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'Crumbs from the Roundtable'

What does it prove to say that most economists agree? They agree with their paymasters!
'Crumbs from the Roundtable'
6th November 2007

Do Economists Agree on Anything? Yes! says the New Zealand Business Roundtable

But what does it prove to say that most economists are in agreement? It proves that they say what their paymasters want them to say. Most are employed by business or by academia that draws most of its financial support from business. The fear of losing your job rather limits the scope of your freedom of criticism.

Economists who are 'consultants' are also dependent on pleasing their paymasters. If they say anything too radical then you won't be consulted. Most economists therefore echo views of the the economy that are consistent with the interests of those who own and control modern capitalist society.

That is why such economists can be called 'respectable' by the NZBRT. They have won the respect and therefore the financial support of their paymasters.

Economists who do not agree with the current orthodoxy, do not become 'respectable'. They do not get the top jobs in business or academia. Some like Karl Marx live off income from others or as as consultants for social movements who cannot afford to pay them much.

'Non-respectable' economists must limit their criticism to get any sort of job, and if they misjudge what is 'respectable' may lose promotion or even their jobs. Consider the famous case of Paul Sweezy, the 'golden boy' at Harvard in the 1930s, who missed out on a tenured job at Harvard but was able to become the most famous Marxist intellectual in the US because he inherited wealth. The fascinating relationship between Sweezy and his friend and rival Schumpeter, today a born-again guru, is recounted in Sweezy's obituary in the journal he helped found, Monthly Review.

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The source of 'respectability' can be proved by looking at the parallel development of trends in economic 'orthodoxy' and the economic booms and busts. Keynes, for example, became prominent only when the global economy experienced stagnation and depression in the 193os. The old neo-classical orthodoxy of the unregulated market was replaced by the new orthodoxy of Keynesian state intervention.

With the end of the post-WW2 boom in early 1970s however, Keynes was challenged by a return to neo-classical, or neo-liberal, orthodoxy, that is, a return to market forces and a reduction in the economic role of the state.

Yet, while the economic orthodoxy is now for minimal state intervention in the economy, the facts are that in the most neo-liberal economy in the world, the United States, the role of state is more central than ever. It may be that state spending in social subsidies are reduced from the days of the New Deal of the 1930's or the Great Society of the 1980's, but state spending on arms and subsidies to business is at an all time high.

So what today's economic orthodoxy is that its OK for the state to be involved in a huge transfer of income from poor to rich. The attack on state spending is no more than PR for a huge shift in state spending from the people to business.

A recent illustration of this is the banks who got rich on loaning to the high risk subprime housing market in the US. When that market collapsed these exposed banks were baled out by central banks while those who lost their houses lost almost everything they owned. Yet 'capitalism for the poor and socialism for the rich' is not a recognised part of the economic orthodoxy, because it doesn't pay.


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