by Ghassan Kadi for The Saker Blog
Economics is not a science. Economics cannot be expressed in mere reproducible and predictable mathematical terms as in the case of physics.
Physics and mathematics are subjects and manifestations of the Universal Law (Logos in Greek), whilst economics is a human-made system that is based on greed and fear. The father of economics Adam Smith in his famous book “The Wealth of Nations”, tried to establish economic “laws”. These “laws” are still acceptable 250 years later, but those “laws” are not more than indications that point to probabilities rather than the accurate predictability that physical laws provide.
Economics is made to look like a very complex field of knowledge that only savvy and seasoned economists can dare try to understand. What makes it look dauntingly difficult, especially by those who never studied it, is that not only its so-called “laws” are elastic and unpredictable, but also because of the vagueness and mystique that surround it. Where both vagueness and money converge, enter individuals and nations that are greedy enough and powerful enough to capitalize on the shades of grey in their favour. Thus far, they have been able to commit the worst kind of theft that exceeds by far any corporate theft ever exposed, let alone possible.
Simply put, the world economy is based on keeping rich nations rich and poor nations poor. This is a fact, but there is no law of economics that explains this and/or admit it, because the so-called “laws” of economics have been set in stone by the rich nations. And even if economics acknowledges such inequities, given that its “laws” have a total lack of morality, such profiteering would be regarded as smart business and successful marketing.
We are told that the value of any country’s currency is a reflection of its wealth. Wealth is, or at least used to be, described in terms of the country’s resources, manufacturing base and exports. When historically powerful nations had little resources to generate more wealth, they developed their manufacturing industries and ventured overseas, captured colonies, robbed their resources and turned them into raw material that their industries could use to generate export and wealth.
Yet now, many of those same former colonizers have little or no resources left, little or no manufacturing base left, little exports, but they continue to be considered wealthy and their currencies still rank high. They have high “Gross Domestic Products” (GDP) and high “Per Capita Incomes”. This is in total contradiction to the “laws” of economy that define what makes rich nations rich.
On the other hand, there are many nations that are resource-rich and have very a strong manufacturing base and high exports, but yet they are considered to be poor. This is also in total contradiction to the “laws” of economics that define what makes poor nations poor.
It is not a secret that industrial giants like say, Nike, pays its Vietnamese manufacturer $2-3 for a pair of shoes and then sells it for $100. The virtual slave labour context is well known. What is rarely ever spoken about however, is the decision of Western nations to keep the currencies of poor nations low in a deliberate attempt to keep them poor and to make sure that they can be used as cheap manufacturers in order to feed their own greed and remain looking wealthy.
Globalization comes into the scene to give this inequality longevity and sustainability, and of course favouring the wealthy nations and maintaining their status quo. One US Dollar could be worth 20,000 Vietnamese Dongs and what buys a standard service, say a hair-cut, in Vietnam would not be enough to buy a hair-cut in the USA as the currency values are so different, but globalization does not allow poorer nations to base their economies on their own income standards.
A worker in Vietnam or Indonesia is paid the hourly rate dictated by the economy of his country, but the purchase power of his Dong and/or Rupiah is dictated by the token value that wealthy nations decide to give those currencies. This is “justified” by giving many guises and names that fraudulently reflect honesty and transparency; names that also underpin a system of rewarding achievers. They use terms such as “free economy”, “free trade” “open market”, “competitiveness” and “laws” such as “supply and demand”, all in a manner to sugar-coat such inhumane discrepancies with a veil of lawfulness and justice.
Whilst the relatively new economic term “Purchasing Power Parity” (PPP) accounts for discrepancies in local cost and productivities based on local and domestic parameters rather than international ones, in real terms, it does not put food on the tables of poor nations and does not feed empty bellies. In real terms, it is nothing short of a “feel-good” potion and does not get reflected on poor nations’ standard of living and international economic status and clout.
But when the worker of a nation with a low exchange rate goes to buy basic commodities including food, globalization implies that he/she would have to pay the international price for rice, wheat, sugar, fuel, and medications. Even if some of those commodities are produced locally, international prices apply, unless they are subsidized by one’s government
On one hand the income ceiling of the worker is lowered by the perceived international value of their national currency, and then on the other hand the purchase power of his/her income is dictated by global terms.
The system of world economics pays in Dongs and Rupiah and charges in US Dollars.
GDP’s and “Per Capita Incomes” of nations are no longer based on the real wealth and productivities of nations, but rather on arbitrary figures that powerful nations deliberately implement in which they overvalue their own productivity and undervalue productivities of poorer nations.
And in an atmosphere of diminishing Western industrial output, how do wealthy nations manage to generate high GDP’s, one may ask? Well, they resort to many tricks, including “recycling” cheap imports. For example, a Belgian businessman can import T-shirts from China at $1 each, and then resell them for $20 each. The proceeds of his sales turnover are accounted for in Belgium’s GDP, when in fact the actual productivity was imported.
Once again, wealthy nations hide behind the façade of economics to justify such discrepancies. They also use terms such as “developed economy” to hide the crime of allowing themselves terms of reference that have “explanations” in the “science” of economy. They thus give themselves higher economic standards over nations that are doomed to have “developing” or “under-developed” tags. If those terms are stripped down to the core, all they imply is a new form of colonialism, slavery and inequity that values products and services not on their true value, but on who provides them to whom. Such terminology furthermore makes it look like it is due to their own fault and poor economic management that “under-developed” and “developing countries” are in the predicament they are, and that the onus is on them to develop their economies.
But this is not all. International prices of commodities such as sugar and rice are indeed subject to international competition, but the price of fuel is not.
