Behind the Veil of Zest — Economics Is Prone to Religious Abuse

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Not long ago, I used to laugh at the below. My academic education inclined me to believe in the neoliberal message of a self-regulating free market order with its purported ability to autopilot itself to best results on all fronts.

There are a number of reason why I let myself be convinced by that view. One of the grounds, probably the most important one, is that I was never properly introduced into the framework of assumptions underlying mainstream economics (ME), nor did I ever bother to look into them by my own initiative.

I had heard of the dubious nature of these assumptions by way of critical summary. Why I persuaded myself to override these criticisms by a number of auxiliary workarounds I do not know. However, I have some conjectures: it may have been a mixture of at least three factors: (1) my (then) recent, deep and final disappointment with Marxism (and somehow I seem to have associated policy controlled capitalism, like Hayek in The Road to Serfdom, with an inevitable tendency toward socialism), (2) the promises of ME that an irrefutable proof of the neoliberal market order can be found in the advanced economic literature (notably Arrow-Debreu, when in reality, their findings represent the ultimate refutation of the theory of free markets, and (3) a zestful delight in the surprising circumstance that by the end of my academic studies I was sought after by employers who were offering very high salaries and excellent career prospects and appeared that more palatable when you believed in capitalism.

This is why I consider it very important to treat the study and the criticism of economics as a unity, look carefully into the underlying assumptions and relentlessly test how these stand up against the empirical evidence. See also (in German) here, here, and here. And The Bad Conscience of an Economist.

Writes Steve Keen:

Left to itself, capitalism will devour itself and the system under performs which means we all get poorer. But not only have neoclassical economists under played the role of banking in the economy, they also believe that maximizing profits is always best for companies and the economy, even if it means in the long term there is under investment. China is doing the opposite and leaving us behind.

After a few years of high profits, at the expense of the long term health of the company, CEO's can retire early because they have made a fortune, and with a great pension. The profit incentive is all wrong. Traditional conservatives would have understood this, who were always very prudent about money, delaying gratification today while saving their money for a rainy day and investing it for long term future. But the conservative 'greed is good ' neoliberal thugs have taken over.

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Freedom and Money (2)

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Continued from here.

III.

Freedom comes in two variants: the freedom of people as part of a community, such as the freedom of Belgians from German occupation, or the freedom of a family from harassment by neighbours etc. Originally freedom refers to a situation where a group or a person cannot be made the subject of another group or person against the formers' will. One may subject oneself voluntarily to the will of another force, which is not a violation of freedom, while compulsory subjection does violate the principle of freedom. In reality people will accept restrictions of their freedom, but usually only as part of a system of trade-offs and compromises whose overall outcome is more highly esteemed by them than the nuisance of singular restrictions of their freedom.

An entirely individualistic conception of freedom, restricting the term's meaning only to demands of the individual (stylised into inalienable and absolute rights that exist independently of her being embedded in a community with qualifying demands) is a perspective on the matter that holds up neither with historical and nor with contemporary man.

§ 1 Man has always been and always will be a social animal, whose personal requirements and demands must be balanced against those of his fellows. So, freedom will always be qualified, conditional, relative, subject to social dispute and subjective perception , and never absolute.

Still, it may be useful, to some extent, to distinguish between social unfreedom and individual freedom. Indeed, in human history, especially during the past 300 years, there seems to have been a significant movement away from social unfreedom toward individual freedom -— again, without overriding § 1.

Very broadly speaking, liberation from total control by the family, clan or tribe or by absolute authority will bring about significant shifts in the extent to which an individual may act of her own accord, and, incidentally, begin to make (indirect) contributions to overall welfare far more effective than those a vassal is capable of.

For the individual to separate himself from the dominance of his family, clan, tribe or other superiors, he needs to attain an economic base for a more autonomous life.

At this point, money and freedom converge. 

Whether as labourer or as entrepreneur, the individual enters a plane of economic self-sustainability in the era of capitalism in the sense that dependence on family, clan or other superiors (the priest, the lord) is at least mitigated by entirely new means of income and paths of personal development.

The prerequisite to this is sustainable economic growth.

Sustainable economic growth is not possible without a regime of fiat money.

Only the state can organise a viable regime of fiat money which, in turn, makes for enduring economic growth, thus providing the economic basis for extended forms of individual freedom.

It must not be forgotten that freedom is not valuable only to the extent that it widens options for voluntary action desired by the individual (also, how does one distinguish between personal desires and socially inculcated desires of the individual, not always easy, and just another indication of the social side of freedom).

Freedom may pertain to the community, the options of an entire association of people to interact the better with one another, achieving better mutually coveted results.

And this is precisely what a fiat money regime achieves. Not only does it ensure continuous economic growth for the first time in human history, which is to say, people are no longer subject to perennial annihilation (the Malthusian trap) but enjoy ongoing per capital income growth, which is in sync with the most human of human traits, man's unique method of survival: the invention and subsequent satisfaction of new needs. Growth is the economic expression of man's ability to survive by constantly improving his life circumstances.

Freedom and Money (1)

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I.

I have concluded my post The Tax-Monetary Regime of the Modern State — Stationary Bandits and Refined Coercion by stating:

Money and taxes are the way in which the modern state organises exploitation.

In a post — Exploitation —, in which I criticise Marx's concept of exploitation, I show that differential power is an inalienable attribute of every human community, and hence integral part of the social relationships relating people to one another within the productive processes of an economy.

In my vocabulary, the presence of political scarcity i. e. the absence of unanimity and the consequent  need to reconcile differing preferences concerning issues considered of weighty moral and social significance, is ubiquitous in societies from the very beginning of human togetherness to today's states.

This is overlooked by communists as well as libertarians, both of whom demand emancipation from politics and its most powerful facilitator — the state. Politics is the type of activity we engage in to ameliorate political scarcity, i. e. reduce it by making it more sufferable and thereby ideally transform it into arrangements of mutual understanding that make for social peace and coherence despite irreducible disagreement and conflict.

The state has evolved to be the most powerful facilitator of politics, by virtue of its singular capability to enforce what is to be respected by everyone as being socially valid. It can (en)force social reconciliation, it can compel people to accept the settlement of issues raised by political scarcity.

Now, in exercising this ability it may not be effective and successful in the medium to long term, in which case it will have to adjust to the needs of the community or eventually degenerate and/or be superseded by new structures of maximal power. But there will always be a state, a structure of maximal power.

The important point is that the state, in being the monopolist of coercion and most effective wielder of power, can also be the most effective facilitator of politics. In other word, if you are looking for the relatively best solutions for problems engendered by political scarcity, you are looking for solutions that will involve the state. You may not find such a solution, but if you do, the state will play a central role in the successful outcome.

Neither Marx nor Hayek understand this. Both propose regimes of freedom — communism and liberalism. Both ignore the need of politics and the state to ensure social conditions preventing anarchy and allowing for gradual improvements in peaceability, social coherence as well as personal and national wealth.

Naturally, the state is an ambiguous institution, precisely by virtue of its ability to force a minimal level of acquiescence and compliance in a human community. Marxists and Hayekians fail to appreciate this inescapable ambiguity, rushing to provide criticisms of the state and alternatives to it that miss the point.

The point is that we must try to shape and influence politics and the state in such a manner as to exploit their potential of being the most effective instrument in mitigating political scarcity. The point is not to condemn the state categorically for its innumerable deficiencies, the point is to make it incrementally better.

A final note on the ambiguous nature of the state, before I conclude by explaining the intimate relationship between freedom and money: being the most successful evolutionary product in terms of dealing with political scarcity, people are reluctant and, indeed, strongly inhibited in practical terms, to discard the state. Simply put, the reason why, is that any (state-like) regime providing for political dominance is better than sheer anarchy. Even in the presence of a very bad type of state, people will find it difficult to call for the abolition of the state as such in view of the many consciously recognised, culturally accepted and customarily consumed "goods" provided by the state. A totalitarian state, its unbearable excesses notwithstanding, will still (promise to) offer many of the welcome and indispensable services of a state — which is why many people under Stalin and Hitler were unable to ascribe the regime's failings to the Stalinist or the Nazi state, respectively. In fact, the good a state is capable of tended to be identified with the person of Stalin and Hitler. The bad was held to be due to evil foreign and internal enemies — not the state. 

