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Saturday, November 01, 2008

And another...


Jean-Philippe Bouchaud, writing in this week's Nature:

"So many accepted ideas have been proven wrong in the history of physics that physicists have grown to be critical and queasy about their own models.

Unfortunately, such healthy scientific revolutions have not yet taken hold in economics, where ideas have solidified into dogmas. These are perpetuated through the education system: students don't question formulas they can use without thinking. Although numerous physicists have been recruited by financial institutions over the past few decades, they seem to have forgotten the methodology of the natural sciences as they absorbed and regurgitated the existing economic lore.

The supposed omniscience and perfect efficacy of a free market stems from economic work done in the 1950s and 1960s, which with hindsight looks more like propaganda against communism than plausible science. In reality, markets are not efficient, humans tend to be over-focused in the short-term and blind in the long-term, and errors get amplified, ultimately leading to collective irrationality, panic and crashes. Free markets are wild markets."

Ilargi once more:

"And if you were thinking about coming up with arguments about free market capitalism, you need to realize that it no longer exists, it is a dead economic model, certainly in the US. It will never come back either. For that matter, the entire growth model is dead. Let's celebrate that. Perpetual growth is a dumb principle to use as a foundation on which to organize your society. It's not even an economic model, it's a ridiculous form of fringe religion. A sect. And all its proponenets should be forced to answer the question whether they think the laws of their religion trump the laws of physics.

Any religion based on the hope of a better life tomorrow, no matter how contorted, will attract followers, and speaking out against growth is a blasphemy in the eyes of the priests and flock of the world's largest congregation, far bigger than Christianity."

James K. Galbraith interviewed in the New York Times:

What does that say about the field of economics, which claims to be a science?

It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.

I think we've all got the idea now.

Economics as we know it is a dogmatic, pseudo-scientific religion and nothing more.

How scary is that?

Why did we all rush to prostrate ourselves in front of that false God?


Posted by Phil at 11:35 AM
Edited on: Sunday, November 02, 2008 7:21 PM
Categories: Comment, Environment