A nice little video of Steve Keen discussing his book Debunking Economics: The Naked Emperor of the Social Sciences (now available in a new edition), which is mainly a critique of neoclassical economics. Some interesting remarks on Walras and mathematics in economics.
My god, I found that abysmal.
ReplyDeleteI can't believe you raised my expectations so much by showing somebody who was going to show holes in neoclassical ideas, and then crushes them. Because all I saw was political activism and rhetoric, not the clever dissection of wrongful economic ideas that I expected.
Yeah, neoclassicism is probably weak in its idea of marginal product determining pay for work. Except Steve Keen promotes using the political process for determining pay for work. What a ridiculous non sequitur.
There is no third party mechanism for determining who should be paid how much. And there is no sense, reason, or rationale behind creating one. All that happens in the real world is that a subjective idea in the employer's mind of how much he should pay his employees determines how much he should pay him. Our conversation ends here.
Professor Keen should have simply said that the neoclassical GOAL of more pay for more productivity is arbitrary. Instead, he says that the political process must be adjusted to fulfill that ***neoclassical goal*** more easily.
What is funny is that economic activists want to use government intervention to achieve neoclassical goals. In trying to reject neoclassical economics, they turn around and use neoclassical value judgments.
I would have said that distribution of wealth (output) IS a political decision. The justification for how it is done could be moral, not dereived from economics.
ReplyDeleteAnyway, you have a nice defence of the need for real wage growth here from Bill Mitchell:
ReplyDeletehttp://bilbo.economicoutlook.net/blog/?p=16325
'All that happens in the real world is that a subjective idea in the employer's mind of how much he should pay his employees determines how much he should pay him.
ReplyDeleteThis is false. Wages are determined by bargaining power, which employers have most of the time as there are fewer of them (capital is scarcer than labour).
'What is funny is that economic activists want to use government intervention to achieve neoclassical goals. In trying to reject neoclassical economics, they turn around and use neoclassical value judgments. '
The idea of government 'intervention' only makes sense in the skewed world of neoclassicism. Neoclassicals accept 'intervention' in the form of immigration restrictions, slave labour laws, limited liability, private property and whatever else as part of the 'free market', but consider other things as outside their scientific definition.