Hierarchy of Orthodox Economists

Today at heteconomist, interest is not so much in the economy, or even economics, but, if anything at all, in the economists themselves. Currently, the economist is king. Not just in the US, UK or Japan, but in most parts of the world. The king of comedy. Right now we are witnessing one of the more audacious practical jokes in modern history, and it is mostly down to economists! Not so much the heterodox economists. They don’t count, really. The kings of comedy are the orthodox economists, and they are having a ball!

I gather that some time ago they tweeted themselves the question, “What is the most draconian, class-interested macroeconomic policy advice the rubes will still be gullible enough to swallow?” Currently, we are meant to be in the process of finding out. However, if anything, it has been too easy. The level of gullibility may have been underestimated. Although the answer we are getting is hilarious, it could have been so much more hilarious! History may yet record that the economic comedy establishment sold itself short.

Even so, the comic potential and ongoing entertainment value of the practical joke cannot be denied. For its success, the joke has called for different categories of economist to play different roles. These roles have been performed with varying degrees of artistic restraint but always with a view to causing great hilarity. The roles appear to be carried out in accordance with a well defined intellectual hierarchy.

At the highest level of the hierarchy are the fake Nobel Prize-winning academic economists. These are the economists who are too smart to believe their own bullshit. Then come the garden-variety academic economists. They are careerist enough not to call out others’ bullshit, though they might laugh about it behind closed doors. Next are the central bankers. They are too complicit not to bullshit. Treasury economists are actually stupid enough to believe the bullshit. Private bank economists don’t understand it, but they do believe. Economic journalists go along with the bullshit, because as journalists they’re shit.

But we should not be deceived by this hierarchy. The lowly private bank economist or economic journalist is just as vital to the success of the practical joke as the lofty fake Nobel Prize winner.

26 thoughts on “Hierarchy of Orthodox Economists

  1. Surplus theory can be ‘pivoted’ to use labour accounting as the measure of surplus value. Unemployment then becomes luxury consumption of surplus by government and the household budget argument favours employing more people. Many real households will behave in this way, i.e. take on more work rather than cut spending. The household budget accounting metaphor works better with labour accounting because financial accounting can’t separate real capital from fictitious capital. I call it bad money driving out good.

  2. Interesting point, Hacky. I appreciate your recent comments in various threads. They are providing great food for thought.

  3. Thanks. I think my first couple of comments may have been a bit rash so apologies if any caused offence. I don’t like Marx’s attacks on Proudhon. I personally think there’s more mileage in Proudhon’s ideas.

    My take on this is that, historically, capitalist relations developed in response to the control of the guilds (fairly straightforward conflict theory), but now capitalist relationships are abnormally maintained by taxation. Social value exchange (usually granting favours) is historically a very natural institution that creates social bonds but is today prevented by taxation. If exchange isn’t mediated by money then the money isn’t earned in order to pay tax. This prevents any social value exchange from taking place. Capitalist social relationships and money are therefore institutionally backed by taxation.

    I still have a lot to read and I’m trying to work through the influences on 19th century socialism. I still get muddled on the who said what, when, when, where, why and how.

  4. It is way too easy, as you say. Intentionally keep unemployment high, watch people turn on each other, and push through any economic or political agenda TPTB want.

    Speaking of tweeting though. Are you on Twitter, Peter? I recently rounded up many of the MMT-related tweeples, but I’ve yet to see your name come across my screen.

  5. So far I am not on Twitter. I guess I’ll get around to it sooner or later. I did eventually get a mobile phone a few years ago, though I rarely use it …

  6. Hacky, I’m certainly not offended. You are bringing up interesting stuff. My own mind is not made up on how best to get from capitalist to post-capitalist society. My instincts tend toward the left-libertarian. But I need to do much more reading on all that myself. My academic background was narrow and impoverished (economics). Now I have to make up for lost time. Some of my more recent posts in the “future society” category are mainly exploratory, not at all intended as authoritative, and any critical engagement with them is welcome.

  7. Re. Trixie..
    One of the concepts imposed by the IMF is the ‘labour market’ which is treated as a self evident reality. I think the concept of the labour market defines the institution of work and this is one of the problems.

    In the UK, government pays people to do nothing and wait for market demand. By definition, surplus is consumed or invested. If surplus labour isn’t invested then it’s consumed as inactivity. This is partly why I’m suggesting that unemployment is luxury consumption by government and therefore isn’t appropriate in austerity.