Fuel that drives all engines of productivity has a price that is by-and-large fixed and dictated by oil-producing countries and greedy cartels like OPEC. For decades, OPEC had a virtual monopoly and a licence to price-fix the world’s most vital commodity, until non-OPEC producers came into the scene. But to say that current fuel prices are just and equitable would be a far cry.
The wealthy nations of the West run on the principles of “free economy”, “open market”, “free trade” and “competition”, but yet the very same West that does not allow monopoly and price-fixing is one that endorses and feeds from price-fixing of petroleum products. Domestically, high fuel prices incur high taxes and high revenues for Western governments, which of course hurt the poor sector of the Western communities the most. And internationally, high fuel prices mean that poor nations remain poor.
If the whole world had a unified and equitable economic system and the term “global economy” were a positive and constructive reality, a visit to the dentist or barber should cost the same worldwide. Reality dictates otherwise. What reality dictates is that when a barber who charges 50c for a haircut in Mumbai goes to the petrol station or the pharmacy for example, without government subsidy, he’s likely to pay what a New Yorker pays in US Dollars.
And if there were a face for the global economic thuggery that the world is reeling under, it has to be the US Dollar. Some may argue that it is the banks, the Rothschilds, and whilst this is true, the vehicle of extortion and theft is the US Dollar. When a taxi driver in India goes to fill his tank, he is inadvertently having a transaction in US Dollars, and not one directly with the Rothschilds.
It is quite ironic that the US Dollar continues to have clout at a time when America has huge economic problems. Yet, with all the crippling debt, declared and undeclared, a debt that some pundits estimate to exceed 150 trillion dollars, for as long as the “Green Back” is the preferred world reserve currency, America will continue to be able to “weaponize” its currency. In doing this however, and in imposing sanctions on other nations, America is inadvertently speeding up the process of its own economic demise. With trade and other organizations such as BRICS, the SCO, the “Regional Comprehensive Economic Partnership” (RCEP), many nations are looking for ways to liberate themselves from dependency on the US Dollar. Even the EU is feeling the brunt of the heat and searching for alternatives.
In the absence of a globally-accepted alternative, China, Russia and India are literally digging for gold and stacking it up in tons, hundreds of tons, thousands of tons. No one really knows how much physical gold they have acquired. What is clear is that all three nations, are trying to find ways to protect their economies. And given China’s economic stature that currently supersedes that of America on PPP basis, the Renminbi (Yuan) is not far from replacing the Green Back as the world’s preferred reserve currency in its own right, but the Chinese are not taking any chances, and are accumulating gold.
In doing so, China, Russia, India and many other nations are selling off their US-Treasury Bonds and replacing them with gold, physical gold. All the while, the USA is propping up its failing economy by printing money.
The current system of world economics is bound to implode and collapse. Recent financial crises are a clear indication. Whatever is built on unjust laws is bound to lead to its own destruction. Notwithstanding the achievements of European Civilization and the industrialization that came with it, greed is taking its toll and giant corporations are now undermining the same foundations of economics upon which they have built their empires of former colonial wealth. The current façade of surrogate wealth cannot last.
Many analysts foresee that the economic demise of America is a question of time, and predict that it will happen gradually. I do not profess to be an economist, but it doesn’t take an act of genius to believe that it is possible, just possible, for the house of cards that is terminally infested with termites, to just tumble and crash when its foundations can no longer carry it.
In more ways than one, this situation reminds me of a rather different, but yet similar, scenario. The former presence of Israeli forces in Lebanon was unsustainable. Something had to give. Then one morning, on the 25th of May 2000 to be exact, Lebanese people in Israeli-occupied territories woke up to realise that all Israeli forces had withdrawn overnight. I foresee a repetition of this scenario when it comes to the American economy. A time will come when America will no longer be able to print more money. A time will come when other nations of the world will dump the US Dollar. And when such events happen, just like puberty, they don’t happen gradually.
The world has been conditioned to see todays’ version of economics as a science, as a fixed mark that explains and predicts financial transactions and their destiny. Moreover, the world has been conditioned to believe that the “laws” of economics are reality checks, both pragmatic and fair, and losers have to only blame themselves and try harder, because if they do, they can be up there with the winners.
This is a fool’s promise, one that is akin to blaming victims of crime for their misfortune.
The future of what we now perceive as economics is destined to follow the path of systems that preceded it, and perhaps, hopefully, in time, humanity will look back with amazement and disbelief that such a draconian system was adopted by humanity and accepted as a guiding light that gauges their productivity performance.
“Economics is made to look like a very complex field of knowledge that only savvy and seasoned economists can dare try to understand. What makes it look dauntingly difficult, especially by those who never studied it, is that not only its so-called “laws” are elastic and unpredictable, but also because of the vagueness and mystique that surround it. ”
There should be second opinions consulted about this topic, like Prof. Hudson and others known or mentioned on this blog. They might respond with comments about the institutions, policies, laws, enforcement, of respective countries. Economies and economics are more predictable and do make more sense than Ghassan Kadi is describing. And it is also no doubt that there are various junk economics schools out there also.
In most cases Mr. Kadi’s take on economics is correct. They not reproducible, nor divorced from the normal environment, as say Boyles Law, or Gravity.
Economics is just one method of storing created value. Trading value for better or another value is still storing and using value.
Perhaps You could tell me what you use of economics would be in a deserted world, where a few people till the soil by hand to yield enough food for now and the coming winter – but no more.
A world where travellers bring a few other goods for barter – direct one on one value.
The thing is, that in itself would be an economy of sorts, just not the one developed hand in hand with the development of the Industrial revolution [in my opinion one of the greatest disasters to hit mankind].
The modern view of “economics” belongs to the modern Anglo American Fascist Empire world view.
There are others.
