Economics, Like Religion, Assumes It Knows Everything

Both are interested in establishing dogma, not pursuing truth.

It’s amazing just how much imaginary ideas affect the real world. That’s all I could consider as I read the flimsy theological defense of moving the US embassy to Jerusalem. If you aren’t aware, the Christian god apparently cares deeply about the placement of the hegemonic power’s diplomatic HQ.

Curious though that may seem at first, history is full of examples where “His” wants are conspicuously human. It’s almost as if god is a concept by which people (powerful people) rationalize their decisions.

You know, like economics.

Follow me here: economic theory, like the holy word, is not ordained by a truth greater than us. It is a creature of our own making; tamed and held captive by the influential.

Both economics and organized religion disregard human nature, lived experience, and complexity to provide laughably simplistic explanations of the world. Both are inextricably linked with power, so they are uniquely vulnerable to corruption. And both lack any semblance of humility and maintain their dominance by demeaning anyone who dares question the validity of their “insights.” (Please note the Catholic Church’s preferred method of punishment used to be far worse.)

It is for these reasons that I am, shall we say, critical of their self-assuredness.

Yet this blog is first and foremost concerned with economics, so I’ll focus my ire on that particular form of bullshit.

Economics is based on made-up assumptions

While some economists claim that “the whole intention of empirical economics is to force theory down to Earth,” the opposite seems to be true. Economic debates on the left and right are routinely framed by “the laws of economics”—assumptions that are based upon “synthetic a priori reasoning.”

We’re talking about “eternal” laws like “value is measured by the price people are willing to pay,” “wealth is based on a society’s productivity,” and “something must be produced before it is desired.”

Sure, these laws may appear dubious to the mortal mind, but your critical thought is not welcome in this discipline! Because “one cannot falsify [economic] laws empirically because they are true in themselves.” Or in other words: we said so, therefore it’s true.

Economic theory has utilized this religious strategy so effectively that it has been said that “the laws of man can be bent and broken,” but “the laws of economics can not.”

Zachary Karabell observes:

Referencing “the laws of economics” as a way to refute arguments or criticize ideas has the patina of clarity and certainty. The reality is that referencing such laws is simply another way to justify beliefs and inclinations.

There is no better way to manipulate the masses than to create a belief system which is so foolproof that any doubter can be labelled an ignoramus.

At this point, it’s important to at least address the fact that all human knowledge is based on assumptions. They “permeate our lives precisely because we cannot act without them.” Why, then, focus exclusively on refuting the legitimacy of religious and economic assumptions?

Because these disciplines are social sciences and their methodology “starts with an assumption and is gradually added to with a series of experiments and observation.” Whereas with natural sciences like physics, the methodology relies on “on repeated experiments, laboratory testing, and constant reproductions of results” to arrive at assumptions.

Presupposing the truth and finding the truth are two very different procedures. One seeks knowledge, the other creates doctrine.

Economics is similar to religions like Christianity in this way. The hubris of claiming to know the desires of an omnipresent being is obviously ideological, as is pretending that we know how humans will act in any given situation.

Here, it’s useful to bring up “rational choice theory” which posits that humans, at all times, make prudent and logical decisions. It has been called the “bedrock theory” of economics, with a “God-like ability to make long range, intricate plans exploiting all trade-offs across goods, time, and uncertainty.”

There’s a problem with this neat economic explanation, however. Humans aren’t rational. At all. It is an absurd theory, contrary to human experience (like, say, an immaculate conception), that is nevertheless taken very, very seriously by the economic profession.

(Ironically, our propensity for emotional reasoning has contributed to the rational choice theory’s continued acceptance. In matters that are beyond our comprehension, “we’re happy to unthinkingly agree with others’ seeming expertise.”)

Having blind faith in those who say they know “how things work” has serious consequences, though. It immediately limits our collective imagination of what can be and what is accepted as normal or good. And it gives a huge advantage to the arbiters of knowledge.

Consider, for a second, why people are okay with the richest one percent owning half as much wealth as the rest of the world, but balk at the idea of paying workers $15 per hour. Why is this the case?

Could it be that economists’ adherence to the law of supply and demand has meant they worry more about slight changes in low wages than ghastly inequality?

As my boss Nick Hanauer has remarked, “the claim that wages go up, jobs will go down is not a theory, it’s a scam.” He goes onto quote James Buchanan, a Nobel Prize-winning economist, who compared the law of supply and demand “to a force of nature”:

Just as no physicist would claim that ‘water runs uphill,’ no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics.

But as we’ve established above, denying economic assumptions is not the same as denying scientific ones. If we were to find that in every single situation a minimum wage increase lowers employment, then yes, denying that “law” would be silly.

That isn’t the case though—at all. Anyone who cares to look into the minimum wage literature will see that there is, in fact, a lot of evidence to suggest that the minimum wage benefits the broader economy—including employment.

Progress can originate from imaginary ideas

Economic and Christian assumptions have led to positive developments in society, though. For example, the Protestant Reformation’s radical notion that “Christ alone” “is the only mediator between God and man,” is a totally fabricated idea. Yet, its promotion and subsequent acceptance across much of the world has helped establish a philosophical justification for recognizing human rights.

Likewise, economic assumptions have led to great developments in mankind. (The earth’s climate is another story, but I digress.) Capitalism has led to jaw-dropping advances of humankind that would have been unfathomable to the ancient mind. World poverty has plummeted. Humans are living longer than ever. And thanks to market competition I can now do almost anything from the comfort of my couch.

Acknowledging these forms of progress, however, shouldn’t stop us from criticizing the deification of assumptions—either in economics or in Christianity. These disciplines can still attain these aforementioned positive outcomes without having to hold onto some of their more evil concepts.

Christianity can advance compassion and charity without having to warn about a nonexistent hell, just as economics can improve human welfare without having to suppress the wages of the working class.

Thankfully, all it takes for us to change the world around us is to call bullshit on the common acceptance of these more pernicious ideas. Just read about Galileo Galilei. Or Martin Luther. Or Karl Marx. Baseless beliefs only exist for as long as people continue to accept them. That realization is both frightening, yet liberating, and should embolden all of us to constantly question anyone or anything which claims to reveal the truth.

Imagine the possibilities.