    Re. peterc..
    I think there is mileage in labour accounting and resource accounting generally (Proudhon was in favour and Marx was against). It should be possible to get round the institutional problems of labour exchange by allowing employees to retain ownership of their labour using an accounting system (where labour is treated as equity). I could explain in detail how this could work but it might be a bit off topic.

    My background is computer science. This is why I see life processes (including economics) as primarily information search. It’s hard to explain my concept of information search without narrowing the explanation to specific search processes. Narrowing the explanation is misleading because it doesn’t portray the unlimited scope of information search. The closest thing that I’ve found in economics is Paul Romer’s work. My concept of information search is one where information is created by search.

  8. “My own mind is not made up on how best to get from capitalist to post-capitalist society.”

    The anarchist answer is that real change needs to be grass roots (anarchistic) rather than top down (hierarchical authoritarian). If people gather into communities, visualize and actualize to create the kind of community they want to live it, then change will rise from the bottom up as collective consciousness changes.
    This has always been going on to one degree or another mostly underground, invisible to “normal” society.

    It surfaced in various utopian movement and went mainstream during and after the Sixties and Seventies countercultural revolution. There are millions of people living in such groups now and this is the basis of Occupy. It’s already happening.

  9. Hacky: “My concept of information search is one where information is created by search.”

    Right, data is inert until processed, ultimately through a neocortex for use as information. Human brains are information processors with a lot more power than other animals’ brains due to the ability to abstract and universalize, which is key to using signs as symbols.

    Add technological assistance to human brains and hands, and the power increases exponentially. Kurzweil calls this “the law of accelerating returns.” The sky’s the limit, as the limitations of creative intuition and imagination are surpassed.

  10. re. Tom Hickey

    I just posted something similar on one of the Marxist blogs but it got moderated. I think it might be due to linking to a pdf or it could be the character encoding in the link. I’m not sure what triggers moderation so any help would be appreciated then I know what to avoid.

    I think search isn’t easily understood by anyone without a background in heuristics. Some examples for anyone that doesn’t follow..

    Situationism and Guy Debord’s psychogeography..
    When traversing a geographical space a mental map is made. This can be represented as a traditional map but it could also be a directed graph linking landmarks. Both models are analagous to the general structure of information. This practice is an artistic representation of search within anarchist practice, i.e. freely expanding information in all directions.

    Evolution demands a shrubbery..
    Starting with a simple information process, organisms copy and mutate in a tree structure, the process of information gain becomes more efficient by addition of new information processes (permutation, selection, intelligence, etc). The addition of each new process can also be represented as a tree.

    Real capital accumulation..
    Information creates new technology which creates new information which creates new technology. Each generation of technology becomes more sophisticated by building on the past.

    By free association, people co-operate in mutual societies. Some operate more successfully and the ones that don’t can disband and form new groups easily. Federal government operates with more devolved freedom than highly centralised systems. Freedom allows local governments to try and fail.

    The human brain..
    Err.. that was your example.

    All of these examples follow the general pattern of search, and search creates information. Search is also responsible for real economic growth at a micro-economic level.

  11. Re. Trixie..

    I just read the Heteconomist market theory blog so my previous response to you is a bit redundant (sorry). There are a lot more of these blogs than I thought at first so I have some reading to catch up on.

    Paradoxically, it’s true that markets can sometimes be a way to remove moral hazard. Saying that markets can sometimes be OK isn’t quite the same as market ideology which says that everything must be a giant globalized market. If markets are going to be rigged because of market ideology (e.g. legally stopping unemployed people from doing anything other than looking for work), then why is the market rigged to provide surplus labour? This leads back to a decline in labour’s countervailing power and unreasonable corporate influence on state institutions.

    Re. Magpie..

    That’s a good thing.

  12. Hi Hacky, thanks for your responses.

    I should let you know that I have absolutely no background in economics worth mentioning. I am trying to learn though. That said, I’ve read your recent comments here, and I pretty much have no idea what you are talking about. And sometimes the comments I make are unrelated to the post itself. Ok, make that most of the time. Most people around here get that I think, you’ll get used to it. 🙂

    Unless, of course, you want to discuss The History of the Swamp People. Then I will DESTROY you.

    Btw, welcome to heteconomist!