This is no different today, when the majority of people tend to acquiesce in what the state delivers, propagandises, or truthfully claims, while at the same time in a functional pluralistic-democratic order there is a constant flow of undercurrents driven by the process of political competition that keep eroding the status quo and gradually rebuild a new base on which the emergent political status quo will eventually rest. 

[Personal note: 14:20, 4 November 2018 — first food in nearly six days of fasting: an apple. Delicious, though I did enjoy fasting.]

II.

Structures of maximal power, meaning the modern state, have evolved precisely because of their ability to wield insurmountable power over all members of a community. Typically, this feature of total dominance cannot be maintained for long unless it is balanced by forms of social service that (a) genuinely support the viability of the community and (b) meet approval of the populace. The process of mitigating total power to achieve (a) and (b) may be very complex and imperfect, but it is also amenable to conscious improvement.

As I have written here on the evolution of the state:

If the roaming bandits become stationary bandits, if they settle among the victims of their raids, they will inevitably develop a certain interest in improving the very conditions of production which is the spring of their wealth. Exploitation becomes more ample for the exploiter and less disadvantageous for the exploited. There is more left for both. As Olson puts it, the bandits develop "an encompassing interest" in the community from which they steal. Actually, the line between pilferage and exchange begins to blur, when the bandits take into consideration and even cater to some of the needs of the community. Being resident owners of a territorially delimited precinct of exploitation, it is in their self-interest to ensure peace and orderly conditions and provide a range of other public goods liable to make the task of ruling more tractable, efficient, and profitable.

Pillars of the Successful State

Successful states allow themselves to be bound by rules which limit, control, and thereby, ultimately, increase their power/capabilities/resources. They accommodate within the structures of maximal power a political system that is superior in coping with political scarcity, the best type of which so far is pluralist democracy. So, an effective process of political competition appears to be one of the major pillars that make for a state that is maximally powerful and at the same time maximally benign. Again, it is still ambiguous and subject to imperfection and severe discontent among the people — after all, we are dealing with approximations and perfectible socio-political developments.

Another pillar consists of the organisational structure and the functional capabilities ensuring that the state is effective in wielding the power implied by its mandate.

The first pillar has a stronger exogenous component — emphasising the public influence on it —, the other a more intrinsic component — the effectiveness of its design and self-organised proceeding.

Money and Freedom

The monetary order of modern states is not a spontaneous product of free  markets. Instead it is organised, managed and enforced by the state. It has a very strong coercive side to it, rooted in traditions of exploitation from times when coercion was less refined, less socially beneficial for the broader population — remember the roaming bandits.

However, the monetary order sustained by the coercive state has also very strong features of social support, making pivotal contributions to the common weal — actually defining the common weal for the first time in a sense that is inclusive of the entire population as it never had been before.

The fiat money system organised by the state is the precondition for Promethean economic growth  and hence the key to man's escape from mass poverty and Malthusian cycles of annihilation which has been the gruesome fate of human beings until 250 years ago.

A strong state is the precondition for a free society with a powerful economy, as we shall spell out more fully in Freedom and Money (2). But such a strong state depends on growing freedom both as a prerequisite and an attendant feature of its development. To become strong and viable, a modern state needs the pressure of those who want it to be accountable and constrained constitutionally, politically and judicially. Provided it is steering into that direction, the state will create an increasing economic basis for individual freedom (and thus alternative and competing attempts at solutions to the challenges individuals and the community face every day). But social freedom will grow at the same time — the kind of freedom that enhances the options for the community as a whole, for instance, the ability to guarantee medical health care and retirement for all members of society.

In organising the fiat money regime analysed by MMT, the modern state is instrumental in creating social freedom that supports and enhances individual freedom. For only a regime of fiat money can support ongoing economic growth which, in turn, is required to maintain the economic base of a society with high levels of individual freedom.

Continued here.

The Essence of Freedom

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In this post I revisit findings from my research into the phenomenon of freedom. I am preparing a post on the relationship between money and freedom and hope to find inspiration from my earlier historical and sociological investigations.

Having started from a partisan view of freedom, my research into the phenomenon has gradually steered me into a different position which I have summarised in a paper delivered at the University of Witten/Herdecke. Below find the paper's conclusion:

5.0 Conclusion

Discovery through political competition is not without risks, and it cannot guarantee the absence of severe error, but it is still the best way (1) to incorporate knowledge generated in civil society, (2) to keep politically dominant views exposed to ongoing corroboration and (3) to include the largest possible number of interest groups in the permanent sequel of repeated games that produce effective trust in society, thus bringing about the dynamic equilibrium of dissension and pacification which defines feasible freedom.

5.1 Lessons for Freedom

Classical liberalism tends to misunderstand or ignore the political logic of freedom, owing to a monadic conception of the rights underlying personal freedom. In theory, these rights are absolute, immutable, and monadic, i.e. attached to and owned by the individual in inalienable form. Under feasible freedom, however, people, in exercising their liberty, negotiate and renegotiate these rights, both in politics and in private transactions. Free citizens constantly renegotiate new permutations of feasible freedom, thereby constantly rewriting the social contract.

We detect an unexpected and rather incongruous similarity of deficiency in socialist ambitions for central planning and liberal calls for a depoliticised society. Both desiderata are based on incomprehension of a vital spontaneous order which concerns the economy in the case of socialism and politics and the state in the case of liberalism. Both political camps underrate or misconstrue the need and the logic of the indispensable discovery procedures required for strong economic performance and, respectively, the feasibility of civil society at large.

As there is no single person or group of persons capable of registering all inputs needed to calculate an efficient [allocation of resources], Hayek suggests inclusion of all citizens in a free economy to approximate far better the needed range and quality of information. Analogously, no single person or group of persons is capable of registering the inputs needed to take better political decisions than are available from a regime that guarantees the possibility for all citizens to make their contribution to political decision making. Incongruously, liberalisms akin to Hayek’s insinuate the equivalent of an impersonal central planer by suggesting that observance of certain rules activate automatisms in a free society, notably the market mechanism and the rule of law, that reduce the need of politics to such an extent as to portray freedom as a state of affairs distinguished by the absence of significant levels of politicisation - a visionary predilection that amounts to the disenfranchisement of the public. 

A free society, this is the claim of the present paper, is akin to a free economy, in so far as only the mobilisation of dispersed knowledge lodged in decentralised units (citizens and their organisations) can bring about a discovery process capable of sustaining human relations that make freedom feasible.

Liberalism cannot fulfil its role in a free society unless it acknowledges that its leadership in matters of constitutional integrity does not carry over into the area of legitimate political discretion. And liberalism must recognise that within the boundaries of constitutional integrity there is substantial leeway for political discretion by players of quite distinct emphases of vision. Freedom remains an open-ended project.

In order to establish her meaning and detailed shape, liberty depends on a political infrastructure that engages contestants in a competitive discovery process that is likely to result in eclectic policy outcomes deviating from puristic ideological positions. Adaptability is a survival requirement for any agent participating in the political discovery process. Puristic ideologies fail to stay in touch with the diversity of interests and views that push toward concrete policies. Feasible freedom may be conceived of as a dynamic equilibrium balancing dissension and peaceableness. Approximating the balance requires that the competing agents continuously search for new information about the prospects of their agendas, swiftly adjusting the latter to sustain support and the power to exercise influence. Precise and consistent accounts of freedom such as endeavoured by classical liberalism play an important role in clarifying the rules of the discovery game and the inalienable contours of freedom, but they are too abstract and too general to be able to prejudge the differing aims that people ought to be free to pursue within the competitive political framework of an open access society. Ideologies lend impetus to freedom’s sine qua non: discovery by political competition, but they do so fruitfully only when being capable of changing and renewing themselves in response to the findings elicited by the search.

The success of politics under feasible freedom is to be judged by the ability to balance dissension and peaceableness under the auxiliary conditions of high levels of personal autonomy, productivity, and wealth. We may register good performance and even progress along these lines in the very presence of states of affairs that appear insufferable from a classical liberal point of view. But it should not be forgotten that classical liberalism is just a set of hypotheses, some of which are rejected by freedom. Freedom is not identical with liberalism. Freedom is not identical with liberalism‘s account or expectations of her.

The source. 

