Understanding capitalism

10 Nov, 2014 at 09:28 | Posted in Economics | 2 Comments

Frank Roosevelt, a member of the Sarah Lawrence economics faculty since 1977, likens his field to the elephant a group of blind scholars famously tried to describe. Each felt a different part of the animal, and so described a different beast.

“There is no objective truth in economics,” says Roosevelt. “Nobody understands the whole picture. Everybody gets a piece of it.”

81ZvfCDvPoLIn February, Oxford University Press published the third edition of the introductory economics textbook Understanding Capitalism: Competition, Command, and Change, Roosevelt’s six-and-a-half-year project of rewriting and revision. It’s an untraditional book. Roosevelt is an untraditional economist.

“I’m not like ninety-nine percent of economists in the world—I’m in the one percent that is self-styled ‘radical,’” he says. “‘Alternative’ is a more sanitized word.”

Each year, about a million college students take introductory economics courses; their textbooks are selected from among some two dozen on the market. But this apparent magnitude of choices, Roosevelt says, belies the sameness in their explanation of economics. “Class,” for example, is not an independent entry in the index of the most popular traditional textbook. “In our book,” says Roosevelt, “class is not only in the index, but it has more references to it than almost any other word.

”There are power groups, power interests, and much of the world is made up of power relationships. Class is about power relations. We think introductory courses should educate people about the economic system in which we live. This concept is central to this book, and that’s what makes it different.”

As a student in the 60’s, Roosevelt was involved in the Civil Rights and anti-war movements, and co-founded a group called the Union for Radical Political Economics. The first edition of Understanding Capitalism (1985) was written by two friends from the Union’s early days, Samuel Bowles and Richard Edwards. Roosevelt began using it right away, giving it equal course time with more traditional textbooks and introducing, he concedes, “a lot of cognitive dissonance” into his classes.



  1. Objection, your Honour! There is objective truth in economics. Granted.
    Comment on J.B.’s ‘Understanding capitalism’

    It is proverbial that the representative economist does not know how the economy works. Many explanations and excuses have been advanced. Putting aside all individual specifics and possible exceptions for the moment, the main reason is this.
    Neither Classicals, nor Walrasians, nor Marshallians, nor Marxians, nor Keynesians, nor Institutionialists, nor Monetary Economists, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor Econophysicists, nor RBCers, nor New Keynesians, nor New Classicals ever came to grips with profit (cf. Desai, 2008). Hence, ‘they fail to capture the essence of a capitalist market economy’ (Obrinsky, 1981, p. 495).
    Neither orthodox nor heterodox economists understand the two most important phenomena in the economic universe: profit and income (2014). And, clearly, if the premises of a theory are muddled the whole thing ends up in intellectual nirvana. Economics still stands where physics stood in the Middle-ages before the concepts of force and mass were properly defined and clearly understood.

    “We are not yet out of the wood; in fact, we are not yet in it.” (Schumpeter, 1994, p. 7)
    To conclude from the plain fact that the representative economist is a confused confuser (2013) that “There is no objective truth in economics” seems rather far-fetched.
    Egmont Kakarot-Handtke
    Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume
    (Eds.), The New Palgrave Dictionary of Economics Online, pages 1–11. Palgrave
    Macmillan, 2nd edition. URL http://www.dictionaryofeconomics.com/article?id=

    Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like
    an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series,
    2207598: 1–16. URL http://ssrn.com/abstract=2207598.

    Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics:
    Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL

    Obrinsky, M. (1981). The Profit Prophets. Journal of Post Keynesian Economics,
    3(4): 491–502. URL http://www.jstor.org/stable/4537615.

    Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford
    University Press.

    • Confusion is not free, this have a cause. Economy is complex in several aspects. In first term, change is realized for two persons or two entities, each one has his proper valuation of operation in course, second, each “person” making interchange can represent one or more persons or some social structure.
      Profit is valuated in very different form for different cultural systems. First error in economy is newtonian objectivity. Object is modified by subject.

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