China lifted 600 million people out of poverty. This was not an accident. It was a result of direct application of known economic principles, that do work, as evidenced by results in many countries over the past two centuries. Ask Dr. Koenig. There is much more predictable than you, or Mr. Kadi are presenting. Iran is using these principles also, and the west does not like it, and so all the efforts to crush it.
Sure, China has done this by replicating the US model to some degree and exploiting other poorer nations, particularly in Africa and SE Asia. Without the resources of those nations China would not have been able to get it’s own population out of poverty. And when that Chinese project is done, African nations will have no exploitable continent for them to raise themselves out of poverty. And, in the end, all modern standards of living are based on non-renewable resources, and thus unsustainable. Assuming infinite growth on a finite planet was the first mistake of economics.
That is not all economics. See ecological economics. There is a problem showing up on this thread, several people are thinking that all economics are the same. They are not. Ask Peter Koenig, and others, Steve Keen, etc.
Not buying it. China is not ruining Africa.
Exploiting poor nations?
China even forgave some of the debt of poorer African nations while China actually have the right as their creditor to seize their assets.
Your comment is based on prejudice and malice, not based on fact and reality.
Sounds to me that you’re another sore loser, envy of China’s success in Africa and Southeast Asia while your incompetent country is unable to do the same.
That’s it, China is winning, and has said it is going to be supporting development in ‘global south’, Africa, etc.
And there are huge differences between the Chinese system and the US model. Opposites. The US system has/had extensive give aways of mineral, timber, and huge land areas to oligarchs. & the US finance system has always been private.
China has extensive central planning vs US is basically private/corporate/oligarch control. The Chinese finance system is tightly controlled by the government to prevent the abuses of private system as in US, UK, etc. This the US propagandists hate, and are continually complaining about the ‘debt fueled’ Chinese miracle, trying to distract attention away from the truth. Face The Fact has it right.
China does NOT ‘exploit’ African countries. It trades with them, lends them money, builds massive infrastructure for them, including road, railways, schools, hospitals etc, and educates thousands of Africans in China. Cheap Chinese mobile phones have revolutionised African communication and commerce. And China often forgives debt, unlike the thugs of the Western ‘Washington Consensus’s’ ‘economic hit-men’, the IMF, World Bank etc who have used odious debt, over and over again, to impose austerity, foreign take-overs and privatisation theft on African countries. That after centuries of vicious imperialism, numerous genocides like that in the ‘Belgian’ Congo, and now the threat of the US Africom military apparatus.
I agree. This economic system is not reproducible science. Gerald Celente a very well known trend predictor and quite accurate said he believed the U.S. financial system would tank in 2014. It didn’t. He said that he had no idea they, the international bankers, would pull out of the hat a new trick; QE. This is all manipulation. A system based upon debt that we can never escape. Those pieces of paper we carry are not money, as we are led to believe. They are really debt notes. They have no intrinsic value. I have one question. WHY does the world need a reserve currency which only vastly benefits the country who holds that title and punishes everyone else? The sooner one nation after another abandons this current U.S. dominated weaponized currency the better off they will certainly be. Being in Canada, I’m sure when the U.S. financial system meets it’s end, we are going to suffer bad. But for the good of humanity, let it be soon. Russia, China and other countries are on a very exciting path. I would like to see them speed it up. They are correct to be storing gold. But caution is in order. The Empire does not like this competition and threat to it’s dominance. They are bound to react violently if need be, and as they did in Ukraine when they created the coup, they will come and steal all the gold they can get their greedy hands on, because quite frankly, I don’t think the Empire has much or any gold of their own.
I agree with you. The US wants to ensure that the US dollar is the chief reserve currency in the world. Hussein in Iraq and Khadaffy in Libya wanted to abandon it’s use, and we all know what happened to them.
It is indeed debatable how much gold the US has, bearing in mind those articles on the Internet which state that in Fort Knox the only “gold” available is tungsten covered by a thin layer of gold. When Yanukovich was overthrown in Kiev in 2014, 33 tonnes of Ukrainian gold ended up In New York. As for Russia and China, the article is indeed correct. Nobody knows how much gold they really have, certainly much more than they want to admit. There is no question that both are playing the waiting game, waiting for the appropriate time to introduce gold backed currencies.
It is easy to understand why or how the system did not tank when Celente predicted. For this, one needs to read people like Bill Black. “The crash point is political” – Michael Hudson.
Sure whatever you like to believe in anonymous troll.
Have you read Bill Black? Or Hudson? Anyone can put any name they want on their posts. And so without links, and verification, all posts are anonymous, except Saker, the site moderator, Scott (humor), and maybe a few others.
‘Mike’ – another anonymous, whatever you like to believe, confirmation bias. There are real data to look at, that tells you what is going on, but if you’re not looking, you won’t see it.
Unless you know what ‘a rolling loan gathers no loss’ means, then you won’t get it. This is at the heart of the problem.
Debt. Debt. Debt. The financial coup detat in 2008 was the surrender by western sovereign governments of their people to the bankers.
“If I could borrow at ridiculously low interest and never be obliged to pay the principle, I’d certainly be tempted to do so”.
If it is not intended to be repaid then it is not debt: it is a perpetual income disguised as debt. It is not debt. It is the implementation of a sophisticated form of feudalism.
The future productivity of people is being securitised and sold off to oligarchs.
Politicians are selling the citizenry to people who print debt/money out of thin air.
Government bonds are the titles to slaves referred to as ‘tax payers’.
In 2007 the limit of the financialisation of people/businesses i.e treating them as targets for debt expansion and profit via interest payments, reached its limit and imploded, deliberately. In 2008 western governments ushered in an era of debt expansion whereby the same banks lent to the government to prop up their otherwise zombie economies. Some of them bought national assets directly, such as in Greece, Spain, the US. In doing so the banks, BIS, Bilderberg members, central banks, etc moved from financialisation of populations to commoditisation of populations. Before, you were the target creditor, with power and rights (to default, renege, withdraw your capital as cash). Now you are the trade.