If Equilibrium Economics Is Wrong Why Is Capitalism Still the Best Economic System?

 

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German summary below / deutsche Zusammenfassung unten

The only consistent defence of capitalism is provided by equilibrium economics. However, equilibrium economics is demonstrably wrong. It comes in two variants: one is the Walrasian and (later the) Arrow-Debreu type of mathematical model. However, mathematical equilibrium economics bears no resemblance with reality: it excludes time and space, human uncertainty and competitive processes. The other variant of equilibrium economics postulates market clearing processes — like interest rates  equilibrating savings and investments (loanable funds theory) — that do not exist in reality.

Still, capitalism is the best economic system that we have.

Why do we not seem to be able to explain its superiority?

Hayek comes pretty close to a satisfactory explanation and defence of capitalism's relative superiority. Unfortunately, being wedded to a radical capitalist bias, Hayek does not bring himself to admit that capitalism has serious shortcomings that it cannot overcome without interventions from outside of it. I would tend to agree, among the most important of these shortcomings are desirables that cannot be attained by the unwavering pursuit of profits: full employment and desirable social achievements like universal medical coverage or retirement security.

It would be, however, mistaken to dismiss capitalism for these deficiencies. After all, it is the economic system that provides the community with the wealth from which social improvements can be sourced that the market mechanism will not normally provide or not at all.

Hayek is right in criticising equilibrium economics for presupposing the answer to the question why an economy is capable of bringing about equilibrium rather than explaining the manner in which equilibrium is attained.

According to Hayek, the key to capitalism's superiority is its unique ability to collect and disseminate information needed to coordinate the plans of the agents operating in an economy. The price system is central in this regard. But it is not the only factor ensuring that people are able to reliably coordinate their objectives with the plans of other economic agents. 

Surprisingly, Hayek emphasises the role of certain select extra-economic institutions in creating this infrastructure of mutual predictability, such as social customs of decency, the rule of law, and the guaranteed expression and protection of differing interests by legal and political means.

At the same time, unfortunately, Hayek tends to condemn the extra-economic processes in their political form, by which people constantly work out the details of this infrastructure. (He creates an artificial distinction between principles and politics, when in fact political influence is what tests and shapes principles).

The main takeaway for my purposes is that we are able to explain capitalism's superiority without having to offer a coherent formal model or make claims of perfect equilibrium outcomes and absolute economic and social optima.

Here is a useful article on Hayek's anti-equilibrium defence of capitalism by Paul Lewis.

See als see my comprehensive Hayek-critique: The Paradox of Freedom — Austrian Thought and the Crisis of Liberalism

Deutsche Zusammenfassung:

Die einzige zusammenhängende Rechtfertigung des ökonomischen Systems des Kapitalismus liegt uns in Gestalt der Gleichgewichtsökonomie vor. Doch diese ist nachweislich unzutreffend. Sie begegnet uns in zweierlei Form – zum einen: die mathematischen Modelle von Walras und später Arrow-Debreu. Die mathematische Gleichgewichtstheorie entbehrt jedoch jeder Ähnlichkeit mit der wirtschaftlichen Realität, da in diesen Modellen von Raum und Zeit, menschlicher Ungewissheit und Wettbewerbsvorgängen abgesehen wird.

Zum anderen unterstellt die zweite Variante der Gleichgewichtsökonomie (gleichgewichtsherstellende) Markträumungsabläufe, die in der Wirklichkeit einfach nicht anzutreffen sind – z. B. die vermeintliche Funktion des Zinses, Ersparnisse und Investitionen ins Gleichgewicht zu bringen.

Und doch ist der Kapitalismus, das beste ökonomische System, das wir kennen.

Warum sind  wir nicht in der Lage, seine Überlegenheit zu erklären?

Friedrich Hayek kommt einer befriedigenden Erklärung und Verteidigung der relativen Überlegenheit des Kapitalismus einigermaßen nahe. Leider bleibt Hayek an radikalkapitalistische Vorurteile gefesselt. Deshalb gelingt es ihm nicht, sich dazu durchzuringen, einzuräumen, dass der Kapitalismus auch ernsthafte Defekte aufweist, die er ohne Eingriffe von außen nicht überwinden kann. Ich selbst würde ohne weiteres jenen beipflichten, die meinen, dass zu den wichtigsten dieser Defekte die Unfähigkeit zählt, bestimmte wünschenswerte gesellschaftliche Zustände durch ein profitorientiertes Wirtschaften herbeizuführen, etwas Vollbeschäftigung und soziale Errungenschaften wie eine lückenlose medizinische Versorgung und Altersvorsorge für alle.

Es wäre jedoch ein Irrtum, den Kapitalismus wegen dieser Defekte in Bausch und Bogen abzulehnen. Schließlich haben wir es bei ihm mit dem ökonomischen System zu tun, das die Gesellschaft in beispielloser Weise mit dem Wohlstand versorgt, der die erwünschten sozialen Errungenschaften, die der Markt selbst nicht hervorbringt, wirtschaftlich überhaupt erst ermöglicht.

Hayek hat Recht, wenn er die Gleichgewichtsökonomie dafür kritisiert, dass sie die Antwort auf die Frage, wieso eine Wirtschaft einen Gleichgewichtszustand erzielen kann, bereits voraussetzt, statt zu erklären, wie das Gleichgewicht zustande kommt.

Laut Hayek ist der Schlüssel zur Überlegenheit des Kapitalismus in seiner einzigartigen Fähigkeit zu finden, Informationen aufzunehmen und weiterzugeben, die benötigt werden, damit die Wirtschaftsteilnehmer ihre ökonomischen Pläne untereinander koordinieren können. Eine zentrale Rolle hierbei spielt das Preissystem. Aber es gibt auch andere Faktoren, die sicherstellen, dass die Menschen sich aufeinander verlassen können, indem sie ihre Ziele dadurch erreichen, dass sie sie mit denen anderer Wirtschaftsteilnehmer verzahnen. Dazu gehört die politische Abstimmung der Menschen untereinander.

Es ist erstaunlich, dass Hayek einerseits bestimmte außerökonomische Institutionen in ihrer Fähigkeit, eine Infrastruktur der gegenseitigen Berechenbarkeit zu erschaffen, hervorhebt – etwa soziale Anstandsregeln, den Rechtsstaat und die garantierten Rechte der Menschen, ihre Interessen  auf rechtlichem und politischem Wege geltend zu machen.

Leider verurteilt Hayek andererseits die Abläufe in ihrer politischen Form, mit denen die Menschen unentwegt an den konkreten Ausprägungen dieser Infrastruktur der gegenseitigen Berechenbarkeit feilen. (Hayek macht einen künstlichen Unterschied zwischen Prinzipien und Politik. Tatsächlich fallen Prinzipien nicht vom Himmel: sie  entstehen und wandeln sich durch politische Einflussnahme.)

Wie dem auch sei, das wichtige Ergebnis dieser Überlegungen für meine Zwecke ist, dass es möglich ist, die Überlegenheit des Kapitalismus zu begründen, ohne dazu gezwungen zu sein, ein kohärentes formales Modell zu bemühen, oder idealisierende Behauptungen über vollkommene Gleichgewichtslagen oder ökonomische und soziale Optima aufzustellen.

