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The Pocket Guide To Understanding The Different Schools Of Economics
From the man who bought you "the shortest economic textbook in the world"; and "13 things Economists won't tell you", here is Ha-Joon Chang's ultimate pocket guide to the differences (and similarities) between all the economic schools of thought.
As Chang discusses in his new book,
Despite what the experts want you to believe, there is more than one way of ‘doing’ economics
People have been led to believe that, like physics or chemistry, economics is a ‘science’, in which there is only one correct answer to everything; thus non-experts should simply accept the ‘professional consensus’ and stop thinking about it.
Contrary to what most economists would have you believe, there isn’t just one kind of economics – Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.
I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, the simple table below should help you overcome your initial fear.
click image for large legible version
Source: Ha-Joon Chang's latest book, Economics: The User's Guide, which is available in stores now
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Where's "Ponzinomics" on that list?
Does it come in two-ply?
Didn't see Oligarchic Neofeudalism on there.
Where are the Monetarists?
Good, fair question.
agreed. i dont think any of those categories adequatly cover what we have going on these days.
Institutionalist.
It doesn't matter because the definitions are wrong anyway
Where are the "Neo-Keyensian Central Bankist"
That is equal to Marxist.
Which shows that people on ZH still don't know the definition of Marxism
Pretty much.
In Washington.
Of course the proponents of each economic belief system deem theirs to be God's Law and therefore to be forced upon everyone.
Except any endorsed, embraced, quoted, utilized, praised or fondled by Obie & Cie., striving for a Godless, statist mankind.
It's there under "Keynesianism".
Keynesian!
Yeah, where is Ponzinomics? And where the hell is Alchemy?
The Austrians would say Gold has to be mined; the Keynesians that they can produce it from Lead with enough time and other people's money.
Where's the "common sense" school?
right after "fed must die"
Come on, how could make an economist make money with the obvious?
Currencies linked to tangibles like Gold and Silver, and the rule-of-law.
Which is why all three of those are toxic to modern economic practices.
Austrians for the Win.
Seem like none of them can address what to do AFTER the sociopaths (the highest evolved humans) win?
At least Marxism gets us to that situation sooner than later.
I don't think brain damage is a form of evolution. Is there any evidence it is inherited? Or it gets passed on through child abuse, so anybody can raise sociopath kids?
Insanity is hereditary, you get it from your kids.
Did not understand that part about tradition though. The only tradition in Austrian school are the methods of examination, everything within the actual theory is up for discussion though. That is the beauty of the work, it's meant to be evolved as Rothbard and Hayek both showed.
This summary is so facile as to be almost worthless. Austrians also believe in the importance of entrepreneurs (Kirzner) and production (Skousen). They are among the harshest critics of the Keynesian obsession with consumption (demand), instead pointing to the importance of investment.
Agreed. It's far too simplistic.
I think entrepreneurs can be considered an exchange, and the most important aspect of any economy according to Mises was the method by which that exchange took place. Rothbard went further into saying that it was whether that exchange was voluntary or not.
So I can see how that summary could account for this chart/graph thing.
I have only read some of Skousen's work at this point, so I can't comment in an honest fashion on it. I'm still drudging through Walter Block's and Gary North's work.... I love Walter's writing style, but Gary's is rather... I think it's his writing tempo and the way it reads that makes me wish it were more like Walter's. Not as bad as trying to read Lew's writing though, boy does he prattle on...
It's a pocket guide fellas.
As I am roughly 800 pages into Rothbard's Man, Economy and State - I currently possess a strong appreciation of simplicity and abbreviation.
Where's the bullshit school?
Printed most days in the NYT by Paul Krugman.
I thought that was the entire chart since economics isn't science, but faith.
In every major university, especially the Ivy Leagues.
Where does the 'Critical Realist' school fit in? Is this the same as the behavioralist?
kleptonomics = steal as much as you can
That's called Feudalnomics, or Banksternomics.
Worked like a charm for centuries, for the Secular and Clerical Elite, as well as the Money Changers. Coming back now as "Feudalism 2.0" (C)
Each school has a Bankster that prints money out of thin air and has control of your life and your government.
Knowledge is the pathway to enlightenment....
"...different flavors of ice cream"...?
How would one even describe the taste of 'Ben & Janet's'??
For most people it kinda tastes like feces.
