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and which is using neoclassical economics, which has no foundation in economic reality,

At which point the ‘Tater disappears into a cloud of tuberousness.

The idea that neoliberal economics might be wrong, well, perhaps. Not that I agree but it’s at least an interesting discussion to have. To claim that neoclassical economics has no foundation in economic reality is, well, it’s absurd.

What Is Neoclassical Economics?
Neoclassical economics is a broad theory that focuses on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services. It emerged in around 1900 to compete with the earlier theories of classical economics.

So, that’s everything from the Marginalist Revolution onwards – including all of Keynes of course – trashed because neoclassical economics is wrong.

Even, in fact, MMT is wrong:

This paper shows that so-called modern monetary theory (MMT) lacks a sound economic foundation for its far-reaching policy recommendations. This paper’s main contribution to the literature concerns the theoretical foundation of MMT. A simple macroeconomic model shows that MMT is indistinguishable from the Keynesian cross model, as well as a neoclassical macroeconomic model, even when taking account of money in the sense of MMT.

If we do go on to say that, even so, neoclassical is wrong then we’re left with only the classical economists. Smith to Marx – which isn’t all that useful a palette to paint the current world from. There are bits that are right in both of those named, of course. But it is still trying to do things in B&W rather than colour.

The other possible explanation here is that the P³ has no friggin clue, which is always possible.

12 thoughts on “Ah, right”

  1. But the current social ethos is to insist that observing the world and formulating explanations of how the observed causes create the observed effects is an evil racist patrician capitalist conspiracy, what you feelz is how the world works, not reality, and when reality refuses to comply, it’s the evil alt-right to blame.

  2. Theoretical frameworks can be “wrong” and still useful as tools for analysis. He’d know that If he’d bothered to attend his economics lectures

  3. Smith & Northcote Parkinson are all one needs for economics. One for th4eory, other for practice. Rest of it’s wibble.

  4. I think it was the Great Moqifen who made the point that Murphy always considers himself the smartest man in the room – the result of that is that he is always right and whatever accumulated wisdom has consolidated through previous eras is wrong ‘because he says so’ – disagree and you’re a ‘troll’ and can join the 20,000 blocked on Twitter. So the following statements are incontrovertible:

    And what I cannot find is anything in the Bank of England mandate that says it is allowed to oppress the country. Nor do I see anything that says it must create wholly unnecessary recessions. What is more, nothing says it must engineer an increase in inequality in the UK. Nor does it have the power to lay waste to the UK business community, or drive households into destitution. But that is what they are doing.

    And then ask the question, why is it that the NHS and social services are under such stress? Could it be, at least in part, the result of the deliberate policy of the Bank of England to undermine security, incomes, safe housing, stable communities and secure childhoods in this country? Might their policy of deliberately creating anxiety at almost unprecedented levels be the course of much more than our economic malaise? I think so.

    I strongly recommend that in this case we stop taking this Pill at face value and see what he really intends, which is economic devastation. A sane government would stop the out-of-control autocrats at the Bank of England. Ours just applauds them as they drive the country towards destitution.

    We are living through an era of economic madness.

  5. @VP thanks . Because of this he thinks his motives are pure. If anyone disagrees it because they are not pure and are in fact evil in intention. Most easily demonstrated when hes arguing for increased spending on the NHS. If you suggest that perhaps we ought to consider how other health systems operate and whether it might be beneficial in the long term to adopt some of their practices before shovelling more billions into the bottomless pit, he’ll immediately accuse you of trying to kill people. No wonder he can’t work with anyone – not only are they wrong, but evil as well.

  6. I have read most of Professor Murphy’s great works. I am indebted to him as a classical political (!) economist for explaining that I should set the price of the home I am selling at the cost of its construction… in 1870.

    Could somebody explain that big queue that has formed outside our front door please?

  7. “I think it was the Great Moqifen who made the point that Murphy always considers himself the smartest man in the room – the result of that is that he is always right and whatever accumulated wisdom has consolidated through previous eras is wrong ‘because he says so’ – disagree and you’re a ‘troll’ and can join the 20,000 blocked on Twitter. So the following statements are incontrovertible”

    Yes, I think this is what I find so galling about Murphy. It’s not just that many of his ideas fly in the face of basic common sense and observable evidence, or that he commands squads of teat-guzzling sycophants who lap up everything he says without question – there are lots of “public commentators” out there (the now departed Edward De Bono, for example, or Slavoj Zizek) who tick one or both of those boxes, but aren’t nearly as infuriating as he is. It’s more that he combines this with a clear belief in the idiocy of almost everyone who has ever expressed a thought on the issues that most concern him. And I do mean “almost everyone” – if you’re damning neoclassical economics as without any substance, then you’re going way further even than “heterodox” economists such as Steve Keen and Ha-Joon Chang (and are, therefore, implicitly contemptuous of them too; and these are people who could be Murphy’s allies on many fronts).

    As Tim says, man’s a cretin.

  8. One point for the Murphy is he’s pretty open about his funding sources – Kenneth Miller Trust and individual donors excepted.
    But wouldn’t it be interesting to know all the rejected funding applications he has made – there must have been a few. Is there a way of teasing this out.

  9. Theoretical frameworks can be “wrong” and still useful as tools for analysis.

    All of chemistry, for example. Actual chemistry is quantum physics and far too difficult to do in any practical case.

    But we have come a mighty long way with theoretical frameworks that we know are wrong. Not “wrong”, actually wrong.

  10. From the article:

    “In contrast, in MMT the government finances public expenditures via money creation, with no intention to refinance them with taxes.”

    MMTer Neil Wilson who sometime blogs as “aldursys” explains why this thinking is wrong:

    [quote]
    Run through the geometric series.

    Government buys the services of somebody for $100, that is taxed at, say, 20%, leaving $80, that is spent with somebody who earns it as an income, which is taxed at 20%, and so on.

    When you do the maths you discover that whatever government spends comes back as taxation. Then do it for another tax rate and show the same. All that changes is the number of transactions. The government always gets its money back no matter what the tax rate.

    It’s like a stone skipping across a pond. The stone always sinks in the end.

    Then stop the sequence half way through and say that person didn’t spend but saved. There’s the deficit.

    That’s like watching a video of a stone skipping across a pond. Saving is then the pause button. When you release the pause button the skipping continues – savings are therefore the store of taxation that settles the ‘debt’.
    [end quote]

  11. Chester, you could say the same about Newton’s law of gravitation. You can quibble about relativity but for just about all practical purposes Newton works fine.

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