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Screaming stupidity

He had a profound insight that neoliberal economists do not share. He realised that markets, just like the rest of us, often have little or no clue at all about what is going on. That might sound like a statement of the obvious, but as I will explore in this book, neoliberal economics – and all that follows on from it, including the crashes we have had and are facing – is built on a very different logic. Neoliberal economics assumes that there is nothing markets do not know, and therefore nothing they have not already built into the prices that they charge.

No, not at all.

The assumption rather is that what is known is already incorporated into prices. This is why new information moves markets.

Neoliberal economists assume – quite extraordinarily – that markets know everything but that as mere human beings politicians are error prone and therefore are bound to get things wrong.[v] Which is why, neoliberals say we must trust markets and not politicians. And despite the absurdity of this claim – for that’s all it is – the politicians of the cowardly state think this is true.

The importance of this difference being that if anyone, markets or politicians, could in fact know everything then we could in fact have a planned economic system. Advocacy of a market system is based absolutely on the point that we do not, cannot, know everything and thus we cannot plan in detail.


8 thoughts on “Screaming stupidity”

  1. He believes things to be possible that are not. He subscribes to a religion, not a system of logic. Hence his inability to argue, or to even consider arguing, with logic. His on-line behaviour is identical to religious nut-jobs..

  2. It’s maddeningly difficult to explain this to people, especially ones whose minds are already made up like Murph’s. It’s not that markets know everything, it’s that they contain all kinds of information that isn’t exposed for perusal. Like, whether I fancy strawberry or vanilla ice cream for dessert today. Nobody can know that, not even me until I come to the moment of decision.

    I’m never sure if people don’t get it, or just don’t want to get it. The dogma of statistics is simply very powerful, and has been ever since Adolphe “Tosspot” Quetelet had the very stupid idea of organising an international statistic conference and began the whole fantasy that by collecting enough information, you can know everything about everything, upon which most modern managerialism is based.

    He also invented the BMI statistic, which makes him even more of a tosspot.

  3. “Advocacy of a market system is based absolutely on the point that we do not, cannot, know everything and thus we cannot plan in detail.”

    Slight twist: all of us (the market) will always know more than a few of us (the planners).

    more importantly, planners needing to know everything introduces:
    – delay
    – exorbitant costs of trying to know everything.

  4. Also, by their nature, statistics are always out of date, which produces a feedback and a delay, otherwise known as an oscillator, which is one reason why managed markets fluctuate so badly.

  5. I think this is a symptom of his confusion of “neoliberal” with “neoclassical”. Arguably neo-classical General Equilibrium theory built on Arrow-Debreu assumes perfect information.

  6. Arguably neo-classical General Equilibrium theory built on Arrow-Debreu assumes perfect information.

    But as Ritchie stopped paying attention in his economics classes in the 1st term because it was apparently self-evidently bollocks, how would he know anything about what you have just said?

    Note that this just seems to prove the many saws about accountants. Engineering students would have gone to the pub.

  7. “If a universal mind existed, of the kind that projected itself into the scientific fancy of Laplace – a mind that could register simultaneously all the processes of nature and society, that could measure the dynamics of their motion, that could forecast the results of their inter-reactions – such a mind, of course, could a priori draw up a faultless and exhaustive economic plan, beginning with the number of acres of wheat down to the last button for a vest.

    The bureaucracy often imagines that just such a mind is at its disposal; that is why it so easily frees itself from the control of the market and of Soviet democracy. (…)

    The innumerable living participants in the economy, state and private, collective and individual, must serve notice of their needs and of their relative strength not only through the statistical determinations of plan commissions but by the direct pressure of supply and demand.

    The plan is checked and, to a considerable degree, realised through the market. The regulation of the market itself must depend upon the tendencies that are brought out through its mechanism. The blueprints produced by the departments must demonstrate their economic efficacy through commercial calculation.”

    Trotsky, L, ‘The Soviet Economy In Danger’, 1932

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