August 23, 2021

Is Econ Just Politics in Disguise?

Neoclassical economists basically say: Trust the models. Trust us. We have this thing figured out. We can micromanage growth, engineer prosperity and keep the economy humming.

Then I ran into Hazel Henderson. She wasn’t an economist, but a writer. Her husband was an economist. So she was outside the economists’ clubhouse but close enough that she could hear everything through the door. And what she heard struck her as mostly bogus. “Economics isn’t a science,” she declared. “It’s just politics in disguise.”

Henderson, who would go on to co-invent an ethical investment strategy called biomimicry finance, gently nudged me in a different direction.

I started to investigate alternatives. And quickly stumbled on a story of resistance and growing discontent a hundred years in the making.

Nicholas Georgescu-Roegan. Frederick Soddy. Kenneth Boulding. Robert Heilbronner. E.F. Schumacher. Herman Daly. These were seriously out-of-the-box thinkers. They had creative ideas about how the world really works. They were dismissed as gadflies by people who didn’t know what they were talking about: entropy, thermodynamics, chaos theory. Each in their own way, and with a depth and profundity I found exhilarating, questioned what we all thought were the sacrosanct axioms of economic science.

Are the costs of our way of doing business being properly tallied?

Can we keep growing?

Do we know how to measure progress?

These folks thought wide. They thought wobbly. They thought through the WASP-y arrogance of neoclassical economics’ straight-line ambitions. It’s not like they were anti-science. Soddy won the Nobel Prize for chemistry. But then he couldn’t help noticing that what they were up to across the quad in the economics department didn’t quite add up, that there was no real science going on in the sandbox the economists had built for themselves.

“Stop creating money out of nothing,” he told them.

“Growth may cost more than it’s worth,” Daly warned them.

“Existence is a free gift from the sun,” Georgescu-Roegan reminded them. (When they scratched their heads about that, he doubled down with: “Waste increases in proportion to the intensity
of economic activity.”)

These mavericks floated tantalizing new ways to think about markets, growth, value and progress. They were playing a longer game, a more cosmic game. A more beautiful game.

I became convinced that my initial hunch had been right: there is something seriously wrong at the heart of economics. But I also felt now, despite my earlier misgivings, that economics really does matter. That economics is destiny.

Get it wrong and people revolt, ecosystems collapse, empires fall.

But get it right — even for a brief moment — and a bolt of optimism, creativity and enlightenment surges through the land.

If economists could see past their mathematical models and formalist pretensions and embrace psychology, sociology and anthropology, even history and religion, their discipline could evolve into an all-embracing hybrid science that could solve many of the ills that plague humanity. Economics could be the Queen of the Sciences.

Part 2 coming soon...

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