Population as commodity is the economics of today. It leads to bail-ins, cashlessness; data collection to amass the most detailed cohort profile, for sale; the maneuvering of group minds; spheres of influence; supranational global corporations; one world finance.
In the absence of real economic growth based on adding value to raw materials or agriculture, to pay interest government debt must for ever expand until it reaches territorial and population limits. Ultimately this leads to confrontation and war against the resistance, namely war against families that won’t have their children sucked in, against faiths that direct peoples gaze to independent power; against nations who have unexploited assets and that protect the sovereignty of their land, border and population; against nations that resist the mechanisms (reserve currency privilage) that powerful debtors use to secure cash from weaker nations to pay off their interest.
Here we are folks. Don’t let them shackles chafe. If you let your Christianity go for shits and giggles, or your parents did, then this governance without counterbalance is what you traded in for.
If economics were true then why are usa and uk not bankrupt for last 25 years when these bankrupt countries print money at rate of 86 billions folkar a month fir last 10 years.?
One thing obvious from this thread is that people are not reading enough. There are lots of authors that give insights from experience in various parts of the system. There is a ‘forensics of economics’ view, analyzing the different schools.
BS, economics is a scam plain and simple, you anonymous troll.
“Fallacy of Western Economics,” reiterates the usual mis-interpretations of Adam Smith. Supposedly, Smith places avarice at the core of his economic thought, praises free trade and many other dubious ideas.
Were Ghassan Kadi to read “The Wealth of Nations,” he would discover Smith places the well being of farming, specifically small farms, at the center of national wealth. And what about capitalists? The word was not yet invented, but Smith uses the terms “merchants” and “manufacturers” and for them he has only censure — maintaining that the interests of this monstrous group run exactly counter to the benefit of society as a whole.
For example, a booming economy raises wages and land rents, thereby lowering profits to the mercantile class. For these US Chamber of Commerce predecessors, a slow ruination of the economy suits best, such as the United States experienced from the 1970s on.
Smith’s advice to the public and government is to examine any proposal from the mercantile class warily — “with the most scrupulous, the most suspicious attention. For it comes from an order of men whose interest is never the same as of the public, who generally have an interest to deceive and to oppress the public, and who, accordingly, have upon occasions, both deceived and oppressed it.” page 219 – 20 Wealth of Nations, Prometheus Books; Amherst, New York 1991.
This article seemed to speak very little of Adam Smith or his writings.
Again anonymous troll post that with your real name, otherwise you are just one more paid online hack or delusional believer in the big slavery scam called corporate western capitalism.
I have a degree in economics from an English university and have worked for investment banks in the City. I spoke to a few other friends with degrees in Economics from LSE, UCLA etc – we all agreed we haven’t learned anything useful while doing these degrees. It took me a decade or so to unlearn all the BS they taught us – basically all about how great and inevitable it is to steal from the poor and to give to the rich…
I think anyone can learn much more from these 2 -3 books about how the world economy functions than from doing any degree in Economics anywhere:
I’m glad to see Naomi Klein’s Shock Doctrine on your list. Its one of the books on my short list of books that I’d recommend to people if they want to understand the world. Highly recommended. I’ll have to check out the other two books since I know one on the list is very good. :)
Wow… I could’ve written that comment…
I read that book when it first came out in print version, but also have it in pdf on all my devises (phone, iPad, etc)…
Have spoken with economists about fundamental principles, even recent economic events such as consequences of increases in money supply, and they stick with the the principles they learned at Uni – do x and y happens – until you start discussing graphs of the 2008 bankers coup d’état and its aftermath.
it’s not really a science – more like a predatory cult/religion led by well-connected greedy psychopaths who keep changing definitions of everything as it suits their thievery.
I read in the book listed below how although crony capitalists pretend Adam Smith is their patron saint – they actually do the exact opposite from what he preached:
Thanks for you ‘confession’. Perhaps you could add another book to your list: Confessions of an Economic Hit Man by John Perkins.
I wanted to add it but though the list would be too long. Also Michael Hudson’s other very informative book:
not just that it’s all fake ‘science’ but they also find ways to rewrite history, change definitions and meaning of words and concepts…it’s a fundamental and widespread, multi-dimensional fraud
International monetary economics is based on:
– Creating money out of thin air which is enforced by the banks and the governments.
– Usury, making money out of money. A brilliant method to keep the rich richer and the poor poorer. A method that has been forbidden by all major religions since the begin of time.
– First and second points equal money being created out of thin air that makes more money. Its a brilliant setup if your evil and trying to suck the sweat and blood of as much people as possible as fast possible.
About the bit about israeli invading *with intent to colonize* lebanon (greater israel anyone)
You make it sound like somehow it happened magically and somehow the ever rational zionist realized that they bit more than they could chew.this is really misleading because it was a bloody drawn out tug of war and lots of sacrifices were made by the lebanese that made it possible.
Besides that great article especially. this “Such terminology furthermore makes it look like it is due to their own fault and poor economic management that “under-developed” and “developing countries” are in the predicament they are, and that the onus is on them to develop their economies”
The Economic Sciences (to borrow the Riksbank Prize terminology) are analogous to the political sciences:
quantitative relationships do exist, and predictions can be made, sometimes with accuracy.
However, as a branch of the social/behavioral sciences, economics is at bottom as scientifically predictable as human behavior and, at bottom, is similarly based on opinion, persuasion and force.
