Are all economic theories doomed to fail?

Belfast

Economic theories are implement in the real world by Politicians. ( King , Dictator Democracy etc) not economists.
To become a government and to retain power you need the support of well organised groups or well fund groups.
These groups have influence with the government who distorts the economic theory to reward these favoured groups or only implement the parts of the economic theory that help then stay in power.
This over time this economic distortion tends to leads to economic failures.
In counties with abundant natural resources like oil this make take longer.

Cannibal Ox

Belfast wrote:

Economic theories are implement in the real world by Politicians.

Where is there not a real world? Or, if theory originated outside of the real world, how would it get there? Or, if it got there, how would it know what to do with itself? Or, if it did know what to do with itself, how could it relate to the real world, having not originated in it?

Economic, social and political theory originates in the real world amongst human beings surrounded by a big, open world with lots of things in it that they don't really understand. It does not come from on high, people don't touch the divine and spread the word of Economy to the faithful.

Religion says, God exists outside of this world, his word is truth, if only we followed it everything would be okay. If an economist says, my word is truth, if only we followed it everything would be okay, the same logic and presumptions are at play behind that claim. So I would say you should be a little suspicious about that.

Belfast

Cannibal Ox wrote: »

Where is there not a real world? Or, if theory originated outside of the real world, how would it get there? Or, if it got there, how would it know what to do with itself? Or, if it did know what to do with itself, how could it relate to the real world, having not originated in it?

Economic, social and political theory originates in the real world amongst human beings surrounded by a big, open world with lots of things in it that they don't really understand. It does not come from on high, people don't touch the divine and spread the word of Economy to the faithful.

Religion says, God exists outside of this world, his word is truth, if only we followed it everything would be okay. If an economist says, my word is truth, if only we followed it everything would be okay, the same logic and presumptions are at play behind that claim. So I would say you should be a little suspicious about that.

When I say the real world I mean moving for an Economic theory that only exists as a set of ideas on paper to its practical implementation in the economy.

Permabear

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oscarBravo

Permabear wrote: »

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Have you read Nassim Taleb's The Black Swan? I think you'd like it.

Belfast

Permabear wrote: »

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even with Austrian economics there is an incentive to alter the system to give them selves more power and ignore the principles of the theory.

Cannibal Ox

Belfast wrote:

When I say the real world I mean moving for an Economic theory that only exists as a set of ideas on paper to its practical implementation in the economy.

I know, but I think that's wrong. I don't think you can make a neat distinction between the world of ideas and the world as it is, for the reasons above, and then judge the success or failure of an idea based on the relative reciprocity between the ideal and the real.

Trying a bit more of a long winded example...

Following this line of thought, you can't judge the relative merits of Capitalism based on the relation between markets as they function now, and as they are supposed to function in texts. That would be a value judgement based on measuring the functioning and efficiency of the real market as it relates to the ideal market, which, I think, is what you're suggesting.

Instead, the trick would be to examine how the relation between the markets as they exist, and how they are supposed to exist, produces A capitalism. This means that the practical implementation of Capitalism is A capitalism, rather then being a pale shadow of Capitalism.

It exists, and it exists through the relationship of ideas and the practical implementation of those ideas. This bundle is what makes A capitalism*. So, the real, nitty gritty implementation of economic policies is not a derivative of the objective ideal, but on an equal footing with the ideal, and as productive of the ideal as the ideal is of the real.

Or, the civil servant putting policies into effect, the economic theorist scribbling notes in a university department, and the citizen saving money instead of spending it are all constitutive of A capitalism. This is the thing, not simply the idea.

The problem then isn't the failure of the civil servant to fit their policies to the theorist, or the theorist to relate their ideas to policy, or the citizen to spend or not spend as the theory dictates, the problem is how the relationship between all of them produces a particular system of economic (and really, social and political) relations.

Which may still all sound like gibberish, but I can't think of a better, more concrete example at the moment.

* I keep writing "A capitalism" because all of the above would imply that there are multiple forms of capitalism that are dependent on the relationship between the real and the idea for their form and functioning.

Belfast

Cannibal Ox wrote: »

I know, but I think that's wrong. I don't think you can make a neat distinction between the world of ideas and the world as it is, for the reasons above, and then judge the success or failure of an idea based on the relative reciprocity between the ideal and the real.

Trying a bit more of a long winded example...

Following this line of thought, you can't judge the relative merits of Capitalism based on the relation between markets as they function now, and as they are supposed to function in texts. That would be a value judgement based on measuring the functioning and efficiency of the real market as it relates to the ideal market, which, I think, is what you're suggesting.

Instead, the trick would be to examine how the relation between the markets as they exist, and how they are supposed to exist, produces A capitalism. This means that the practical implementation of Capitalism is A capitalism, rather then being a pale shadow of Capitalism.

It exists, and it exists through the relationship of ideas and the practical implementation of those ideas. This bundle is what makes A capitalism*. So, the real, nitty gritty implementation of economic policies is not a derivative of the objective ideal, but on an equal footing with the ideal, and as productive of the ideal as the ideal is of the real.

Or, the civil servant putting policies into effect, the economic theorist scribbling notes in a university department, and the citizen saving money instead of spending it are all constitutive of A capitalism. This is the thing, not simply the idea.

The problem then isn't the failure of the civil servant to fit their policies to the theorist, or the theorist to relate their ideas to policy, or the citizen to spend or not spend as the theory dictates, the problem is how the relationship between all of them produces a particular system of economic (and really, social and political) relations.

Which may still all sound like gibberish, but I can't think of a better, more concrete example at the moment.

* I keep writing "A capitalism" because all of the above would imply that there are multiple forms of capitalism that are dependent on the relationship between the real and the idea for their form and functioning.

I think the same principle applies to Communism , Socialism or fascism etc.

All economic theories are are implement by those who have political power as a mean of getting and keeping power.

People who seek are do not care if the economic theory works or not.
For them they only care that in allows them to stay in power.

Power seeker prefer economic at give them more economic power.

In democracies Keynesian economics are the ones they favour as it give them more power to reward their supporters.

This corruption of the theory make it fail more often that it should.

Economic ideas like Austrian economics are not like by power seeker in democracies as it strip the state of the power to control the economy or create state sponsored Monopolies.

As government have power to change laws the incentive for power seeker is to change the economic model back to one that give them more power.

In USSR under Stalin it seems to me he was more interested in power than ensuring that Communist economic principles were used for the betterment of the people of USSR.

In an anarchist society the is no central power for power seekers to control.

So the incentive the is for them to create one and impose them will on others again.

Ostrom

oscarBravo wrote: »

Have you read Nassim Taleb's The Black Swan? I think you'd like it.

Sounds like reverse complexity?

The chapter on Brian Arthur is excellent, and I'm always fascinated by the work of the Santa Fe institute. I gather Arthur's work on positive feedback is still outside the mainstream (based on what little I know of academic economics).