You forgot the Cluster Fuck school which is what we have at the Fed at the moment.
. FEUDALNOMICS BANKSTERNOMICS
The economy is Classes Classes
made up of…
Individuals are… selfish and rational selfish and rational
but malleable and but malleable and
. manageable manageable
The world is… Ours Theirs for now,
Ours eventually
The most important Production, exchange Exchange & Consumption
domain of the eco- and Conquest via Leveraged Debt
nomy is…
Economies change Capital Accumulation Debt Creation
Through
Policy Hierarchical Control Currency
Recommendations Economics via leveraged
. via Peace & War Cycles Debt Creation, and
. Boom & Bust Cycles
You forgot welfare warfare symbiosis belonging to the red and blue mob family. Wrestlemaniomics?
Where is Zionomics where one tribe gets 99.9% of all wealth?
. REALNOMICS
The economy is Individuals, Groups (definable, segmentable)
made up of…
Individuals are… Selfish and Rational,
but malleable and manageable
The world is… An Ecosystem
The most important Sustained Stability (Principles rooted in reality
domain of the eco- of planet and human nature)
nomy is…
Economies change Incremental optimization and
Through Disruptive inputs (planned and unplanned)
Policy Aspirational, but Reality-based
Recommendations
- Kirk out
The predominant view nowadays is Randian - which I suppose is closest to "Classical" or the Austrian School. The shorthand is that profit is the highest moral good ... or even that profit actually defines morality and in the extreme even your right to exist.
So it would be better if every enterprise posted loses, consuming more stuff than they produce. Make loses a moral inperative and see how many folks survive.
Zombienomics:
All squares on the chart: BRAAAAIIINNNSSS!
Any 'guide' that omits the Hogwart's School of Economics cannot really be called a guide, can it.
No way I can fit that in my pocket.
I have the same thing to say about this summarizing chart as I stated in my comments on the two previous Zero Hedge articles about Chang.
All of the so-called schools of economics are based on compromises promoting the biggest bullies' bullshit view of the world, which is pretty well as totally backwards to being scientific as it can possible be, which is why Chang makes the mistake of saying that "economics" is not a science.
The world is made up of nested toroidal vortices of the flow of energy. Individuals are within classes.
Individuals are biological beings that develop brains with neural networks. There is both genetic and cultural information.
The world is governed by natural laws, however, the inherent limits to measurement make it impossible to make certain predictions.
The most important domain of the economy is the murder system, which backs up the existence of private property, which has its most abstract form as money.
Economies change through cultural evolution. The primary driver is advances in science which enable advances in technology.
Policy recommendations are to become more aware of the system as a whole in order to work towards better dynamic equilibria between the different systems of organized lies operating robberies.
All of the most popular comments posted above focus on the ways in which the REAL world manifests through the dominance of organized crime, as the ways that the government has become the biggest form of organized crime, controlled by the best organized gang of criminals, the biggest gangsters, which are currently the banksters.
The REAL world has almost nothing to do with the bullshit theories of economics, because the real world operates as systems of organized lies, operating robberies, with the privatization of the public "money" supply being the single most important way that the government has become organized crime, controlled by the best organized gang of criminals, which means that there are systems of legalized lies, backed by legalized violence, whereby the government enforces the bankers' frauds. That social pyramid system was described by other comments above as being:
"Ponzinomics"
"Oligarchic Neofeudalism"
and as "Banksternomics"
etc. "the bullshit school."
"Economics" is not regarded as being a science because it is not integrated as general energy systems within other general energy systems. For economics to be a better science, it would have to go through a series of profound paradigm shifts, which appreciated the degree to which the biggest bullies' bullshit social stories have been able to dominate and distort the philosophy of science, as well as all aspects of any sciences related to human beings.
The oldest and best developed social science was warfare. That is what built states, and that was what made and maintained the systems of political economy. However, the essential characteristic of warfare was its success was based on deceits. It was upon that basis that economics was built. There was a continuous development of the principles and methods of organized crime, as the ways that human societies actually operated, as organized systems of lies and robberies, dominated by their biggest bullies within those systems.
The best way to understand how human systems actually operate is to describe them as energy systems which may be described by the principles and methods of organized crime. Warfare is organized crime on a larger scale. In that context, the surviving War Kings built the sovereign states, and the best organized gangs of criminals were able to dominate the political processes, in order to have their systems of legal fictions enacted and enforced.
