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How American Economics Failed

How Macho, Patriarchal Ideas Created a Feedback Loop That Wrecked Prosperity — Instead of Enlarged It

In case you haven’t heard, American economics is having a reckoning. After a few famous professors were unmasked as predators and harassers, more women came forth and said — hey, I have been viciously bullied. I have been abused, too. I left the field because of the abuse I suffered. Men just didn’t take me seriously — and that’s when they weren’t trying to get me in bed. 

This essay, though, isn’t just about that reckoning, as necessary and crucial as it is. It’s about how that reckoning is a perfect microcosm of how American economics failed — and how, in a strange feedback loop of bad ideas becoming bad institutions, caused American society to fail right along with it. Because economics doesn’t just reflect our world, it creates it.

American economics isn’t just having a reckoning because it’s full of bullying, abusive men. It’s full of bullying, abusive men because it’s fundamental assumptions select for such people, reward and motivate people to be bullies — who then go out to create a society built on such assumptions, instead of ever investigating whether they’re true (or good) to begin with. It is a self-fulfilling prophecy. A hidden, ultra-destructive form of sociopolitical feedback. And that weird, strange loop, my friends, is in large part why America ended up where it is. Let me explain — because that’s a subtle, complicated idea — by way of discussing what the most basic assumptions of American economics are. Have you ever thought about them? 

American economics rests on three assumptions. (They are assumptions — not really conclusions, backed by empirical evidence, but assumptions, because economics has never tested them, but we’ll get to that part). First, that people are aggressively, narrowly self-interested machines, calculators of advantage, only interested in money, possessions, things. Second, that brutal competition is therefore the only and correct way form of human organization — since, of course, people are only self-interested profit-maximizers. Third, that anyone who is not “competitive” enough is therefore a liability and a burden — which means that government should not exist, a social contract is a hindrance, and the only point of a society is to be a Darwinian jungle, where the strong rise, precisely by trampling the weak.

Let’s take these assumptions one by one — because the funny thing is, if we even bother to merely glance at the world, it doesn’t take more than a moment to show that they are false. They are trivial in that sense: they don’t require huge debates and studies to disprove them — just open enough to seeing reality. 

People are not aggressive self-interested profit-maximizers, only interested in owning more and more. How do we know? That is the central lesson of modern psychology. Consider Bowlby’s groundbreaking work on attachment. What does it really say, what did it really find? That human beings — when they are babies, in their purest, rawest form — are primarily interested in relationships. In love, in care, in loving and in being cared for. Anyone who has ever spent time around a baby knows that: they are curious, empathic to an almost incredible degree, and fearless. They are loving and kind, to a degree that is funny to us. That is why they make us smile. A little girls on the bus wouldn’t stop saying “heyyo!” to me — the strange, scary vampire in the leather jacket and sunglasses — the other day. Everyone couldn’t stop laughing — including me. The assumption of self-interest is obvious false — at the deepest level anything can be false.

The second assumption is that competition is the best way to organize everything in human life, since people are only self-interested. But since they’re not, this one must be false too. And that’s precisely what we see. Societies in which people can cooperate have things like functioning healthcare, education, retirement, media. They have higher incomes and more savings. They have more stable democracies and more representative polities. They are simply superior in every imaginable way — like Europe, Canada, Britain, or Australia are to America today, having vastly higher living standards. America, on the other hand, by fetishizing competition to a bizarre degree, makes its kids undergo traumatizing “active shooter drills.” The assumption of competition (which goes by many different names, from “the tragedy of the commons” to “market efficiency”) is even more obviously false than the assumption of self interest.

That means the third one must be the falsest of all — that people who cannot “compete” are burdens and liabilities, to be disposed of. Why are teachers paid barely enough to survive — while hedge fund managers earn hundreds of millions for raiding the pensions of those very teachers? In what universe is such a dynamic clearly going to lead to anything but social collapse — as people grow frustrated, furious, and impoverished? This assumption made it impossible for Americans to invest in each other — because to do that is to be even weaker than the weak, to support a person who cannot “stand on his own feet.” But nobody in a society can build their own hospital, highways, or university. So this assumption is the falsest one of all — American living standards have cratered, while European living standards rose, precisely because Americans didn’t invest in one other, while Europeans did. But Americans didn’t invest in one another, building hospitals, schools, universities, retirement and childcare systems, for everyone, because American economics said that only the strong should survive — and they must do that by trampling the weak.

Now. Why have I taken the time to show that the central three assumptions of American economics are trivially, obviously false to such a degree even a child who reads a newspaper should be able to see through them? Partly, it is to educate you. But it is to show you the self-fulfilling prophecy effect at work.

These three assumptions — self-interest, competition, and never investing in one another — are essentially just restatement of macho values. What else can they be? We’ve shown they’re not empirical realities, backed by any kind of evidence. So they are value judgments — statements that say “this is how we should be.” But they are also value judgments of a very specific kind. Macho ones, hypermasculine ones.

