Light Bulbs And Free Markets
By Case Wagenvoord
09 December, 2009
Countercurrents.org
According to the Chicago School of Economics, we have nothing to worry about. The market is a self-regulating organism that automatic cleans up the shit left by the financial retards who run it. So, let the boys have their fun; the invisible hand will pat them on their asses and send them on their way.
According to Raj Patel there is a joke making the rounds among economists:
Q: How many Chicago School economists does it take to change a light bulb?
A: None. If the light bulb were burnt out, the market would change it.
As Patel points out, “The great unwinding of the financial sector showed that the smartest mathematical minds on the planet, backed by some of the deepest pockets, had not built a sleek engine of permanent prosperity but a clown car of trades, swaps and double dares that, inevitably, fell to bits.
Actually, we can blame William Petty (1623-1687) for this. Petty is considered the father of “Political Arithmetik.” His philosophy is summed up in his decision to “discard comparative and superlative Words and to use only such reasoning as can be expressed in Terms of Number, Weight and Measure.”[1]
Thus was born the quantification of everything and the gradual rise of the wacky world of the value-free social sciences. (So seminal was Petty’s work that it influenced both Adam Smith and Karl Marx.)
The problem with both Petty and the Chicago School is the mistaken belief that they can impose a rational, linear matrix on the nonlinear chaos that is life. From this premises arises the fallacy that the market is driven by rational beings making rational decisions and that the price of a commodity or stock represents the sum total of all of the input from a given stock or commodity.
As Patel points out, “This is different from saying that the price actually does reflect its future performance—rather, the price reflects the current state of beliefs about the odds of that performance being good or bad.” In other words, the price reflects what the mob thinks.
Because economic theory is so shackled to numbers and formulae, it is unable to factor in greed, stupidity, ego and mob psychology, all of which have a greater influence on the market than rational decision making.
The result has been an economy that has reeled from bubble to bubble to such an extent that it views bubbles as the norm. As soon as one pops, the masters of the universe frantically work to inflate another.
It’s really not fair to blame Petty for the Chicago School. The man believed that a rational government was wise to minimize defense spending in favor of building an effective social welfare net.
But then, history shows us that it is the mission of disciples is to corrupt their master’s teachings. Look at what St. Paul did to Christ and what Stalin did to Marx.
Meanwhile, Obama still believes that the clowns who built the car can put it back together.
Good luck, babe.
Case Wagenvoord blogs at http://belacquajone.blogspot.com and welcomes comments at [email protected].
