Mainstream economic ideology guides government decisions which determine the direction in which we are headed as individuals, as a nation and as a species, as well as deciding the fate of planet earth itself. Right now, none of that is looking good.
The result is exploding inequalities of wealth and income, within and between economies, loss of social cohesion resulting from those inequalities, corruption and fraud by the financialised sector, waste of earth’s finite resources; pollution of oceans and atmosphere; a looming mass species extinction; and the avoidable inevitability of global warming.
That mainstream ideology, Friedman’s variation on traditional neoclassical economics, seems utterly discredited, but continues to be supported and promoted by its beneficiaries and accepted by most others.
In support of its pretence to being a science, neoclassical economics relies on abstruse and irrelevant mathematical models and hypotheses that have been repeatedly shown to be absolutely wrong. The study of economics will inevitably return to its original focus on how systems actually work in reality. It will be an economic paradigm shift and will take some time, but it seems bound to happen.
The systems approach is based on analysis and understanding how the real world works. It is what led Adam Smith to report remarkable productivity gains from the specialisation of work in the pin factory. That was hardly new: Plato had reported gains from specialisation in Ancient Greece. Specialisation is a fundamental concept of systems economics.
Continue reading “It’s the economy, stupid!” Let’s try systems economics instead.