Your sentence that begins with “Economists will not disagree with…” is suspicious for having three negatives. Yeah, the neoclassical economists who champion rational choice theory or what you call “economic rationality” say that if you let individuals maximize their self-interest, the whole society will benefit. This economic program is rooted in Adam Smith’s point about the invisible hand, and it ignores or “externalizes” his book on morality. So the happy equilibrium which they, not I, posit has to do with the correct pricing of goods. Of course, this equilibrium is as divorced from reality as is the model of economic rationality from actual human rationality and irrationality. The equilibrium assumes, for example, that we won’t run out of natural resources for producing those priced goods.
The free-rider problem may indeed explain the harms that monopolies can produce. Alas, neoclassical economists are free to ignore this problem, too, insisting that it’s not part of their model. Or they can propose ludicrous free market solutions to it which never work. Again, I hypothesize that this is a pseudoscience. It’s not a legitimate enterprise, so the models are used as propaganda to provide excuses for the rise of monopolies, not to eliminate them. This is just social Darwinism dressed up with math.
Classical liberalism is about ensuring that “individuals” or “persons” (i.e. white, rich European males) have the right to their private property, since the royal family shouldn’t be able to dictate how the market works. If monopolies form, and the top one percent become billionaires who effectively control the public discourse, the democratic process, the regulators of the marketplace, and the dominant economics departments and think tanks, that’s all to the good, since that’s the secret purpose of this branch of economics.
In reality, the boom-and-bust cycle that follows from “economic rationality” (i.e. from the hypermasculine sociopathy of the upper class) may prove disastrous. Some economists may even predict and lament these effects of what economists set out to explain. But there’s a systematic confusion in the dominant mold of economics between description and prescription. If economists took themselves to be merely describing the benefits and downsides of “economic rationality” and of the development of a “free” market, that would be perfectly fine. Understanding how a system naturally unfolds can be quite scientific.
But that’s not a fair characterization of the neoclassical program, is it? Adam Smith said a free market would be better than a feudal system, since capitalism would maximize utility. The “equilibrium” reached sounds morally neutral because of the economist’s borrowing of the objective physics concept, as Mirowski explains, but it’s normative after all. The “invisible hand” even looks like an allusion to God.
The point is that markets are supposed to be most productive and fair when individuals are left to their devices. Decisions about buying and selling should proceed from the bottom up. A free market is supposed to be better than a centrally planned one. That’s the ideological, deregulationist impact of neoclassical economics which economists hardly rail against. No, economists who take on cushy consultancy jobs at big corporations profit from the political impact of their phony, fantasy calculations.
And the reason politicians and the public don’t listen to economists’ more particular policy proposals is that those proposals are obviously politicized rather than being genuinely scientific and reliable. There’s no such thing as left-wing and right-wing math or biology, but there is in economics.
I don’t blame only neoclassical economists for the damage done by consumerism and by free markets. Those economists are only cheerleaders for social Darwinism and for the sociopathy that tends to rise to the top of natural dominance hierarchies. Liberal individualism is an ideology in roughly the Marxian sense. Economists bring in exotic math to make excuses for highly irrational and primitive behaviour, for greed and short-sightedness, the hope or humanistic faith being that capitalistic society will work out alright in the end. That’s neoclassical economics in a nutshell. Taking that program at face value would be asinine.
Why the suspicion? Because the climate crisis demonstrates that neoclassical models and abstract anthropology are perfectly foolish and counterproductive. But have neoclassical economists revised their models in a self-correcting scientific manner? Was there a drastic reckoning in those departments after the massive failures made apparent by the 2008 crash? Not at all.
Cults double down on their nonsense, not scientists.
Says one disgruntled former economics major (link below): “I went to university and was stunned by the irrelevance of what I was being taught. It was as if the crash hadn’t happened. If this was how we were training our economists, it was no wonder our economic system wasn’t working!...
“Our book, The Econocracy (2016), surveyed 174 economics modules at 7 leading UK universities and found that fewer than 10% covered anything other than mainstream economics. Students in Denmark, the Netherlands and Norway have done similar reviews, with similar results. Undergraduate economists all over the world learn theories from textbooks that have barely changed since the 1950s. Those theories are based on individual agents, competing in markets to maximize narrowly defined ‘economic utility’ (for people) or profit (for firms). The principles are taught with the same certainty as Newtonian physics, and are as devoid of value judgements.”
Where that author errs is in saying that neoclassical economics has no value judgments. That appearance of scientific neutrality (thanks to the math and the obscure jargon) is only superficial. The liberal value judgments are obviously implicit in the program. Why would mainstream economics remain the same despite repeated falsifications of its models (e.g. the 2008 market crash)? Why do they patch up their system with the equivalent of mere epicycles? Why do they apparently CARE SO MUCH about the neoclassical program? BECAUSE THEY’RE NOT SCIENTISTS. THEY’RE PROPAGANDISTS IN THE BUSINESS OF MAKING EXCUSES FOR PLUTOCRACY. See, I can yell too.
Of course I haven’t formally studied economics. I also haven’t studied how to murder people.
