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If they're so rich, why ain't they smart? Another prelude to the critique of economic theory

Freeman, Alan (1997): If they're so rich, why ain't they smart? Another prelude to the critique of economic theory. Published in: SSRN accepted papers series No. Paper 2217892 (14. February 2013)

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Abstract

This is a mirror, deposited with MPRA for completeness, of the same paper at the Social Science Research Network, which can be found at http://ssrn.com/abstract=2217892.

It should be cited as 'Freeman, Alan. 1997. If They're so Rich, Why Aren't They Smart? Another Prelude to the Critique of Economic Theory (November 6, 1997). European Association for Evolutionary Political Economy (EAEPE), 1997. Available at SSRN: http://ssrn.com/abstract=2217892'

Economics, it argues, has lost its way and has proven itself incapable of reasoning or explaining the world we observe. Increasingly, it plays a religious rather than an explanatory role. The reason for this is the substitution of a dogma – equilibrium, or comparative statics – for scientific enquiry.

This is illustrated by a detailed discussion of the profession’s treatment of Marx’s value theory. It has substituted, for Marx’s own theory, an equilibrium ‘reading’ of Marx that removes, from the theory, its capacity to explain crisis.

The article was written at a time when an alternative reading of Marx – which became known as the TSSI or Temporal Single System Interpretation – had been made available to the academic world, at a time when there were still grounds to expect that this discovery might be received in a scientific manner.

The article presages subsequent development of the debate, in the course of which the defenders of the equilibrium reading have systematically refused to engage with the temporal alternative. The fact that the temporal reading was not accepted, it argues, is evidence of a profound malaise at the heart of economics, to which academic Marxist economics is no exception. The equilibrium paradigm is at the root of what is now, in 2009, coming to be called the ‘systemic failure’ of economics. It is what renders economics impervious, theoretically, to theoretical comprehension of the world around it.

In the dock, the paper argues, is not Marx but Marx’s target: the economics profession. This is not just a question for scholars but millions – probably billions – of victims of the market economics of the 20th Century. If the conclusions of this paper are true, then a very powerful weapon is available to these victims, of which they have been deprived for more than eighty years by the neoclassical reading of Marx: Marx’s own ideas.

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