The structure of the current economic system is due to the more recent triumphs of organized crime, based on the long history of the previous triumphs of organized crime, as the War Kings segued into the Fraud Kings. The current economic system is built on the government enforced frauds of bankers being able to make "money" out of nothing as debts. Upon that foundation has been built up systems of corporations, as layer upon layer of more legalized lies, or legal fictions, which are more levels of organized lies operating robberies.
The degree to which the biggest bullies' bullshit world view dominated the developments in the philosophy of science has made public debates about economics be almost totally dominated by bullshit. All the significant schools of economics are forms of controlled opposition, that stay within the frame of reference of the biggest bullies' bullshit world view, which is primarily made by false fundamental dichotomies, and their related impossible ideals.
There is only one world, with one energy flowing through. If there is any science possible at all, it is because there is a principle of the conservation of energy, which makes the patterns of the flows of energy possible to be studied, so that they become intelligible. Human beings and human societies participate in those flows of energy, and thus, there are patterns of social facts, which can be scientifically studied. However, the basic realities are always organized lies operating robberies.
The biggest bullies' bullshit is based upon false fundamental dichotomies regarding how those lies and robberies operate, which tend to allege that, at some arbitrary thresholds, there are groups of human beings which form "governments" which charter "banks" and "corporations," which have "rights" to operate their systems of legalized lies, backed by legalized violence. However, the political processes that "legalize" lies and violence do not change the essential reality of those lies and violence. Legalized organized crime is still fundamentally organized crime, despite the biggest bullies' bullshit stories that assert there are some fundamental dichotomies between governments versus organized crimes.
IN FACT, GOVERNMENTS ARE THE BIGGEST FORMS OF ORGANIZED CRIME, CONTROLLED BY THE BEST ORGANIZED GANGS OF CRIMINALS, WHICH ARE THE SCIENTIFIC FACTS WITHIN WHICH THE POLITICAL ECONOMY WORKS, AND MUST NECESSARILY WORK. The various established schools of economics tend to deliberately ignore those facts, and/or recommend that those facts should not exist, while the more genuinely scientific view recognizes that those are the real social facts, and those must necessarily be the social facts, because as soon as we define and name human beings and groups of human beings, as subtracted from or separate from their environment, then they must be perceived as energy systems which are entropic pumps, i.e., they are necessarily organized systems of lies operating robberies.
Actually, everyone has some power to rob, and some power to kill to back up that power to rob. Governments assemble and channel those powers. Those who are the biggest and best at doing that now call themselves governments, banks and other corporations. (In the past, some tended more to be churches, and some still are.) The biggest bullies are able to promote their bullshit as the "truth" by beating almost everyone else into submission. After enough generations, the ability to reward those who agree with bullshit, while punishing those who disagree with bullshit, makes that bullshit become what controls society.
After the vast majority of people are brainwashed to believe in bullshit, then the established systems of lies backed by violence are on a trajectory towards mad self-destruction, due to the paradox of final failure from too much success. In the current context, that means that the government enforced banksters' frauds were a debt slavery system that has run away at an exponential rate, to generate numbers which have become debt insanities.
Always, money was measurement backed by murder, because the debt controls were backed up by the death controls. To discuss the monetary system without the military system is ridiculously superficial, because there is a necessarily combined money/murder system. However, the history of the success of warfare based on deceits indeed created an economic system where the success of finance was based on frauds. Since that was being done by the biggest bullies, promoting their bullshit social stories, all of the established schools of economics operated as controlled opposition within that bullshit world world.
None of those significantly established schools of economics directly address in a sufficiently forthright way the central social fact that the source of the public "money" supply is enforced frauds. Therefore, none of those kinds of "economics" can be reconciled with environmental ecologies, because they all deliberately ignore the laws of the conservation of energy, which are flatly contradicted by "money" being made out of nothing, and able to disappear back to nothing, unless that is perceived as being fraudulent.
Some of the old-fashioned schools of economics used to attempt to approach an understanding of money through the principle of the conservation matter, i.e., with the over-simplified notions that money should be based on gold and silver. However, matter is actually a form of energy, and the current systems have become globalized electronic frauds, backed by the threat of the force of atomic bombs.
