Image credit.
Arnold Kling brilliantly sums up:
“[E]conomics differs from physics in that physicists usually can undertake direct tests of their assumptions, while economists generally cannot [... W]hen we prove that assumptions a, b, and c together imply outcome X, and we instead observe outcome Y, we have no way of independently testing which of assumptions a, b, and c is untrue in the real world. Because there are so many plausible assumptions available to economists, this means that real world does not constrain economic models nearly as much as it does in physics.” (Emphasis added, G.T.)
The source, and my two cents:
Economic perceptions are fundamentally political in nature, i.e. open to competing perspectives and narratives (of strong assertive ambitions, including vigorous policy demands). This carries over into economic reality, which hence is for epistemic reasons alone political. Of course, there are other forms of political competition (lobbying etc.) that are formative for economic reality.
What guarantees the persistent insignificance of libertarian views in the greater scheme of things is that they insist on the possibility of autonomous spheres of freedom, whose normative desirability and positive feasibility they tend to derive from certain economic models (that are useful in many regards but limited in that they exclude the political dimension of economic reality). From the promises of these sanitised economic models emerges a general assumption that politics can be effectively replaced by “market-solutions” and an irritable disregard of (the spontaneous order of) politics. Libertarianism degenerates into an ideology (rather than a powerful way of looking at and influencing the real word), a very weak ideology though, predestined to serve as an intellectual pastime, since one of its core creeds suggests political abstention).
In a reasonably free society, the contours of micro economics will remain visible under heavy political overgrowth. What is needed, however, is to better understand from a libertarian standpoint the inevitable (in large measure even) positive contribution of that overgrowth to feasible freedom.
The mixed economy is real and not optional. Feasible freedom will always be highly qualified and constrained, precisely because freedom encourages and consists of epistemic and political multiplicity.
The fundamental libertarian error is to refuse to understand that a free society is a highly politicised society – far more politicised than a society where mass political participation is unthinkable. To embrace freedom is to embrace politics.
For more see:
Just-So Stories in Economics and Politics - Consequences for Liberty
The Idea(s) of Freedom (3/3) - The Mirage of Autonomous Spheres of Freedom
Red Cedars and Apple Trees - The Political Character of the Economic Process
Test. Comments work again.
Posted by: Georg Thomas | 08/07/2015 at 02:00 PM