Postmodern economics? No thanks!

18 February, 2016 at 11:58 | Posted in Economics | 1 Comment

Despite its considerable oeuvre, postmodern criticisms of economics are doomed to shrivel and be absorbed by mainstream economics …

Social theory, unlike thermodynamics, is condemned to remain untestable, and stuck in the realm of opinion. Economics valiantly attempts to extricate itself from this fate with a touching commitment to mathematics but, sadly, it only ends up as a religion with equations.

61687679Postmodernity errs in thinking of this as the inevitable failure of all Modernist enterprises. It lambastes economists’ churlish reliance on an Outer Wall of Algebra and an Inner Wall of Statistics but overlooks their success at never even coming close to the nature and the dynamics of contemporary capitalism, thus shielding the latter from rational criticism. But such is the fate of all idealisms which give language an existence independent of the material conditions of social life and reproduction. If only postmodernist critics understood theology and mathematics a little better! Perhaps they would have recognised in economics the greatest proof that Modernity is saturated with its negation …

Postmodernity not only lets neoclassical economics off the hook but, more worryingly, reinforces it copiously before dissolving into it … In a fully-fledged postmodern schema, social relations are confined to interplay, voluntarism, tolerance and exchange; society is the playground where the latter unfold; and discussions of the General Will, exploitation and developmental freedom make no sense. Does this all sound familiar?

If it does the reason is that neoclassical economics went down that alley decades ago. The asymptotic limit of postmodern fragmentation is the neoclassical general equilibrium economic model … Whereas the problem with modernist mechanism was that its view of our world excluded value from the outset, the problem with Postmodernity is that it ends up having no view of the world and becomes easy-pickings for a similarly viewless-valueless tradition, one which bears the additional weaponry of intricate mathematics and endless econometric ‘evidence’.

Yanis Varoufakis


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  1. Nihilism is to defacto side with the lowest possible values there are.

    Both ofcourse abdicate from doing anything. The relevance of mathematics is not universal. In natural science we use maths successfully, which does not mean that it has the capacity to be so everywhere. Just applying maths comes with an assumption. We normally do not state this assumption in natural science, because it is selfexplainatory. When we put maths on our stuff we are saying, this applies to this universe, no other universe, changes in the universe will alter results.

    What does this mean for social science? Economics, and so on?

    I call it a utopian assumption. When maths is applied to society, you are watching it, like the natural scientist is doing. You are essentially saying that this is the only society, this society will never change. This is utopia, you are done, we have arrived!

    It is an assumption of constancy. Models based on this assumption will always guide you to move against any change in what you are assuming as constant. Such a model is unable to make changes to society and also unable to detect them.

    If I model some function Y=kX, where k is constant. I use this model to regulate Y. If k changes upwards, Y will rise and if I am regulating the function I will move against the change in k. Same applies if k goes down. Thats how we get a self fulfilling prophecy of economics.

    Like a person with OCD, desperately trying to keep everything in order, everything perfect, turning the perfect utopia into some dystopian hell.

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