  13. Magpie: Doing my best imitation. 🙂

    Hacky: Sometimes a comment will go into moderation if there is more than two links (or maybe one, I’m not sure). The software here does it, too, and I think it happened to your latest comment in the thread on fiat money and capital. It can be a pain, but I will hopefully notice within 24 hours (hopefully much less) and approve the comment. I guess when involved in a back-and-forth discussion, one method might be to put the extra links in a separate comment so that your argument comes up straight away and then the extra links come up once moderated. Echoing Trixie, your contributions add a lot.

    Good discussion, everyone. Thanks.

  14. re. Trixie
    I don’t think we get Swamp People in the UK. I like Swamp Thing and also some people. That’s probably not close enough though. I started reading about economics in 2008.

    Neoclassical economics treats labour as a market, like a market in goods. The concept of the market is based on real markets where you can buy fruit and veg. Other schools of economics don’t agree that there is a real market in labour. Institutional economics sees work as primarily a social institution. Institutional economics is associated with institutionalism which is a branch of sociology that looks at social institutions (e.g. government, law, tradition). Institutionalism argues that we are all institutionalised. Some big names from institutionalism are Max Weber and JK Galbraith. I’ve read some of both but not as much as I’d like.

    There’s another blog on Heteconomist that talks about markets and socially necessary labour. I have some views on that but I’ll leave the subject alone for now. Thanks for the welcome. I haven’t read everything on Heteconomist yet because I only recently discovered the website.

    re. peterc
    I thought it was probably something to do with the links. Putting links in a separate post is a good suggestion. I’ll do that from now on.

  15. Nice post. As far as “Nobels” go, Bill Vickrey is by far the most interesting and relevant from an applied/policy standpoint. Rumor has it that the Bank of Sweden was unaware of Vickrey’s post-Keynesian allegiances when they awarded him the prize.

    Just curious but where do economic bloggers fit in your hierarchy? Do you include them under the journalist category? I, for one, see bloggers such as yourself in a very positive light. I recall reading Wray’s “Understanding Modern Money” back in 2002 and wondering whether this view of economics would ever get out into the open. I’m still amazed at the amount of exposure the modern money view has had since then.

  16. I think my post on how information is created may be too metaphorical. Instead I’ll give some basic definitions and use further explanations when it’s relevant to one of the blogs or one of the posts.


    The basic definition of information is negative entropy.

    Creating Information:

    Information is created by tracing a path. This is called search.

  17. “Information:
    The basic definition of information is negative entropy.
    Creating Information:
    Information is created by tracing a path. This is called search.”

    Right. At the most simple biological level an organism uses its sensors to gather data and its selection mechanism to construct information relevant to survival, that is, distinguishing nutrients on positive side and threats on the negative from noise. Noise is the indifference rejected to isolate the signals being searched. Its the self-organizing flow of information-energy that results in “reverse entropy” (Prigogine).

  18. I don’t know how relevant it is to stick very close to Marx in contemporary analysis. The system he was analyzing was very different. For example, industrial capitalism of his time was based on owners and workers, whereas today it is top management and board that run the show, often in spite of shareholders. Marx was also not dealing with the level of economic financialization that we are. Technology has also transformed the industrial age into the information age. Useful insights but dated historically and may not apply in the same way. He is one set of shoulder to stand on. among others that came after him.

  19. circuit: I think blogging has provided an important opening for alternative voices to be heard as well as for circumventing the gatekeepers in the leading orthodox academic journals. The decision by the modern monetary theorists and some other Post Keynesians, Marxists, institutionalists, etc., to blog was an excellent one. It has a significant cost in terms of time for the academics involved, but it is well worth it from the perspective of getting the word out and also as a valuable community service. Support blogs, such as this one, have a role to play too, but rely for credibility on the research output of the academics.

    My negative comments in this post concerned the orthodoxy. I didn’t intend to suggest that there aren’t journalists, bank economists, central bankers or academics doing good work. In terms of blogging, I think even the orthodox blogs are much more open to alternative views and debate than has been the case with the orthodox journals in academia, and that is a good thing. It means a dialogue can occur between people with different viewpoints rather than the orthodoxy publishing in their journals, heterodox economists in theirs, and each group ignoring – or at least not engaging with – the other.

  20. re. Tom Hickey

    The biology references are interesting. I’m taking my views from AI and evolutionary computing. I’d like to understand the biological source of these ideas as well but I’ve picked them up 2nd hand. It would be intriguing if you have a background in biology as we seem to have reached a lot of similar conclusions.

  21. I don’t have a background in biology but Roger Erickson, who posts at MNE, does. He is the go-to man on this.

  22. I should add that Roger also knows a lot about the relationship of biology, computer science, and economics/finance.

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