Siehe auch meine umfassende Hayek-Kritik in Das Paradoxon der Freiheit

Say No to Racism

Image credit. Die einst progressive Linke (die wir heute dringend nötig hätten) hat sich in eine zutiefst reaktionäre Kraft verwandelt. Ein Aspekt dieser Metamorphose ist die rassistische Definition des Rassismus, zu der sich die regressive Linke inzwischen bekennt. Das, was schrecklich ist am Rassismus, ist nicht etwas, was nur nicht-weißen ethnischen, rassischen oder an anderen körperlichen Äußerlichkeiten erkennbaren Gruppen widerfahren kann. Jeder Mensch und jede erdenkliche Gruppe oder Gemeinschaft von Menschen kann vom Rassismus betroffen sein. Doch die Linke will nur nicht-weiße Gruppen als Rassismusopfer anerkennen. Sie macht sie zu den Stars und Privilegierten ihrer Identitätspolitik, denen sogar das Recht zugestanden wird, ihrerseits ungestraft Rassismus zu praktizieren. Die regressive Linke hat inzwischen eine Industrie errichtet, um ihre Lieblingsgruppen zu unterstützen, wobei die Industrie-Funktionäre für gewöhnlich weit mehr von solchen Bemühungen haben als die Zielgruppe selbst. Die von der regressiven Linken bevorzugte rassistische Definition des Rassismus ist ein Ablenkungsmanöver, eine Nebelwand, hinter der sich ihre Adepten des schlimmsten Rassismus gegen Andersdenkende und ihre politischen Gegner befleißigen. One of the terrible changes that the left has undergone to mutate from a progressive force (much needed today) into a reactionary force is due to its determination to artificially confine racism to ethnic minorities and turning these into the privileged of identity politics, even entitled to reverse racism. The essential scandal inherent in racism is not something specific to and reserved for certain ethnic groups, let alone only non-white ones. But the regressive left decided to turn racist by confining the notion of racism to non-white minorities, excluding vast groups exposed to dreadful discrimination, while building up enormous industries to privilege the leftists' victims of choice (and actually benefitting the industry management far more than the selected target group as such). The left's racist definition of racism is a smoke screen helping them to perpetrate racism on a vast scale against anyone opposing their views.

German summary below / deutsche Zusammenfassung unten

 
Deutsche Zusammenfassung des englischen Textes unten

Sag' Nein zum Rassismus. Ich fordere alle meine Leser dazu auf, diese Haltung zu leben. Denn in Deutschland herrscht ungezügelter Rassismus. An die Stelle eines rückhaltlosen Pluralismus und einer Demokratie der vielen Stimmen ist hierzulande die Herrschaft eines obrigkeitlich vorgekauten Kanons der politischen Korrektheit getreten. Die Litanei wird unkritisch nachgebetet von einer Staffage an politischen Konsumenten, die seit langem schon in einen abgestumpften Zustand versetzt werden, indem ein Einheitsbrei ideologisch schick frisierter Nachrichten und „Informationen"“ an allen Ecken und Enden der „Bildungs“- und Medienwelt an sie verfüttert wird. So zu einer Einheitsmasse geformt konnte es nicht ausbleiben, dass die Deutschen wieder sehr intolerant geworden sind und sich Formen der Diskriminierung und hasserfüllten Verächtlichmachung zu eigen machen wie sie rassische Minderheiten, etwa die Schwarzen in den USA, zu ertragen hatten.

Es ist gang und gäbe heute, das Deutsche gewohnheitsmäßig und geradezu lustvoll Personen und Gruppen diskriminieren und auf hasserfüllte Weise verächtlich machen, die der Billigung durch den Kanon der politischen Korrektheit entbehren. (Im Stile der Diskriminierung der Schwarzen durch die Südstaatler, darf der Verein Eintracht Frankfurt unter landesweitem Zuspruch Angehörige und Unterstützer der legalen deutschen Partei AfD die Vereinszugehörigkeit verweigern. Es gibt tausende von ähnlichen Beispielen reinsten Rassismus gegen  oppositionelle/nicht politisch korrekte Kräfte in Deutschland.)

Zu den zahlreichen Opfern des neu erwachten deutschen Rassismus zählen der US-Präsident, seine Anhänger, selbst unterscheidungsfähige Menschen, die Vor- und Nachteile seiner Administration konstatieren, es aber wagen ihm auch gute Ideen und politische Maßnahmen zuzurechnen. Wie schon angedeutet,  die völlig legale Partei der AfD, ihre Mitglieder und Anhänger werden wie seinerzeit die schwarze Bevölkerung der Südstaaten dem ungeheurerlichsten Rassismus in Gestalt von Verleumdung und sozialer Ausgrenzung ausgesetzt. Menschen, die eine ordnungsgemäße Einwanderungspolitik und die Einhaltung der diesbezüglichen Gesetze fordern, werden als fremdenfeindliche Nazis, also als Typen, die Massenmord und andere Gräuel begehen, diffamiert. „Klimaleugnern“ wird der Tod gewünscht, während man an anderer Stelle daran arbeitet, sie zu kriminalisieren. Europäische Mitbürger werden an den Pranger gestellt als widerwärtig faul und gaunerhaft, etwa die den Brexit wagenden Engländer oder die Griechen. Stellen Sie sich mal vor schwarze Menschen würden solchen Anwürfen ausgesetzt – die Heuchler der regressiven Linken würden in hysterisches Geheul ausbrechen und in diesem Fall natürlich mit ihrem Protest recht haben. Für andere gilt dieser Schutz nicht.

Es ist inzwischen so weit verbreitet in Deutschland, dermaßen politisch korrekt, diejenigen, die nicht den Linkspol bevölkern, auf das demütigendste herabzusetzen und mit hasserfülltem Eifer verächtlich zu machen, dass die meisten Menschen längst schon ihre Antennen dafür verloren haben, dass sie den reinsten Rassismus an den verschiedensten Fronten praktizieren.

Der soziale Druck, der durch diese allgegenwärtige Leidenschaft für rassistische Beleidigungen  aufgebaut und durch das Land gepumpt wird, ist gewaltig. Es handelt sich um eine Art des sozialen Signalisierens und bedeutet: „Hey, ich bin ein guter Deutscher, ich denke auch wie ihr, habe die gleichen Gegner. Sind wir nicht geil?“

Was ich regelmäßig erlebe, wenn ich mich mit Freunden, Bekannten, selbst mit Geschäftspartnern treffe, ist dies: Ich komme ins Vergnügen einer Brandrede gegen das jüngste Opfer ihres Rassismus, z. B. die Ölindustrie. Und ich blicke in Augen, die strahlen wie von einer Offenbarung. Dabei habe ich nur die wiedergekäute Version des letzten Schubs an politisch korrekter Propaganda aus den staatstreuen Medien zu hören bekommen.

Doch niemand sagt: „Stop!“ Nur die „Nazis“ außerhalb des Linkspols.

Deutschland hat sich zu einem Laboratorium gewandelt, in dem man die Abtrift eines Landes in Richtung Totalitarismus unter Bedingungen weitgehender Freiheit (grundsätzliche Informationsfreiheit und legale Widerstandsmöglichkeiten) studieren kann, ebenso wie weit in die Zeit zurückreichende kulturelle Unterströmungen der toxischen Art, die allmählich wieder auftauchen.

In den 1920er und 1930er Jahren waren es die Väter, die unter den Fahnen totalitären Visionen (der marxistischen Sozialisten, der Kommunisten und der Nationalsozialisten) marschierten. In den 1960er Jahren tat es ihnen ihre Söhne gleich in ihren Demonstrationen für einen totalitären Kommunismus, bevor sie den "langen Marsch durch die Institutionen" antraten, um schließlich (als gut bezahlte Ministerialbeamte, die die Gesetze von den Augen der Öffentlichkeit abgeschirmt ausformulieren) an die Schalthebel der Macht zu gelangen.

Wie schon in der Weimarer Republik ist es der Demokratie nicht gelungen, in Deutschland Fuß zu fassen.

Was wir heute im „deutschen Laboratorium“ beobachten können, könnte sich gut und gerne dereinst als Probelauf für ein weiteres fürchterlich autoritäres Reich herausstellen. Die Menschen sind bereit dafür. Sehen wir mal, was geschehen wird, wenn dieser Riese auf tönernen Füßen – die EU – erst einmal kollabiert.

Hütet euch – die Deutschen sind ein sehr gefährliches Volk!



English text:

I urge my readers to get behind this demand. 

For racism is rampant in Germany. Over here unrestricted pluralism and many-voiced democracy has been replaced with a preordained canon of political correctness uncritically adopted by political consumers that have been dulled for a long time by an ubiquitous pabulum of ideologically streamlined news and "information" pieces. Having been clotted into a uniform mass, it is inevitable that Germans have grown highly intolerant, exercising the kind of discrimination and hateful disparaging that racial minorities like the blacks in America used to be exposed to.

It is a bit unfortunate that the term that describes this type of social suppression seems to imply its applicability only to ethnic groups of victims. Of course, the meaning of racism extends beyond races to virtually any kind of person or social unit or community.

Nowadays Germans discriminate against and hatefully disparage habitually and with relish persons and groups that are not sanctioned by their canon of political correctness. 