The fundamental assumptions of American economics are just restatements of patriarchal values, my friends. They are put into abstruse equations, so you don’t really connect the two. But nothing could be truer. American economics is essentially macho, domineering, exploitative patriarchy, by any other name. And yet American economics doesn’t even understand the mistake it is making. It thinks it is saying, neutrally, that people are” self-interested profit maximizers, who should compete, and thus, the strong should survive, and the weak perish. It doesn’t understand it is really saying all this — patriarchy, essentially — is what “should” happen. What happens when a field — a powerful one, which helps decide what a country does with its time, energy, and ideas — makes that mistake? Something like the following.

What kind of people do you suppose are attracted to a field that is basically a restatement of macho values of dominance? To patriarchal ones? Men, of course. Men of a certain kind — men who already tend to believe them. It’s not a surprise, then, that such men go on to abuse women and minorities. They are just expressing the values they are permeated by by now — which they believe in so much, they do not understand the difference between “is” and “should”, between values and empirical conclusions, between preferences and reality.

Let me give you a concrete example. American economists cherish the idea that their seminar rooms are arenas of brutal competition — “intellectual aggressiveness” is something they prize. But there is nothing “intellectual” about it — is is just aggressiveness. If we’ve disproven the fundamental ideas of American economics in three paragraphs — then what it can’t be is any kind of serious or considered intellectual investigation. It’s not interested in truth. It’s interested in power. It’s a dick-swinging contest.

Is it any surprise, then, that women flee from such a field? One which is just a perpetual restatement of patriarchal values — so it is, of course, also a patriarchy?

The reason why I gave up economics is that I never wanted to be an economist. I wanted to be a musician. The reason, funnily enough, that I’m a better economist than most of the “real” ones today (sure, you can be the judge) is exactly that. You see, I was never the kind of guy attracted to patriarchal values of dominance and control and exploitation in the first place. I never believed in American economics. Thus, I was free to…investigate the truth. In a way that those on the inside never were — and still aren’t.

So how do we change economics? I don’t care, really. The point I want you to take away is much bigger. It is how societies get traps in self-fulfilling prophecies — like America has gotten trapped. It goes like this.

So there economics is — saying that we “are” self-interested profit maximizers who must compete brutally so the strong overcome the weak, and everyone prospers. It doesn’t understand that’s an assumption it’s making — and doesn’t bother to check if any of that is real, true, valid, or accurate. But what happens next? 

Well, economics goes out and constructs just such a world. It makes institutions which reward us for being self-interested profit maximizers who must compete. Those institutions end up being things like mega-corporations and hedge fungs, like billion dollar pay packages for CEOs while schoolteachers and authors earn a pittance, like jobs with no protections and guarantees. By mistaking their stance for a neutral one — in fact it is an evaluative one — economists then create the very world they believe they have “discovered.” Such institutions come to be the dominant ones in society — because to the economist, they reflect how and who we “are.”

But most of us suffer immensely from the false, predatory selves we are forced to be, rewarded for, “incentivized” to become. Remember Bowlby? Attachment? Such institutions force us to be false selves, competing for status, money, and power — when we are more genuinely interested in knowledge, truth, creativity, love, caring, respect, and meaning. So we grow alienated, as Marx said. We grow estranged from our true selves, form life itself — as Camus and Sartre said. We give up on freedom, and turn to dictators — as Fromm said. We live with a gaping hole in our souls. Do you really want to deny that much? Just take a look at skyrocketing suicide, depression, and trauma.

All that is because American economics created a bizarre feedback loop that it doesn’t understand — and we still don’t, either. It assumed people are heartless fools, uncaring and spiteful bastards, cruel ignoramuses, self-interested brutes — and that is all they ever are, and should be. But Tthose are just patriarchal values — not empirical realities, universal truths. But because economics is part of a patriarchy, and patriarchy holds power, it went about constructing the very institutions that would reward us for being such people. Corporations to throw money at people like that. Hedge funds to shower them in fortunes. Banks to invest in them.

The result was what it was always going to be — if you understand what is really going on here. A predatory society emerged — where the most vicious and cruel and foolish rose, laughing, to the top. How? By exploiting and abusing the rest. Taking their life savings — “raiding their pension funds.” Taking away their healthcare. Charging kids more than a house for an education. And so on.

By assuming people were predatory, just Darwinian animals in disguise, American economics created a predatory society. Life soon enough fell apart. Do you want to go live in the jungle, after all? But the truest truth is that people are not innately predatory. That is why no one, really, in America is happy — except its most abusive and vicious. The field of American economics is all this in microcosm. But what is crucial for us to understand is that is a larger mistake, that cuts across society — the self-fulfilling prophecy of bastardness, if you like. And it is spreading outwards from America, too, to countries like Britain. Let us hope that we are wise enough to learn, finally, from it.

It’s a bizarrely, funnily, tragically Soviet thing— bad ideas, ideologies, becoming a feedback loop of bad institutions, which wrecked a society, because no one bothered asking: “hey, is any of this stuff even true?” Instead, eerily like American economics, Soviet thinkers were too busy bullying and intimidating and conforming to bullying and intimidation, to create the world they wanted, instead of ask whether that world was ever worth wanting to begin with.

(Please note, I don’t mean any of this to say “American economists are all bad dudes!” They’re not. I grew up around them (hi, Uncle Nelson and Uncle Peter). But I think as a field, economics hasn’t thought this stuff — which we might call the second and third order effects of institutional political economy — through well.)

Source: Eudaimonia and Co