Tuesday, December 14, 2010

Confederacy of economic dunces

Inside Job

I particularly liked the fact that the filmmakers touched on the intellectual underpinnings of the crisis, in the Accountability section. Being frustrated at the sorry state of the economics discipline has been a hobby of mine for years, and while delving into it was outside the scope of the film, it was important that the filmmakers noted the connection between financial interests and the economic school of thought that gets funded in universities. The result is that the only worthwhile economics faculty in the country is at the University of Missouri-Kansas City, and every other economics department is fully in the grip of the neoclassical school. (The Post-Autistic Economics movement started in France, and so I hope that Europe is a little better.) This academic support of powerful economic interests goes back a while - the neoclassical school itself, from what I understand, broke away from the classical school because the classical school had taken a sharp turn to the left with Marx... and so the economists he called "sycophants of capital" turned toward focusing exclusively on mathematical abstractions about the economy and away from real world observation and analysis. (These mathematical abstractions all tended to show how swimmingly everything in capitalism went without government interference.) Anyhow, fast forward a hundred years and the tenuous relationship between economics and the actual economy has allowed a situation where politicians from Reagan to Obama can (in good faith, no doubt) listen to economic advisers who tell them (in good faith, no doubt) to adopt policies that will benefit only the very richest while impoverishing the rest. It's an infuriatingly frustrating situation - it's like if Freudian theory was the dominant paradigm in psychology, and whenever you went to see a psychologist s/he would tell you that all of your problems stem from Oedipal and Electra complexes and penis envy and whatever other creative rubbish came out of one man's imagination. Thankfully, the movie was pretty funny at times, and the absurdity of the whole situation does at least allow for a lot of humor, like this video making fun of the ridiculousness of (neoclassical) economic theory:

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