Counting among the many targets of German racism are the US-president, his supporters, even discerning people who see the good and the bad in him but dare ascribe good ideas and policies to him. Equally, Germany's perfectly legal political party — AfD — which has recently made it into parliament is subject to the most egregious racism, its members and supporters being slandered and ostracised like American blacks in the 1950s. People who call for an orderly immigration policy and the upholding of the law are being defamed as xenophobic Nazis. Global warming "deniers" are greeted with death wishes and subjected to efforts at criminalisation. Fellow Europeans are considered despicably lazy and crookish bastards, such as the brexiting English and the Greeks. Imagine blacks were the targets of the same kind of abuse.

It has become so common in Germany, so politically correct, to level the most abasing and vitriolic accusations against those outside the Left Pole that people just no longer understand that they are perpetrating racism along many fronts. The social pressure generated and transmitted by this ubiquitous passion for racist abuse is immense in Germany. It is a way of signalling I am a good boy, a good girl. What happens regularly when I meet with friends, acquaintances, even business partners, I am treated to a rant about the latest victim of discrimination, say the oil industry. And I meet eyes bright with revelation, when all I heard was the latest piece of political propaganda, say from the radio (told a million times before). Many of the racist memes of accusation by which Germans like to reassure each other of their desert of social respect are as lifeless as an insect trapped in amber, deriving their popularity not from truthfulness and accuracy but from longevity. Prejudices clogging the mind, readying it for hatred by blocking discernment and establishing disproportion in judgement. An occasional problem with an industry, by itself, if actually extant, representing a perfectly manageable cost vis-à-vis the enormous benefits contributed by the business is transformed into a lasting condemnation of the entire branch, the full force of which stigma being ever ready to be activated by the least impetus, further deepening and perpetuating an elephant of threat that really is a fly. in that way, the chemical industry is killing millions of people and the oil industry is pushing for the end of the world.  

Nobody says stop — except "the Nazis" outside of the Left Pole.

Germany has turned into a laboratory where you can study how a drift towards totalitarianism can emerge under conditions of freedom and how poisonous cultural undercurrents of long standing resurface. In the 1920s and 1930s, the fathers were marching through the streets in support of totalitarian visions (Marxist socialists, Communists, National Socialists), only for their sons to follow suit in the 1960s demonstrating for totalitarian communism, and after a "long march through the institutions" ending up in the corridors of power today. As during the Weimar Republic, democracy has yet again failed to take root in Germany.

If people, who live in a free country behave like that, how much more susceptible to totalitarian duress must those have been who lacked the unrestricted information (Internet) and possibility of opposition still existing in today's Germany.

What we are witnessing in our German laboratory could well turn out a test run for another terribly authoritarian Reich. The people are ready for it. Let's see what happens when that giant with feet of clay — the EU — collapses.

Beware — the Germans are a very dangerous people!

Self-Interest and Greed

 

Image credit

Go here for a German variant of the below English post.

Hier geht es zu einer deutschen Variante des untenstehenden englischen Posts.

I have written this post in April 2012, at a time when I was still leaning strongly in the direction of libertarianism. However, there is little in it that I would retract or qualify.

⃟

While I consider this article by Dwight R. Lee a good read, I differ with the author's conclusion

that self-interest is not good or bad, but an unalterable fact of life.

I would argue that self-interest is good - and not bad - in that it is a fundamental part of human nature and as such a requirement not only for man's survival but also for his continuous improvement, materially and spiritually.

There are two aspects to my argument, the first, I have written about before. So I touch on it only briefly.

I.

Every human being is an individual, separate from every other individual, and must therefore perceive and cope with the world in a way unique to himself. Inevitably, he has concerns alone to himself. Man quite simply does not have the perspective of another person but only his, he does not live the life of another person but his life, and he does not have the needs of another person but his own needs. If he does not know how to heed his very own concerns he cannot but (a) damage himself seriously and ultimately mortally, and he will (b) lose the ability to improve himself and to make his best contribution to the improvement of his fellows.

The idea of freedom is essentially the idea of personal freedom, the need of which is based on the recognition of point (b) above.

[In the meantime, I have come to support a broader understanding of freedom. Personal freedom remains a central aspect of liberty, but it is part of a network of interacting nodes representing other requirements of freedom — like the need for and the rules of scientific, economic, and political competition, all of which modify the scope of personal freedom.]

The constructive and conducive aspects of self-interest are manifold, complex and absolutely indispensable for human survival and advancement. Unfortunately they are only too often swept aside by crudely equating the concern of the individual for himself with greed or other forms of objectionable misconduct. This habit appears to be a remnant of the times when the individual was constantly and  brutally bullied and terrorised by the tribal collective. Today, the ideological war on self-interest is part of the efforts to turn human beings into mere means for the ends of the powerful.

II.

The second aspect that is even more pervasively overlooked concerns the nature of human needs. I mention this aspect because it leads me to the conclusion that man must and ought to strive for ever growing wealth. If this desire for more wealth is crudely equated with greed (which is silly) then greed is morally desirable - as one might argue for rhetorical effect, while correctly speaking greed is bad, of course, and self-interest good in the above sense. In fact, what is bad about greed is that it represents an overdoing, a transgression of the right measure of something, an excess beyond the harmless or wholesome, whereas an excess of self-interest does not make conceptual sense as defined above, since it would imply a violation of self-interest by self-interest.

The crux: the way in which human beings adapt to their environment is by having and satisfying desires/needs. The greater the variety, variability and degree of differentiation of a specie's ability to have and satisfy needs/desires, the greater its ability to fit successfully with the wider environment. So the ability to constantly renew, extend and grow this ability is key to survival and advancement.

Now, what is wealth? Wealth consists of things and practices that enable man to satisfy his desires/needs. Hence, if an open-ended development of desires is an anthropological sine qua non and the key to continuous successful adaptation to a changing and changed environment, then incessantly growing wealth is just as important.

If man's ability to adapt to and advance in his environment is damaged and curtailed, he suffers impoverishment (relative to the unhampered presence of this ability), even to a degree that may well lead to stark poverty, misery, and death.

Truncating, inhibiting or fully precluding man's ability to develop and satisfy ever more desires/needs and hence to build up more and more wealth is quite simply inhumane. Not to mention that resource-intensive ambitions like comprehensive environmental protection cannot be achieved unless a high level of wealth is achieved and maintained.

Eigennutz und Gier

 

Image credit

Englische Version hier: Self-Interest and Greed.

Ich fasse hier die wichtigsten Punkte zusammen, die ich in einem im April 2012 geschriebenen englischen Beitrag vorgelegt habe.

Darin gehe ich von der Äußerung eines Autors aus, demzufolge Eigennutz weder gut noch schlecht, sondern eine nicht abzuschaffende Erscheinung des menschlichen Daseins ist.

Ich widerspreche dieser Aussage, indem ich zwischen Eigennutz und Gier unterscheide.

Eigennutz ist gut, Gier ist schlecht.

Eigennutz ist gut, weil er gewissermaßen ein Instrument ist, dass wir benötigen, um zu überleben und Gutes zu tun, wobei Gutes natürlich auch die Fähigkeit umfasst, die eigenen Lebensbedingungen und die anderer Menschen zu verbessern. 

I. Eigennutz – der Kompass des Individuums

Menschen sind Individuen, d. h. ihre Existenz ist immer auch begleitet von Bedürfnissen, die dem Einzelnen spezifisch sind. Der Platz, den ein Mensch einnimmt, kann buchstäblich von keinem anderen Menschen eingenommen werden. Jeder Mensch hat also schon physisch einen einzigartigen Standpunkt, der ihn dazu zwingt, die Welt aus seiner ganz eigenen Perspektive wahrzunehmen und sich an der Bewältigung des Lebens unter ganz persönlichen Gesichtspunkten zu versuchen. Das Individuum hat seine eigene Sichtweise, nicht die eines anderen, es lebt sein eigenes Leben, nicht das eines Anderen und es hat seine ganz eigenen Bedürfnisse, nicht die einer anderen Person.

Natürlich gibt es Übereinstimmungen mit anderen Menschen, aber es bleibt immer ein ganz entscheidendes Residuum an Individualität hinsichtlich der Wahrnehmung der Welt, des Bedürfnisempfindens und der Lebensgestaltung.

