And ‘might’ is the important word here. All management decision making is conditional, as a matter of fact. We cannot know what will happen and what the outcomes of actions will be, so we always operate in the real world in conditions of uncertainty. In other words, what Chris says about inability to forecast is necessarily correct. However, decision making has to take place despite that fact. Many (maybe most) economists pretend that this dichotomy either does not exist by assuming the existence of perfect knowledge, or seek to avoid it by saying nothing about what their work might predict may happen. I embrace the uncertainty and am willing to say what I think might happen, with what I think are best risk assessments attached ( the statement that I may be wrong, but don’t at present think that likely being such a statement).
So, that neoliberal economics did not predict the Crash isn’t a function of neoliberal nor of economics, but of the real world.
Good, glad we’ve got that settled.
“neoliberal economics” didn’t predict the crash.
Lots of people predicted the crash. The problem is that the government and press only seem to employ certain kinds of people…mostly those who are cheerleaders for the establishment no matter how thickheaded the establishment is…
Anyone can predict a crash.
I have predicted my own death. When is the tricky bit.
“Many (maybe most) economists pretend that this dichotomy either does not exist by assuming the existence of perfect knowledge”
??
he probably wouldn’t recognise his mistake here if you put all the economics books and articles about uncertainty in bags then got every economics paid to produce forecasts to whack them around the head with them.
Luis
And he probably would not understand the difference between Knightian uncertainty and risk.
He probably also thinks rational expectations means that economists think people are rational.
And such an individual wishes to lecture the world about economics…
clearly he has no real understanding of risk assessments or modelling or statistics or even forecasting and budgeting (in management accounting terms)
May I titter twice?
And yet, despite acknowledging that everything is uncertain, he wants more and more of the economy to be directed by the State, so that instead of having the diversity of millions of different people making decisions, we put all our eggs into whichever basket a Minister chooses.
As johnny dub says lots of people predicted the crash – Tony Dye was predicting it for four years and a few weeks after he got sacked for predicting it, yje crash happened. The trouble was not with the lack of predictions, it was that people did not listen.
BNIC
One slight correction to your accurate piece:
‘clearly he has no real understanding of anything’
Which is a succinct summary……
Wasn’t Vince Cable known as the “Sage of Twickenham” because he predicted ten of the last two recessions?
Ah, his trusty straw man of economists all believing in the perfectly rational consumer. This has been refuted so many times but like last nights dodgy curry he just keeps on bringing it up.
And has been pointed out above: the more irrational individuals are, the even more impossible State Planning of the economy becomes. I wonder if that has occurred to him. I expect not.
Since when did Murph embrace uncertainty? He is always totally convinced by every brainfart he emits.
diogenes
“He is always totally convinced by every brainfart he emits.”
That quote I highlight above – that’s exactly what he’s admitting!
Let me paraphrase (the quote above):
“I embrace uncertainty. The risk being that I might be wrong, but we know that’s not likely”.
Frederick Harrison predicted the Crash to the month and others just predicted it as coming soon, using old fashioned land value analysis .It wasn’t just the politicians who ignored the warnings : conventional economists weren’t interested because theirs is the only academic subject without a canon of accepted authorities such that their Founding Fathers, the Physiocrats and Adam Smith in land tax mode are no longer studied. So the Harrison thesis that the build-up of land value inflation overwhelms the economy every eighteen years is literarily unthinkable.
Since probably the same conventional economists do not believe that banks create money and talk about “bank lending” (without inverted commas) this is one sick, dysfunctional area of study. Corbynistas talk about closing down the Treasury as some enclave of dangerous shit heads: the same could be said of a lot of university Economics departments which are just doing applied maths despite frequent rebellions by the students (Sorbonne 2000).
BTW American land values are bubbling up nicely again from New York to California.Time to recalibrate the mathematical models; not do anything, like apply the measures sorted out by the Physiocrats and Adam Smith two hundred years ago.