Poor Adam

Published on Real-World Economics Review Blog, by Peter Radford, August 19, 2013. (Linked with our new blog: politics for the 99% (Frontpage), and it’s new post: Not Too Big to Jail).

Summer vacation is winding down, I have spent a great deal of time reading papers and books and not enough time doing useful things, so naturally I am continuing to bellyache about modern economics. Perhaps its that ‘end of summer feeling’, but suddenly I feel bad for Adam Smith. I really do. Remembered as he is for a casual, if powerful, metaphor he always gets mentioned as the progenitor of modern economics. This is a strictly Anglo-Saxon view of course … //

… Smith would be embarrassed to be associated with the fiction.

Now comes the good part:

Having created this fantasy and having come to believe it portrays certain truths about the world, economists – those in the dreamworld anyway – dispense advice designed to bring the world around us into line with their fantasy. So instead of explaining the world they try to construct one. Instead of helping us understand how the economy works they instruct us as to how it would work if only we lived out their fantasy.

This is the exact antithesis of Smith’s project. Yet they do it as part of what they see as his legacy. They simultaneously deface his work and look back to him as iconic. More particularly they ignore him. Smith was intensely attached to the world around him. Most modern economists are intensely attached to their fantasy world.

The final step away from the world about us and thus the final step in closing out humanity from the subject was the sudden urge to ensure that any observation or theorizing about the second part of Smith’s paradox, the order up top, could only be valid if it conformed to the rules made up for the fantasy down below. Aggregate or macro-economics, largely invented by Keynes outside of the fantasy tradition, had to be re-jigged so as to be equally fictional. It had to root itself in the quicksands of micro.

It is all very clever. Remarkably complete and very logical. It sounds highly relevant too. When taught superficially it sounds as if it is addressing the world in the way that Smith intended. That is it sounds as if it is answering current questions about real things. But lurking just off stage is a host of fictional characters, made up forces, kluged rules, and rickety analyses upon which that illusion is built. It all mimics well. It explains only itself. It is all a tour de force of imagination not of scientific enquiry. Its brilliance blinds us to its irrelevance. And, in a curiosity of all fiction, it cannot be “wrong”. Since it is internally consistent, complete, and rigorously conceived it cannot be faulted on its own terms. It is thus “right” within those terms.

As a shiny artifact or a piece of art it works well. As an explanation of reality?

Well, let’s just say “poor Adam” and leave it at that.
(full text).


Employment in the Baltics, Spain and Ireland: L and Λ shaped recoveries, on RWER Blog, by merijnknibbe, August 19, 2013;

Google Launches German Elections Page, on Spiegel Online International, August 16, 2013;

The Maritime Labour convention comes into force, on RWER Blog, by merijnknibbe, August 18, 2013.

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