Wenn ein Mensch nicht in der Lage ist, diese ganz eigenen, für sein Leben wichtigen Belange wahrzunehmen, wird er über kurz oder lang schweren Schaden nehmen und irgendwann daran zugrunde gehen. Verliert er seine Fähigkeit, sich selbst besserzustellen, dann wird es ihm auch nicht mehr möglich sein, sein individuelles Wissen, Wollen und Können in den Dienst der Verbesserung der Lage anderer Menschen zu stellen. Man kann ihn vielleicht noch einer Sache opfern, z. B. als Kanonenfutter oder todgeweihtem Sklaven, aber der konstruktive Drang, das Geschick und das Ingenium, welche den Menschen von Maschinen und Tieren unterscheiden, ist nicht mehr im Spiel.

Wer dem Menschen die Möglichkeit nimmt, seinen Eigennutz zu berücksichtigen, entmenschlicht ihn, nimmt ihm die spezifisch menschliche Qualität und erdrückt die notwendige Selbstbestimmung des Individuums unter einem Übermaß an Fremdbestimmung.

Eigennutz ist der Kompass eines Menschen, der es ihm ermöglicht, seine besonderen Fähigkeiten so in die Gemeinschaft einzubringen, dass beide – Individuum und Kollektiv – Vorteil aus dem Miteinander ziehen, dass die Interessen beider Seiten gewahrt bleiben.

Eigennutz grundsätzlich mit Argwohn zu begegnen oder ihn, wie dies oft geschieht, mit Gier und Rücksichtslosigkeit gleichzusetzen, ist eine gefährliche Haltung, denn sie wirft den Respekt über Bord, den jedes Individuum verdient.

II. Der Mensch überlebt und gedeiht, indem er unentwegt neue Bedürfnisse entwickelt

Auch das Kollektiv ist auf das Instrument Eigennutz angewiesen, d. h. darauf, dass der einzelne Mensch seinen Eigennutz verfolgt. Denn als Spezies überleben und gedeihen wir, weil wir uns unserer Umwelt durch die Entdeckung und Befriedigung immer neuer Bedürfnisse anpassen. Freilich ist das Kollektiv kein Wesen, dass dazu imstande wäre, sich neue Bedürfnisse zu erschließen. Das kann nur das Individuum. Auch wenn Instinkte eine große Rolle beim Überleben der Menschen spielen, sie sind nur notwendige nicht aber zureichende Bedingung für die erfolgreiche Bewältigung des menschlichen Lebenskampfes. 

Als Individuen, aber auch als Spezies können wir nicht überleben, ohne, dass wir unsere Intelligenz einsetzen, unsere Fähigkeit zu abstrahieren, zu schlussfolgern und Lösungen im Kopf zu vorwegzunehmen, bevor wir sie in der Praxis  – auch da wieder mithilfe unserer hoch entwickelten rationalen Fertigkeiten – umsetzen. 

Wir schützen uns vor Anfechtungen durch unsere Umwelt, indem wir diese in Problemlagen zerlegen, eine Landkarte von ihr entwerfen, die quasi ein Verzeichnis mangelnder, noch fehlender Lösungen bildet. Aus dieser Perspektive ist es leichter zu erkennen, dass der Mensch kraft Bedürfniserzeugung überlebt. Es sind ja Bedürfnisse verbunden mit der Beseitigung fehlender Lösungen – sagen wir, das Bedürfnis, ein Fortbewegungsmittel mit einem Selbstantrieb (einen „Automotor“ ohne Einsatz menschlicher oder tierischer Antriebsenergie) auszustatten. 

Jeder Tag unseres Lebens ist angefüllt mit der Erfindung neuer Bedürfnisse zwecks Beseitigung fehlender Lösungen. Wir tun dies so häufig und mit solcher Selbstverständlichkeit, dass uns das zugrunde liegende Prinzip in den seltensten Fällen bewusst wird. Die alte Eieruhr funktioniert nicht mehr – damit ist ein Problem oder anders gesagt: der Mangel an einer Lösung, entstanden. Die Lösung erscheint in Gestalt eines Bedürfnisses, das man in dieser Form noch nicht hatte: man sucht nach einer digitalen Eieruhr im Internet. So trivial und selbstverständlich gestaltet sich oft das grundlegendste Verfahren des menschlichen Überlebens.

Je ausgeprägter die Fähigkeit einer Gattung ist, sich Probleme durch Ersinnen und Umsetzen neuer Bedürfnisse zu entledigen, desto erfolgreicher ist sie bei ihren Versuchen, sich der Umwelt anzupassen – und das heißt, sie lebt sicherer, länger und angenehmer.

Weil die Fähigkeit sich durch die Entdeckung und Erfindung von Bedürfnissen im Leben zu behaupten von so tief greifender existenzieller Bedeutung für den Menschen ist, empfindet der Mensch jede Einschränkung dieses Talents wie eine körperliche Versehrung. Das ist es auch, denn es wird ihm genommen, was er für ein intaktes Leben benötigt.

Jetzt ist es an der Zeit, sich zu fragen, was Wohlstand ist. Nun, nichts anderes als ein Arsenal von Dingen und Fähigkeiten, die es dem Menschen ermöglichen, seine Bedürfnisse zu befriedigen. Sofern wirtschaftliches Wachstum und wachsender persönlicher Wohlstand diese menschliche Grundkonstante bedienen, sind sie Ausdruck der conditio humana.  Der Mensch braucht von Natur aus ständig neue Bedürfnisse. Seine Fähigkeit, diese zu befriedigen, steigern seinen Wohlstand. 

Menschsein heißt ständig wachsen, auch wirtschaftlich, und eine zunehmende Zahl an neuen Bedürfnissen zu empfinden und zu befriedigen.

Dabei orientiert sich das menschliche Ingenium, das eine Eigenschaft des Individuums, nicht des Kollektivs ist, natürlich an dem, was der Kompass des Eigennutzes anzeigt. Denn bedürfnisausweitendes Problemlösen ist eine Eigenschaft des Individuums, wie wir gesehen haben – sogar eine von jenen Merkmalen, die den Menschen von allen anderen Lebewesen unterscheiden (wie beispielsweise die menschliche Sprache). 

Kein Ingenium ohne Eigennutz – denn kein Ingenium ohne Individuum und kein Individuum ohne Eigennutz. Gier und Rücksichtslosigkeit sind kontraproduktive Übertreibungen, oftmals auch eigennutzorientierter Handlungen. Aber den Eigennutz mit diesen Untugenden gleichzusetzen, bedeutet die grundlegendsten Bedingungen des Menschseins zu verkennen.

Die tendenziöse Darstellung der Kategorie Eigennutz als eine Untugend ist ein beliebtes Mittel demagogischer Beeinflussung. Je nach Dosierung kann es ein grelles aber auch ein recht subtiles Element im Arsenal derer sein, die entweder als Vorreiter oder als Mitläufer durch ständige Wiederholung entsprechender Plattitüden eine Grunddisposition des Argwohns und der Verachtung gegen unsere Gattung in der Bevölkerung verbreiten. 

Diese dunkel getönte Sicht auf den Menschen hält uns davon ab, anzuerkennen wie wunderbar die Leistungen unserer Spezies sind, dass wir stolz auf uns sein können und dass die Menschenverachtung der unsere Kultur dominierenden grünen Religion ebenso unbegründet wie gefährlich ist.

Siehe auch den zweisprachigen Beitrag Germany's Vicious Green Circle ...

The Bad Conscience of an Economist

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Short German summary at the bottom of the post (work in progress) / Kurze deutsche Zusammenfassung am Ende des Posts (noch in Arbeit)

I have started a series of posts entitled Neoliberal Economics and Its Rival, part 1, part 2 and part 3. The sequel is available only in German because it is based on a nine part series in English by Bill Mitchell. So my English readers are not left in the lurch. Also, I might rewrite the series to include  my own English summary.

The present post traces the intellectual journey that was to bring me to the point where I felt it is important to understand neoliberal economics and its Marxian and (Post-)Keynesian rivals better than I had before. 