To be uncharitable, one could even say economic science is based on fraud and violence… though that is not the entire story,
William, I would like to comment on “predictions can be made”. This is a controlled system, where small clique decides what their next move will be, so they can steal the wealth of some naive fools, who believe that “investing” in the market will make them rich. Well, until clique decides to pull the plug on some segment of economy, which they call it unfortunate and unforeseen event, which requires government’s intervention, which in turn steals taxes allocated to some social programs.
So, predictions are not made, just pre-planned market manipulations. These guys are not wizards.
Otherwise, Ghadi is spot on on the “economy”, which has never been a science.
Simple Economy can be summarized by the formula:
NetIncome=Investment + Work + Luck – (incurred costs)
This is how it worked for millennia for the farmers and manufacturers (honest work)
Luck means good weather and not being robbed by whoever.
Anyone who actually did any manufacturing knows that manufacturers at the end of the day end up with very little (usually single percentile) net income. Until, we get into major thieving, like internet companies (offering shares for selling “vaporwear” otherwise known as nothing. Or other thieving schemes.
Not only economics but all the other components of the intellectual framework of the Empire will also crash.
People will ask themselves- Did I really believe that?
People will be embarrassed to say that they studied at an elite US university- especially economics and MBA.
When the empire collapses.
I believe Marx and his followers had an appropriate understanding regarding “economics.” In this sense; there is no such thing as economics. What it should be called is “political-economy.” Realistically they are inseparable. This essay proves the point very well. It is bourgeois fascism to assume one can separate economics from politics and have it stand alone as if economics was not driven by politics. I suggest that anyone who uses the term economics as if it is a discrete subject of its own is wittingly or unwittingly adopting a bourgeois ideology.
Very well said! Let’s read Marx, Capital is available for more than a century, folks!
I believe this the essentially the position of John Kenneth Galbraith.
Economics is joined at the hip with politics.
It always has a political aim.
Hi Katherine; Notice how powerfully the bourgeoisie buttress their denial of this obvious fact. They are always reifying “economics”. The propaganda here is massive and incessant. For example the Scandinavian banking bourgeoisie invented a completely phony Nobel Prize in “economics.” Now people actually believe you can get a Nobel prize for this bullshit. The whole thing is a propaganda exercise that has no real relation whatsoever to the Nobel committee. It is nothing more than bankers lies. The separation of economics from politics is just another satanic game of divide and conquer.
Interesting comment. One of my courses was exactly called Political-Economy and it was based on, you can guess, communist theories. Interesting course using basically Marx’s theories. My kid’s godfather majored in Political-Science, which in no lesser terms dealt with Political-Economy , because Economy is totally dependent on the Political System. Later on I took some Economy courses as well. We could go on and on trying to explain, what Economy is and what is not. And anyone trying to tell us that Economy is a Science is “full of something and even his eyes are brown”. The books are full of various formulas, which actually mean nothing. The computer predictors get plugged with various info, which also means nothing. Because at the end of the day, there is a bunch of guys who decide on how they can make more money out of all of us, and this is how it works in reality.
I believe it should be ‘political psychological economics’. To ignore the psychopathology of the ruling capitalist parasites, with their insatiable greed, hatred of others, massive egotism and contempt for Life on Earth is a grave mistake. These are evil and immensely dangerous creatures.
I tried to take a course in macro-economics, and as an otherwise a physics student I became very frustrated with economics. The macro-economics text would explain one theory, then explain exactly the opposite theory. Completely opposite notions on consequtive pages with the author trying hard not to say one was correct and the other was not. I quickly retreated back to physics.
I once had someone explain to me why potholes in roads were good for a nation’s GDP.
If the state goes out and fixes the potholes, then simply the amount spend to pay the workers and for some stone and pavement is spend by the government.
If the state does not fix the potholes, then auto repair shops make an income fixing cars that hit the pothole and break. The companies that make the replacement tires and suspension parts for cars get increased sales, It even leads to the sell of some entire automobiles, sometimes brand new ones, asa driver decides this old piece of junk isn’t worth one more repair after they smacked the giant pot hole on S. Main Street.
Of course,a sane society wants to fix its potholes, as its better for residents and its better for truckers to have safe roads. But, economic statistics says don’t fix that pothole!
That applies to the pharmaceutical industry as well. There’s no profit in cures. Didn’t Goldman Sachs even admit this recently? What a sick world – excuse the pun.
It applies to computers too.
Create viruses and you have an antivirus industry.
Better than digging holes and filling them in, I suppose.
Consider astrology as a comparison to economics: it use more science more accurately than anything in economics does. Astrologers work from a large data base through long periods of observation (a great starting point for science) and are able to predict with accuracy the positions of the planets and stars of the zodiac both as they were in the past and as they will be in the future.
As for economics, it simply uses invented math formulas based on sterile presumptions of a perfect independent market force – formulas based on how they think things should work rather than as how they are observed and recorded over time…meaning it has less validity than astrology…..
Having said that, the demise of the dollar is anticipated, an action for the better, providing the U.S. does not literally go ballistic over its failures.
Poor old Adam Smith, he does get a poor press. In fact his theories were the beginning of the British classical school of political economy; and following in Smith’s footsteps were David Ricardo, Karl Marx and John Stuart Mill. The real villains of the piece were the neo-classicists who came into prominence in the late 19th century. Stanley Jevons, Alfred Marshall and Leon Walras. According to these esteemed gentlemen the economy is a self-adjusting mechanism which will tend towards equilibrium if left to its own devices. This has been the orthodoxy that has dominated economics ever since. There have been challenges to this dogma from later theorists such as Veblen, Schumpeter and Keynes, but apart from the brief period of Keynesianism 1945-71 the neo-classical fortress, which has given the world globalization has, stood firm.
