There is much of economic theory which is pursued for no better reason than its intellectual attraction; it is a good game. We have no reason to be ashamed of that, since the same would hold for many branches of mathematics.
My job was to teach the whole corpus of economic theory, but there were two subjects in which I was especially interested, namely, the economics of mass unemployment and international economics.
My interest in economics has always been in the whole corpus of economic theory, the interrelationships between the various fields of theory and their relevance for the formulation of economic policy.
The notion that a society could be regulated entirely by market forces is a utopian fantasy: an impossible dream generated by imagining what the world would be like if everyone's behavior was utterly consistent with some abstract moral ideal-in this case, economic theories that assume all human action is based on calculating, systematic, (but scrupulously law-abiding), greed.
I imagine you already know that I am much more socialistic in my economic theory than capitalistic. And yet I am not so opposed to capitalism that I have failed to see its relative merits. It started out with a noble and high motive, to block the trade monopolies of nobles, but like most human systems it falls victim to the very thing it was revolting against. So today capitalism has outlived its usefulness. It has brought about a system that takes necessities from the masses to give luxuries to the classes.
If, of course, one builds into the concept of an 'individual' all that Professor Hayek does in his Road To Serfdom, Individualism and Economic Order and many other works, which is, to put it briefly, the whole of laisser-faire economic theory, then plainly man as such a programmed predator has very little interest in being fraternal, or very little chance.
Positivism eliminates any kind of natural law principle - for example, that there are economic laws which can be transgressed only at your peril. With positivism, there is a tendency to leap into ad hoc economic theory.
One of the big take-aways from a lot of economic theory is that people should engage in consumption smoothing.
For Marx, 'pure' economic theory, that is economic theory which abstracts from a specific social structure, is impossible.
People tend to be clueless about prices. Contrary to economic theory, we don't really decide between A and B by consulting our invisible price tags and purchasing the one that yields the higher utility, he says. We make do with guesstimates and a vague recollection of what things are “supposed to cost.”
Two factors explain our success. One, MIT's renaissance after World War II as a federally supported research resource. Two, the mathematical revolution in macro- and micro-economic theory and statistics. This was overdue and inevitable, MIT was the logical place for it to flourish.
Besides, we weren't made to battle villains, because there weren't any. No nation, creed, or race was any better or worse than another; all were flawed, all were equally doomed to suffering, mostly because they couldn't see that they were all alike. Mortals might have been contemptible, true, but not evil entirely. They did enjoy killing one another and frequently came up with ingenious excuses for doing so on a grand scale-religions, economic theories, ethnic pride-but we couldn't condemn them for it, as it was in their mortal natures and they were too stupid to know any better.
As far as social-economic theory is concerned, I am still a Marxist
Conventional economic theory... counts the depletion of resources as the accumulation of wealth.
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