In the title I refer to a singular rival, rather than rivals. This is because I feel that it is legitimate for my purposes to merge Marx's and Keynes's reasoning into one and the same argument against classical economics. For Marx was basically a Keynesian avant la lettre in

• criticising Say's Law — the very base of classic economics on which neoliberal economics is squarely built — and

• suggesting the new concept of effective demand to be the culprit responsible for involuntary employment, a phenomenon which the classics thought did not exist. 

While Marx had preempted Keynes' dismantlement of the classics very much in Keynesian terms — if not in Keynesian phraseology, let alone in the spirit of Keynes's accommodating attitude toward capitalism — the rest of Marxism can be safely ignored in this context.

For more see 

(2) Neoliberal Economics and Its Rival — Say's Law, and

(3) Neoliberal Economics and Its Rival — Effective Demand

Turning to my main point, the economist with a bad conscience — well, that is I. 

I wasted my youth as a dogmatic leftist and became instantly a Wirtschaftsliberaler when forced to study neoliberal economics at university. While previously having censored my economic reading to avoid "bourgeois economics", I was fascinated by it once required to look at it closely. By Wirtschaftsliberaler I mean a person who may not be a liberal (in the European sense of the word) except for idealising capitalism and free markets.

Isn't it interesting that I did not care much for liberalism because I was a Wirtschaftsliberaler. That is to say: I thought that the capitalist economy was a social model that would take care of itself. So, if only we ensured we had free markets everything else would fall into places. This attitude would eventually spell the end of my (libertarian leaning) liberalism, towards which I had drawn nearer in the years between 2007 and 2012.  By that period, largely under the influence if Hayek, I had felt so taken by libertarian leaning liberalism that I began to study it very seriously, delving deeply into issues beyond economics such as history, law, anthropology. The upshot was that I discovered serious flaws in the liberal ideology. At some point, confronted with anarcho-capitalist radicals I found myself compelled to look for answers to the question why I was not an anarchist. Soon I realised that politics and the state actually played a pivotal, extensive, and indispensable role in making liberty feasible.

That was the time when I finally cracked my Hayekian dogmatism. For I began to understand that the spontaneous order of capitalism was embedded in another spontaneous order — that of the state and politics. The latter being just as much a discovery procedure as the former, only that politics and the state will always be the foundation of economic activity, even in a free society.

This insight does not make me an enemy of capitalism and free markets.

To the contrary, I feel I have become more realistic in my perceptions of them.

The point of becoming an implicit Keynesian was reached, when it occurred to me that to maximise the tremendous benefits of capitalism, we must take responsibility for it, guiding it around the pitfalls that it cannot evade of its own accord.

A free society is one in which everyone has the right to participate in the political processes. Hence it is a society with an exceptionally large potential for mass dissension, which includes both daily and more extraordinary episodes of economic activity. People have different interests and goals. They need to compromise and find solutions to balance their differences in reasonable ways. While capitalism with its free markets is a powerful and welcome helper of mankind, it is not a system capable of resolving the multifarious dissension that is natural to a genuinely free society. 

Capitalism can go wrong. And we need to compete politically for ways in which we may thwart or repair its dysfunction and derailment. This is true for the "small matters" of everyday economic life that abounds with issues demanding political resolution, such as organising a farmer's market in a village. 

And it is also true for large issues such as those relating to the balance or imbalance of the interests of capital and labour which capitalism endows with rival ambitions in certain important respects. But we can save our friend "capitalism" if we take political responsibility to target a reasonable reconciliation of interests.

For more see

The Economy and Its Markets Are Naturally Political 

One might say, it was as a political scientist that I got round to discard my former belief in capitalism as an ideal social order.

I had to overturn the Hayek inside me before I could appreciate that the economic system of capitalism was incapable of guaranteeing a desirable society.

To the extent that I had become a dogmatic libertarian leaning liberal, I was bewitched by Hayek's theory of spontaneous order. According to this idea, there are some rules out there. If we happen to chance on them and conform ourselves to them, we can otherwise act any which way we like and the result will be a spontaneous order that produces benign and optimal results, economically and socially.

Of course, Hayek has overlooked the essence of freedom. That people are free to seek out their own goals and solutions, creating thereby a spontaneous order of conflict and dissension. It is the challenge, burden and great prospect of liberty that people need to cope with and overcome the stress of rivalry that is natural to the system of freedom. For that purpose they cannot rely on a mechanism that kicks in automatically if only a number of rules are adhered to, producing ideal outcomes without fail. In order to get to a desirable society man must invest much discretion, run experiments that may fail, expose himself to trial and error, develop visions and carry them though amidst though competition from those striving for different aspirations.

Finally, I am coming to my main point. Why am I writing the series on (1) Neoliberal Economics and Its Rivals?

I want to understand what went wrong in my intellectual development.

I once told my History teacher that it was easy to write after the event about the terrible wrongs of the Third Reich and its Nazis. The real challenge, I insisted, was to write an essay in which you explained how you may have become a Nazi yourself in Germany in the 1920s and 1930s. That would be an appropriately demanding way of learning from the past and building resistance from heartfelt inspection against similar dangers in our own time. 

I think the main fault in my thinking ensued from acceptance of the dogma that a free economy — the subject matter of economics — is a spontaneous order whose natural spin-off is a desirable social order.

What does this have to do with "Neoliberal Economics and its Rivals"?

Classic as well as neoliberal economics, which basically adopts the essence of classic economics, construe their view of the economy as a mechanism whose proper functioning produces both desirable economic as well as ideal social outcomes.

Central to this presumption is the

• concept of equilibrium, and the further assumption that

• economy and society are isomorphic, notably, that by letting the economy operate according to the rules that are appropriate to it, ipso facto a society of first best nature — of maximum wealth, peace, fairness, and freedom — is created.

These two aspects ensure that classical economics and neoliberal economics are indistinguishable.

The latter is chock-full of ad hoc excuses to rescue its basic economic philosophy from innumerable proves that it does not correspond with reality. Awkwardly, notwithstanding the absurdity of its defences, neoliberal economics succeeds in surviving and, in deed, dominating modern policies and the minds even of the broader population.

The reason why is related to my intellectual biography. No less than their precursor, modern variants of classical economics somehow manage to inculcate the notion into those millions of economics students graduating every year that an equilibrium economy (producing a corresponding society) is possible, good, and desirable, and that our efforts should be directed toward rescuing as much of this paragon as possible and always strive to come as close as possible to its complete implementation. Let me call this the fallacy of unwarranted promise (FUP).

While the classical economists believed they lived in the presence of such an ideal socio-economic reality, contemporary neoliberals find themselves frequently in a position to defend what they consider a feasible vision against sinful men who subvert the rules on which a free market economy depends for its smooth functioning. However, they succeed in asserting their view as the dominant paradigm.

There are two explicit expositions of the classical and the neoliberal conception of an economy.

The neoliberal model of an economy is spelled out in General Equilibrium Theory (Arrow-Debreu), a highly formalised mathematical theory.

As for my bad conscience, for a long time I used to say to myself that if only I had enough time to study the Arrow-Debreu model I would be able to prove the cogency of my believe in capitalism and free markets as an ideal arrangement.

Ironically, when I got round to looking at General Equilibrium Theory (GET) more closely, one thing stood out like sore thumb: if anything, the model establishes clearly that the real economy does not even remotely correspond to the equilibrium economy modelled in GET. 

To get to a complete, mathematically correct equilibrium outcome, Arrow-Debreu had to throw out just about every assumption that would create a link to the real economy, employing instead bizarre premises such as the absence of space, time, uncertainty and competitive processes.

Neoliberal economics has stuck to this pattern: realism be damned, main thing: the maths is right and looks impressive. Modern economics is very much a theological exercise in vanity by academics, whose results are eagerly recycled by demagogues and politicians to herd millions of people into the directions preferred by their most potent clients.

General Equilibrium Theory is immunised against rejection as a paradigm for policy by the fallacy of unwarranted promise (FUB), whose inculcation is the chief purpose of economics. And so it continues to dominate economic modelling today. Due to its highly technical nature, it is harder to demonstrate to the layman the irrelevance of GET for understanding, let alone governing, modern economies. So, it is not the ideal candidate for debunking the whole edifice of neoliberal economics.

But there is another reason why returning to classical economics is the best way to show that we are being misled and sent astray by modern neoliberal economics.