The cannons of neo-classicism can be contrasted with those of the catholic church: these are established in academia as well as the financial media, with publications like ‘The Economist’, ‘The Wall Street Journal’ ‘The Financial Times’ and the various gurus such as Krugman, Summers, et.al. Moreover the global instutions of capitalist/imperialism, i.e., the IMF, WTO World Bank are fully on message with the same belief system.
It is significant that no graduates from the economics department of university has any – or at best scant – knowledge of the history of economic thought. This is not even taught any more. Thus generation after generation are imbued with the same nonsensical nostrums, which even at the time were wrong. which have become set in stone ever since 1870. We need a revolution!
I dumped conventional economic and business thinking over a decade ago. Conventional business thinking is based on a series of myths and economists have little idea as to why a national economy declines or how to address the decline. Given this their policy prescriptions, particularly in most countries are proving to be disastrous.
The thing that drives wealth has always been the application of technology. The understanding and validating of technology can be grounded in absolutes and fundamentals (laws of physics). This provides the foundation in terms of understanding real ‘value’ generation in a finite and highly competitive global economy. Only then would you commit other resources – funding, R&D, skills, etc. to realise the outcome – to create value. Trapped by economic thinking most countries simply financialise – print money in the hope that ‘magic’ happens in terms of increasing wealth.
Mastering technology to manipulate existing markets and create new markets is a fundamental prerequisite to the generation of industrial capacity, jobs and trade balancing. Given US policy makers are fixated on the ‘financial’ the US economy will continue to decline against those national economies where the focus is on technology.
I forgot to add, ”A History of Economic Thought’ by Isaac Ilych Rubin, a very informed and accessible work. Unfortunately for Mr Rubin he was regarded as a Menshevik and in 1937 and was shot on some trumped up charge. The same fate unfortunately befell Nikolai Kondratiev one year later. Stalin evidently didn’t have much time for his outstanding economists. Such were the times, such were the mores.
This is what I’ve come to understand about economics. It’s not a “pure science” as you note like physics or chemistry but a “social science”, a constrained and focussed examination of human behaviour as individuals and communities as related to means of exchange, in the broadest terms. It is not and never can be amenable to any predictive value whatsoever as it ultimately tries to derive its power from the unpredictability of human behaviour and of the environment in which we live. The most important aspects of our lives on this planet it is powerless to explain, as is its behavioural sister, capitalism – for instance happiness, beauty, grief, art, wonder, belief, relationships, love – the huge wide world of human experience which outlies the ability of economics to describe, indeed itsability to even observe. Basing our politics, our societies, our happiness and our future on economics and capitalism is to base these fundamental human needs on a mirage, on a falsehood.
I have in my hand a penknife, it has a few useful functions – it can sharpen a pencil, cut a rope or a piece of cheese, trim my toe nails, take stones out a horse’s hoof, whittle a whistle, at a stretch i suppose you could do an appendicectomy with one, but not a heart transplant, and it’s doubtful you could build a house with one either, The penknife belongs to that category of objects known as a “tool’. Most jobs in the world need a specific tool or tools to complete them properly They are limited in the usefulness outside the parameters of the work they are designed for, they are for the most part severely constrained instruments. I would state that economics, and its sister, capitalism, are also tools, intellectual tools, which we, humanity, can put to work in certain very constrained areas where they might be useful, but as noted above, neither economics or capitalism are of any use whatsoever in making us happy or heathy nor are they any use in describing the 99.9% of every human’s most important experiences that lie outside these constrained areas. Because these tools are limited in their usefulness, it is therefore is blindingly obvious that trying to base our society and indeed our existence on capitalist models, depending as they do on an imperfect and easily manipulated behavioural study as is economics, is not only futile but very, very dangerous. The danger to our well-being from such reliance is evident over many generations of conflict and social mayhem, but to which we can now add the impending destruction of the very biosphere that presently supports us.
You mention Adam Smith, an outstanding intellect of that period of intense intellectual self-examination which we call ‘The Enlightenment”. I would contend that at the age of 200 years and more, this Enlightenment has instead become a millstone around our thinking, or huge blinkers which prevent us re-examiing every single fundamental truth of our existence on this planet. We desperately need a “New Enlightment” based on ecology and true science, and making wise use of the vast amount of knowledge gleaned in the intervening two hundred years. So many of the ideas of the enlightenment cannot withstand critical examination in a world with seven billion people and our one home being plundered and damaged beyond repair. Yet what do we get? Trump, Brexit, the Sprattley Islands and Love Island. It isn’t going to happen now, our capacity for rational discourse seems almost to have vanished.
On a lighter note, my definition of economics:
Economics is a social science, much like criminology. Whereas criminology is the study of greed and corruption in those that have been tried and found guilty, economics is the study of greed and corruption in those that have yet to be arrested.
Superb if grim comment on where we are at, right now.
This is an excellent article that cuts through all the economic BS to the simple facts underlying the whole corrupt system. Economics is organized robbery of the poor by the rich.
Not robbery as such, simply enslavemt…
Human Action – by Ludwig Von Mises. Austrian economics not taught in schools.
In Babylon, the chosen literate ones were set up as administrators of the King. The chosen ones were allowed to interpret the “Kings orders “. The interpretation of the kings orders and not the orders themselves had power. Over the centuries, the power shifted from the King to the interpreter of law. Judges classically were forbidden from using interpretation to benefit themselves. However, the judge used the law to benefit his family friends and class. Eventually, elections replaced Kings but the real power had been transferred to judges. It was a judicial common law system influenced by those who controlled the judges. In most democracies, the judges are appointed not elected. In the US the SCOTUS judges are appointed for life. This is carefully done by design. The judges allow fiat currency by private Federal Reserve even though the US constitution requires gold silver coins by the government. The judges of USA approved of abortion and slavery and gay rights.The puppet countries like Brazil will use judges to ban Lula as the most popular candidate in Brazil from running. So democracy is a myth when real power is in the hands of judges. . The power is with the jude iciary.The corporations protected by Jude iciary will control the many for the few that control the Jude.
