
>
>: Within science, there is a well established method to find a way
>: ahead. It is called building better models that fit the data better than
>: other models.
Yes, Mr. Witte, and this is why economics hardly constitutes a science.
The evolution of economic theory is truly a lesson in social psychology. The theories, models, beliefs and "worldview" that has developed is a testament to the powerful, irrational influences that emerge in groups with self-interested, subjective biases. Economists, being the proponents of the egoistic thinking and behavior that prevails amongst people in this day and age, have created a social philosophy, a false religion if you will, that seeks to rationalize egoism under the veil of a "positive science". This, of course, is a ridiculous farce. Economics, particularly the neoclassical paradigm, is not scientific regardless of what rhetoric is thrown at the rest of society by its "believers".
In a nutshell, neoclassical economics is summarized as follows.
If the individuals and organizations that comprise a market society compete with each other for society's limited resources ("perfect competition") and seek to maximize their own pleasure, profits and wealth ("utility-" and "profit-maximization"), then prices will tend to be stable ("general equilibrium"), there will be an ideal allocation and distribution of resources ("economic efficiency") and maximum happiness for all ("Pareto optimality").
That this social "theory" constitutes a pseudoreligious value and belief system is made clear by how it is literally the antithesis of traditional Christian values and beliefs. According to Christianity, if people think and behave like Jesus, i.e., in an unselfish and cooperative manner, then we can have faith in God that society will tend to be harmonious and everyone will be happy.
Modern economics embodies the opposite social philosophy. If people think and behave like economic man ("homo economicus"), i.e., in a selfish and competitive manner, then we can have faith that, as if guided by an "invisible hand", society will tend toward harmony ("general equilibrium") and maximum happiness for all ("Pareto optimality").
Thus, we have two opposing worldviews. One believes in the righteousness of unselfishness, cooperation and faith in God, and the other believes in the righteousness of egoism, competition and faith in an "invisible hand".
It is my contention that one of these views is "rational" and "fits" what we observe in the real world, while the other view is "irrational" and goes diametrically against what is observed in the real world.
Indeed, for any *reasonable* person, even a cursory examination of history reveals that markets behave in an unstable manner. Prices, and the associated beliefs and expectations of social participants, swing between extreme highs and lows as the overall economy suffers recurring booms and busts, prosperity and depression. While this point may seem like common sense to most, economic theorists manage to assume and abstract themselves away from the realities of market history as part of the current irrational extreme in dominant beliefs and expectations.
In other words, the optimistic outlook of economics, i.e., we needn't worry that people's greed is generating any sort of irrational expectations and general disequilibrium, is the complete opposite of the truth. Such a belief and expectation is perfectly irrational and effectively nothing but an extraordinary popular delusion associated with the worst manic extreme ever in the bipolar mood swings of market societies like our own (general disequilibrium).
In reality, the current boom is ripe and now a bust of unprecedented proportions is likely. Of course, this bust will come as a complete surprise to most economists since, based upon their belief in the "rationality" of egoistic social participants, they currently expect we are heading toward general equilibrium in the long-run.
The "irrational expectations" of egoistic economists are about to be upset since, in the long-run, egoism has led society to a dangerous state of disequilibrium and, consequently, a terrible crash lies ahead.
In the same way this crash involves a radical upset of society's irrationally high beliefs and expectations, it likewise involves a radical upset of economists' irrational beliefs and expectations.
Most important of all, however, as it becomes clear how perfectly *wrong* the beliefs and expectations of economics are, it will become equally clear how *right* the beliefs and expectations of Christianity are. In other words, we are witnessing an epic, historical "proof by contradiction". As the deluded hypotheses of economics are falsified by almost perfect predictive failure, the realistic beliefs of religion are verified by prophetic fulfillment.
This, after all, is what the "Revelation" of "The Truth" is all about...
"...for the person who loves his neighbour has fulfilled the Law.
Because, 'Do not commit adultery; do not kill; do not steal; do not
covet,' and whatever other commandment there is may be summarized
in one word, and that is, 'Love your neighbour as yourself'."
(Paul's Letter to the Romans, Chp.13; vs.8-9)
If you break God's Law, you are judged accordingly.