What mainstream economists are embarrassed to admit12 February, 2016 at 10:18 | Posted in Economics | Leave a comment
The true state of affairs is almost opposite of what Friedman makes it out to be when he ventures the opinion that “different predictions about the importance of so-called ‘economies of scale’ account very largely for divergent views about the desirability or necessity of detailed government regulation of industry and even of socialism rather than private enterprises.”
Was there ever an economist who came to believe in either socialism or capitalism because of compelling empirical evidence about economies of scale? For that matter, it is probably not economic arguments at all that turn economists into planners or free marketeers …The fundamental link between economic freedom and political freedom, however, is rarely discussed, possibly because mainstream economists are embarrassed to admit that what really lies behind their preference for private over public ownership of industry is a definite piece of reasoning in political theory.
According to Chicago economist George Stigler, studying economics naturally ‘makes one politically conservative.’ And the post-2007 world we live in today surely bears witness of how unjustified is the Panglossian conservative-libertarian myth of the free market.
Once the dust has settled, there is a strong case for an inquiry into whether the teaching of economics has been captured by a small but dangerous sect.