There are several points that need to be considered on this topic, such as the engineering view of the economy, no one has talked about. This goes along side with the institutional view. This is typically left out of discussion, as the finance overlords don’t want anyone to really understand economics/political economy. Also, there is environmental economics, not mentioned. There are many useful things that have predictive value, people are looking in the wrong places.
Modern neoliberal economics is not designed for comprehension, it is designed for hiding the truth. Complexity is used to hide truth. There are several authors on this, showing what’s really going on, and how things work, in addition to Hudson, Klein, there are Steve Keen, and others. If people don’t get it, they just aren’t searching.
Lots of great comments about the sickness of prevalent “economics” which is not a science, but a deliberate fraud.
However, far from being a “dismal science” real economic science is the application of known principles of Natural Law (beyond behaviour of the individual seeking self interest in the short term) that have allowed the human race to progress (with many problems) from a scattered population of a few scarce millions competing with animals for food several millenia ago to 7+ billions today.
It is how we take the accumulated knowledge of the past generations of human beings and improve on that knowledge to give succeeding generations more potential for more scientific discovery, more truth, more material and spiritual well being and so forth. But some sickos hate that process.
The Georgia Guidestones decree a “sustainable” world population of 500 million persons do they not?
That’s the intent behind the worst variants of snake oil being sold today as “economics”.
Whereas the TRUTH, the science lies in HOW a species much weaker than baboons, lions and buffalo found ways to (over time, not in a smooth line,at all local places at all times) to replicate itself and improve its tools and technology and energy sources beyond the conceivable imagination of a specimen of homo sapiens 20,000 years ago.
It was not all one man or one group of dominant nations stealing from as many others as possible, ALWAYS, although a LOT of that has gone on throughout history and is still going on, as the author amply demonstrates.
It was accomplished by the application of principles of the Universe (science) discovered by individual human minds and brought into societal practice by much larger numbers of cooperating human minds, adopting those principles and refining the practices of engineering with which to apply those principles
It is the science behind the New Silk Road and The World Landbridge and attendant thinking, and it has a very good chance of winning out over the erectors of the Georgia Guidestones…and their Age-Old Imperial Dream of a world of very few masters and a severely collapsed number of no longer needed slaves.
However, lacking that overview many dupes of Empire fall into thinking that serves those Fake Masters of the Universe, as they style themselves, and will have none of any more human progress. They are thinking and behaving exactly as their masters have programmed them to think….into eliminating themselves and their posterity, forever. In the Luciferian New World Order.
Despite this disorientation many in society….. and a few here….I am optimistic that that NWO of a severely depopulated planet earth…..will fail in the next decade or so, convincingly, and finally.
Russia alone requires 500,000,000 Russians to make 1/6 of the world’s land surface able to support happier, more cultured human beings.
The US Dollar is actually a banking note issued by the Federal Reserve System. The Federal Reserve System is a privately owned and controlled banking conglomerate. It is not part of, nor is it controlled by the US government. Ultimately, the Fed reports to the global banking system hierarchy under the Bank for International Settlements.
By the way, the “Greenback” was actually a completely separate currency issued by The Department of the Treasury during the Lincoln administration.
Adam smith knew how much pirate england was stealing and looting from India and africa but to hide that he used fradulent theory of supply and demand in name of ” stoken wealth of nation called england”.
259 years later englNd is still stesling 3rd world wealth in form of mobey laundering .
Ghassan Kadi also forgot to mention the rather important fact that when the “Wealth of Nation” was written, UK was using slaves. It’s super easy to “create wealth” using slave labor.
I would like to thank all of the commentators for their intelligent and constructive comments, whether they are supportive of the argument my article presented or otherwise.
I would like to make a special comment to the issue of China, as the rise of China has been used as an example that supports the validity of the theories of economics.
In reality, the initial rise of China as a successful economic giant has been fed and orchestrated by Western corporate greed seeking cheap labour. Such corporations, brought home good news; profit, growth, happy shareholders and good performance on Wall St.
In doing so, those corporations were applying the rules and laws of economics, and they “succeeded”. What they did not foresee was that this success was going to lead to national disasters at home. Their laws of economics do not warn about such sequential developments, and even if the laws did, the CEO’s would still be blinded by their own corporate profit not worrying about domestic unemployment and degradation of their own local industrial base.
And China is not like any other nation. Its high population gives it a demographic clout that no other nation possesses, and there are no laws and rules of economics that warn about this, are there? So when China decided to develop its own technology and industries, not only it was unstoppable by the West because of its might, military might included, but also because the West grew extremely dependent on and addicted to Chinese imports.
It is ironic that America is imposing tariffs and sanctions on China when in fact all that China has to do is to ban exports to America for a month and America will run out of consumer goods; all the way from T-shirts to iPhones. China even manufactures some high-tech hardware used by the military, again because lazy and profit-driven giants like Lockheed have subcontracted Chinese manufacturers to produce them in order to increase profitability.
Where in the rules of economics do we find any rhetoric that alludes to such contingencies that are not merely profit driven and based?
If anything, the rise of China is the outcome of breaking the economic mold and not a result of adhering to its rules and laws. And if anything also, by following the economics rules of growth and profitability, Western corporations have led to the demise of Western economy.