The fundamental notion of the economy inherent in both, the GET and less formal variants of neoliberal economics, is identical with the classical model. Only, the latter is less formalised, more accessible, and it is also being more straightforward, more confident in advertising its assumptions compared to the sophistry, ad hocery and waffle offered by modern mainstream economics.

GET and modern neoliberal economic thinking absorb the echo of the classics. GETers and modern neoliberals mean and believe the same things, when it comes to fundamental presumptions about how the economy works and why — in their form of conceptualisation — it deserves to be our ideal and guiding star.

Had I studied the Classics properly, early in my economic education, I might have discovered that their view of an economy is untenable, and that the Wirtschaftsliberalismus that I was going to internalise as my guide for the next 30 years was seriously flawed.

I had uncritically relied on authorities rather than using my own head and intellectual experience to vet the basics of economics, leaving me with a bad conscience that would make itself felt every once in a while.

Conclusion: Study the model that the classical economists had drawn up to comprehend the economy and you know what modern neoliberals really think about the economy, and what is doubtful about their point of view.


Deutsche Zusammenfassung:

Ich habe vor, demnächst eine Serie von Posts über das Urmodell des neoliberalen Wirtschaftsverständnisses zu vollenden. Drei Teile gibt es schon: hier, hier und hier. Dieses Urmodell ist nichts anderes als die Theorie der ökonomischen Klassik, die nach Adam Smith entsteht und sich von dessen politischer Ökonomie durch ein radikal mechanistisches Bild der Wirtschaft unterscheidet.

Es ist wichtig, sich mit der klassischen Theorie vertraut zu machen, weil sie über die Jahrhunderte hinweg das Grundgerüst des vorherrschenden ökonomischen Denkens im Westen geblieben ist.

Das moderne Wirtschaftsdenken ist klassisch, altmodisch und überholt

Spätere Varianten der klassischen Ökonomik leben bis in die heutige Zeit vom „Trugschluss des falschen Versprechens“ – ich nenne es oben im englischen Teil the fallacy of unwarranted promise (FUB). Das heißt, diese späteren Spielarten sind theoretisch durchaus nicht schlüssig, jedenfalls nicht in dem Sinne, dass die von ihnen vorgelegten Modelle die reale Wirtschaft in akzeptabler Weise abbilden. Der Realitätsverlust, den diese Modelle erleiden, bewegt sich nicht mehr im Bereich des Hinnehmbaren: in ihnen wird u. a. von Raum, Zeit, Unsicherheit, Unwissen und echten Wettbewerbsprozessen abgesehen. Infolgedessen halten sie empirischen Überprüfungen nicht stand. 

Es bleiben zwei Ausweichstrategien für den modernen Aufguss der klassischen Theorie: das ständige Verschieben der Torpfosten, also die Einführung immer neuer willkürlicher Zusatzannahmen (Schutzbehauptungen) im Bemühen, die Theorie einigermaßen stimmig erscheinen zu lassen. Doch selbst diese Vorgehensweise ist streng genommen unwirksam ohne die zweite Strategie. Diese besteht darin, Annahmen (größtenteils) stillschweigend zu übernehmen, die seit der ökonomischen Klassik dazu dienen, freie Märkte und den Kapitalismus zu idealisieren.

Hier kommt nun FUB voll zum Tragen: Jedes Jahr wird Millionen von Wirtschaftsstudenten eingetrichtert, dass eine Gleichgewichtswirtschaft  machbar, gutartig und wünschenswert sei. Außerdem bringe das wirtschaftliche Agieren in einer Gleichgewichtswirtschaft angeblich ipso facto eine ideale Gesellschaft hervor. Aus FUB folgt, dass  unsere Bemühungen darauf gerichtet sein sollten, dieses vorbildliche Wirtschaftsmodell so umfassend als möglich zu schützen und zu erhalten und uns so weit als möglich seiner vollständigen Umsetzung zu nähern.

Die Kunst der ökonomischen Rhetorik besteht darin, uns davon zu überzeugen, abstrakte Ideale, die in Wahrheit weder schlüssig noch realisierbar sind, als Leitbilder des wirtschaftswissenschaftlichen Denkens sowie der Wirtschafts- und der Gesellschaftspolitik anzunehmen.

Schlechtes Gewissen

Den Ökonomen in mir hat immer wieder mal ein schlechtes Gewissen geplagt. Er spürte, dass er jemandem auf den Leim gegangen sein mochte, sich vielleicht selbst betrügt. Aber er ging dem Verdacht nicht konsequent nach. Heute weiß ich, dass ich mich von FUB habe täuschen lassen und, dass ich mich als Wirtschaftsliberaler im Grunde nur einem Glauben angeschlossen habe, statt mich auf dem Boden einer soliden Wissenschaft zu bewegen, wie es mir trügerischerweise schien.

Ursprung und Kern eines Glaubens: die ökonomische Klassik

Die klassischen Ökonomen waren fest davon überzeugt, dass ihr Denken die Wirtschaft, die sie umgab, wahrhaftig abbildete. Anders als die heutigen Ökonomen, die sich mit theoretisch-formalem Pomp und sophistischem Lavieren ständig drohender Entlarvung zu entwinden suchen, besaßen die Klassiker noch das Selbstbewusstsein und den Mut, die tiefer innerer Überzeugung entspringen. Sie sprachen ihre Annahmen klar aus und gaben ihnen eine leicht nachvollziehbare Form. 

Wie vor Jahr und Tag verdankt auch heute noch das große Ganze dessen, was man als freie Wirtschaft bezeichnet, seinen logischen Zusammenhalt dem klassischen Glaubensbekenntnis. 

Allein, dass heutige Wirtschaftswissenschaftler diesen Glaubenskanon häufig nur noch andeuten, gewissermaßen wie eine Stimmgabel anschlagen und für sich klingen lassen. Denn sie kennen den Ursprung dieser Doktrin nicht und sind nicht imstande, das in ihr entworfene Gesamtbild in lückenloser Authentizität – mit all seinen Brüchen und Unstimmigkeiten – aufzuspannen. Oder sie schweigen davon, weil sie ein schlechtes Gewissen plagt, das sie daran erinnert, wie wenig stichhaltig die Theorie der freien Wirtschaft in Wirklichkeit ist. Wohlgemerkt muss das nicht heißen, dass die besten Annäherungen an eine Nicht-Planwirtschaft schon deshalb als verwerflich abzulehnen sind, weil ihre theoretischen Rechtfertigungen in die Irre gehen. 

Wir müssen uns aber darüber im Klaren sein, dass das, was die Idealisierungen der freien Wirtschaft salonfähig macht, nicht ein schlagender wissenschaftlicher Beweis ist, sondern eine verführerische Atmosphäre, ein uns auf Zuspruch einstimmendes Hintergrundrauschen, in dem die Stimmen der Klassiker zusammenklingen, um uns dem Bild einer Wirtschaft gewogen zu machen, die real und ideal zugleich sein soll. 

Ohne Einsicht in die Schwächen der freien Wirtschaft – keine solide Theorie des Kapitalismus

Bevor Keynes in den 1930er Jahren mit seiner antiklassischen Wirtschaftslehre in Erscheinung getreten ist, fehlte eine konsequente Theorie der gemischten (nicht idealisierten) Wirtschaftsformen, zu welchen jede freie Wirtschaft zählt. Die Idealisierung der freien Wirtschaft – weiterhin das Grundmodell der Ökonomie und der Wirtschaftspolitik – hat nur eine zusammenhängende Rechtfertigung: das Wirtschaftsbild der klassischen Ökonomen.

Schlussfolgerung: Wer das Wirtschaftsmodell der Klassiker versteht, gewinnt damit automatisch Einsicht darüber, wie Neoliberale heutzutage tatsächlich über die Wirtschaft denken – was ihnen oft selbst nur unvollkommen bewusst ist, weil sie sich der irrigen Annahmen und Fehlschlüsse der von ihnen unterstützten Lehre nicht bewusst sind. Nur wenn wir zurückkehren zu der originären Theorie der klassischen Ökonomen sind wir imstande zu würdigen, was wertvoll und was fragwürdig an deren Weltbild ist und welche Erbschaft es uns in den Schriften der zeitgenössischen Wirtschaftslehre und in den Sachzügen der modernen Wirtschaftspolitik hinterlässt.