Using economics as a propaganda device

17 Jul, 2018 at 17:54 | Posted in Economics | 9 Comments

diesThe most serious deficiency of implicit formal theories is that the verbal language disguises the abstractness of the theory … The consequence of the fallacy of misplaced concreteness is that the theory looks too convincing to its proponents​ … He becomes​ the prisoner of his own logical model and is rendered incapable​ of seeing reality from any other standpoint …

The most widespread example is provided by the neoclassical economists, such as Frank​ Knight, Ludwig von Mises, Henry Simons, and their present-day followers. These people seemed to think they had penetrated to the very essence of rational human action, and that they knew whatever was​ knowable about it … In other words, they believed that their abstract postulates​ were concrete​ descriptions of empirical reality … The followers of these economists, the Buchanans and McCord​ Wrights … are using their implicit​ formal theory as a propaganda device to support the present capitalist social order.


  1. Thanks, Lars! Paul Diesing a great mind that deserves more attention and should be read more among economists and other social scientists!

  2. Mises certainly was guilty of thinking he had penetrated to “the very essence of rational human action” and knew what was knowable without needing to bother with the details of messy institutional reality. I do not think Frank Knight, Henry Simons or James M Buchanan were guilty of that mortal sin, at least in terms of their formal theorizing. The implicit theory of the latter’s political propaganda does not seem to be formal at all, nor is the implicit theory related in any fixed or explicit way that I can see to the formal theorizing of the old Chicago School.
    Formally, Chicago School theorists were usually quite clear that the analytic theory was entirely a priori. That was certainly how it was taught to me by Harold Demsetz. Fact/value distinctions were sharp, formally and explicitly. Implicitly and informally, in propaganda and polemic, not so much, though Demsetz could, for example, show off by writing out quite a good justification for public utility regulation, just to demonstrate his intellectual superiority to Galbraith, his favorite opponent back in that day.
    The “rent-seeking” meme of Public Choice was very, very effective propaganda, and resistant to refutation precisely because it did not have a place in an explicit, formal theory — it consisted entirely of hand-waving references to an implicit and informal view, critical examination of which was never invited.
    Methodological individualism, I suppose, was in the nature of a presumption or point-of-view, but it was very much explicit in Chicago School theorizing. It also sharpened the edges of a lot of destructive propaganda.
    Near the end of his life, James M Buchanan gave some talks reflecting on how Friedman’s generation of the Chicago School had differed from the old Chicago School of Knight and Viner and Simons, in the context of the origins of the 2008 GFC. His views are very interesting for being perhaps unexpected. Barkley Rosser linked to a paper I have in my possession but seems to be no longer available on line.
    This YouTube is close.

    • Thanks Bruce. Interesting reading!

    • I have just completed reading Nancy MacLean’s book Democracy in Chains that traces Buchanan’s beliefs set and relationship to Charles Koch as they put in place the propaganda structure to manufacture the consent of people to shift from social democratic values to our present age of Neoliberalism. The roots in libertarian thinking is included in her analysis and of course his ridiculous Public Choice notions.

      Not a shred of empirical evidence or research in his work and one of the best examples of how reified theories get promulgated and adopted by so-called academics and faux scholars and are then disseminated into society as gospel.

  3. “The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”
    John Kenneth Galbraith

    • JKG — spot on as usual 🙂

  4. The term ‘propaganda’ has some baggage, and is most often associated with ‘black’ (evil) propaganda. It seems that the propagandists were “rendered incapable​ of seeing reality from any other standpoint’ and hence they honestly thought it was good ‘white’ propaganda. Their mistake, I think, was in being insufficiently humble and not exposing their ideas to criticism, and ignoring or rubbishing the criticism that there was. I have often been accused of similar attitudes, but I try. (I am certain of nothing but uncertainty, but still I go on.)

    • Well, yes, but you as a statistician, and mathematician, logician, give it a whole conceptual definition, and not general criticism,that lead, nowhere. Be just, as I suppose you’re at work. Be careful ,precise as at your at work,and give arguments not sweep criticism.

  5. As far as I am concerned the REAL economics of the future probably already exists…but only on “paper”

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