So back to the subject of economics as a whole, the rise of China proves that even if the rules and laws of economics, immoral as they may be, are to be endorsed and accepted as the pragmatic indispensable evil, they seem to only work if nations are in total control of all aspects of economy; including the manufacturing base, and when this fundamental base is lost, the whole economy turns into jelly.
On February 17, 1950, James Paul Warburg confidently declared to the United States Senate: “We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent.”
CLUB OF ROME – 10 WORLD REGIONS
SYNERGIES BETWEEN THE MILLENNIUM DEVELOPMENT GOALS, THE GLOBAL MARSHALL PLAN, THE EU SUSTAINABLE DEVELOPMENT STRATEGY AND THE LISBON STRATEGY.
On 17, September, 1973, the Club of Rome published a report entitled the “Regionalized and Adaptive Model of the Global World System“, which was authored by Eduard Pestel and Mihajlo Mesarovic. The report revealed the Club’s intention to divide the world into ten economic/political regions, called “Kingdoms”, which would unite the entire world under a common leadership. These regions are:
•Australia and South Africa
•North Africa and the Middle East
•South and Southeast Asia
•Centrally Planned Asia
In 1973, the Club of Rome released a report entitled “Limits to Growth“, which dealt with the problem of overpopulation.
In the August, 1980 edition of Fusion magazine, Howard Odum, a marine biologist at the University of Florida, who was a member of the Club of Rome, was quoted, saying: “It’s necessary that the U.S. cut its population by 2/3 within the next 50 years.” He did not mention how this should be accomplished.
During the presidency of Jimmy Carter, a task force was created to expand the “Limits on Growth” document, and on 24 July, 1980, a two-volume report was released entitled “Global 2000 Report” which had been authored by former Secretary of State Cyrus R. Vance. The report, which was presented to President Carter, attempted to project global economic trends for the next two decades, and indicated that there aren’t enough resources on earth to support the expected dramatic increase in the world population. The document says the population of the United States should be reduced by 100 million people by the year 2050.
We have to adapt, to find a way how to survive in the new REALITY.
Economic science is only the mask hiding the simple and ugly reality of Western capitalism: usury.
The power of Western empires, starting with the British one, is based on the power of paper money imposed on the rest of the world. Today the IMF statutes require for all non-western countries members “independent” central banks that their local currency may only be created proportionally to the amount of their foreign exchange reserves (USD). This is why they are debt-slaves, always in dire need of US dollars and forced, just to survive, to undersell their peoples, products and resources.
The Bank of England was founded in 1694 by “private interests”, the same Jewish private interests that financed the Cromwell revolution from Amsterdam. The Federal Reserve followed the same path, this time with the dollar as “vehicle of extortion”, but the engine remained Jewish usury.
Why is the bankrupt US still allowed to borrow money at will from its lenders, when it has a debt that cannot be payed back? Because the project of total Jewish world domination is not yet completed and the US is still their best weapon to achieve that goal. No other country has been built up with a more destructive military machine, financed with limitless money created out of thin air. Remember that the Manhattan project was a Jewish project: most scientists were Jewish, as the project manager (Oppenheimer) and the financial manager (Baruch).
Western economics have a very old tradition, that has always been kept religiously by the tribe:
“For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you.” Deuteronomy 15:6
Well said mazetto ! …The best comment till now.
Do you know why The Book of Deuteronomey has allowed Jews to lend money on interest/usury but not allowed to borrow ?
Because it is the fifth book of the Christian Old Testament and of the Jewish Torah, where it is called “Devarim” . The Jews changed God’s law in order to use usury on others, but forbid it among themselves. God has completely forbidden usury in every original message sent to mankind !
Incredible how such an evil act has been mentioned and made forbidden for thousands and thousands of years, and people still insist that there is no God and insist on destroying themselves by allowing such evil practices.
This article presents a very confused and in my opinion incorrect understanding of economics. India was a super poor country that only started turning around after 1991 when the government was forced to create ‘tax free special economic zones’ where any company was exempted from tax as long as all products and services were exported. That resulted in the formation of what is today a $150B industry that’s pulled tens of millions of people out of poverty and made India the FASTEST growing economy in the world (in spite of the rampant internal corruption that still plagues it). Capitalism does work when governments don’t kill it with regulations. India has stolen hundreds of thousands of high-paying jobs from Silicon Valley and other global capitals and countries. This is pure and basic capitalism … working against the ‘west’. And it’s fair and proper. In fact, it’s the western companies that are increasing their outsourcing work to India at an accelerated rate. That’s a good thing since the world is a connected system. There are many many other points where you’re just plain wrong: eg the usa actually does NOT want the uSD to be the global reserve currency. It is for reasons of ‘debt instruments’. Too much to educate you here but please read the Armstrong blog: http://www.armstrongeconomics.com/blog
“India has stolen hundreds of thousands of high-paying jobs from Silicon Valley and other global capitals and countries” This is not capitalism (in my humble opinion) this is outsourcing ie corporations use countries with cheaper labor to increase their profits. This is mentionend in the article. Thats also the reason China has more or less taken over the US manufacture process. These are exemples of the unfairness and inequeliaty of the current global economic system (which is also mentioned in the article).
Oscar, you are spot on. Let me chip in with an example. Without getting into details, my good friend (retired now), a software guy was writing software (firmware) for some nifty products. At some point, some bean counters in Denver decided that they can make couple of cents by terminating him and farming the job out to India. First of all, Indian “software guys” could only write high level object oriented code for Windows apps. So their development took an extra year (while disturbing my buddy with numerous questions). The Company discovered, after receiving “finished product” that nothing worked. My friend received a panicky call from the “boss” to help them sort out the $hit. Anyway, he ended up throwing the $hit out and rewriting the code from scratch. This is how things work in the “slave” countries.
Again, I say Kadi is right on the subject.