Of course, none of the significantly established schools of economics come remotely close to understanding how human energy systems really work, because, in order to do that, they would have to transcend the biggest bullies' bullshit world view. Economics could only become genuinely more scientific in the same ways as militarism could genuinely become more scientific. Both face the profound paradoxes that all of their current social successes were based on a long history of being able to back up lies with violence, so that finance became frauds, backed by murders. No school of economics could become more genuinely scientific unless it dealt more directly with those radical truths, within the context of appreciating the limits to measurement.
Most mainstream schools of economics want to deliberately ignore the role of fraud and murder. The mainstream schools of economics want to regard those as fringe aberrations. However, those are actually the foundation of the entire system, and must necessarily be. The production of destruction controls production. Most of the mainstream economics wants to only pay attention to production, or the exchange of things which were produced. However, it is actually the production of destruction that controls the whole system.
There is an old Arabic proverb that says that "he who predicts the future lies, even if eventually proven correct".
This is the best definition of economics I have found yet.
Are we there yet?
The Doctrine of Fascism by Benito Mussolini
Hell yes.
This is bullshit. There aren't this many catagories, and besides, this doesn't make any sense. There are two catagories, one where the people rule the government, the other where the government rules the people. What this guy and most everyone else never realize is the the daily operating model of government determines the economic policy, and not the other way around. But then, that's the problem with economists, they don't know shit other than how to drain you of your last penny through skullduggery and HFT's.
You want the straight scoop? Try www.scienceofliberty.us. Here you can read the FREE PDF of "The Science of Liberty: American Reformation & Renaissance". The first 6 chapters are out along with the preface and table of contents. Chapter 4 is "Economists Justify the UnJustifiable". You can read it for free. Before the week is out, I hope to have 4 more chapters out. Including "The Orderly Removal & Replacement of the Federal Reserve Bank", and the "Four Branches of Government."
Next will come the History of the Neo Cons, Deep State, and Benghazi. Read about all the lies, because that's all it is that rules our lives every fucking day. That will preclude the first half of the book. Then it will start on the physical and social issues. They are not what they seem, other than currently SNAFU. Cheers Mon
Agreed. There are really two fundamental sides to this: Central Planning or Voluntary Exchange/Free Market. Everything else is either an explanation or simply a refined subset. It's government or it's us.
I have found myself going Austrian and they seem to most accurately explain and predict.
Is there one with a caring domain that is agreeable to reason and not on a selfish desire for more than is needed or deserved?
No, because economy is the realm of sociopaths. Economists claim that of all the social sciences theirs is the most logical and rational one. And then they leave it to the market which is full of greed, envy, anger, fear, etc.
Here is a link to an article -google translated- that says that 1 in 50 economist offered or got sexual favours in return for scientific achievement. And also cases of fraud, plagiarlism, etc. And that excludes even causing economic destruction. https://translate.google.com/translate?sl=nl&tl=en&js=y&prev=_t&hl=en&ie...
See also link to the study: http://www.sciencedirect.com/science/article/pii/S0048733314000900?np=y
It's the ecology, stupid. Economy is a subset of ecology and not the other way around.
So I guess I'm a Neoclassical Marxist Behavioralist...except for the times when I'm not.
Seriously, I'm all over that list.
Economics is an abortion masquerading as an academic "discipline".
I once knew a guy in Moscow who got a Phd in Soviet economics,he later moved to Canada, where that degree proved less than useless.
The study of economics is often baffling and confusing. Many economic theories exist but many are full of holes and conundrums. Much of how people react to a policy may have to do with timing and perception instead of reality. Economics is full of loops that feed back upon themselves and unexpected pitfalls based on expectations.
All this can become quite abstract. Economist predict events that never tend to unfold as expected or planned. Many of the "modern monetary theories" in use today have not been proven over time, but reflect an attitude that we can control economic cycles better than in the past. More on how few people really understand this very important part of our lives in the article below.
http://brucewilds.blogspot.com/2014/03/few-people-really-understand-econ...
BROWNIAN BUSTONOMICS
The economy is Our voters (on welfare) ...AND...
made up of… Their voters (known as taxpayers)
Individuals are… Not allowed.
The world is… Somewhere over the rainbox, past end of boom / bust
The most important
domain of the economy is… Borrowing
Economies change Going bust (see above)
Through
Policy Telling lies about how good the economy is
Recommendations Leave the country