ECONOMICS AND ALL THAT!

Arming You to Fight Mainstream Economic Theory by Reconstructing It Into What It’s Properly About

INTRODUCTION

The world’s a mess. That's partly because economic theory with it's dicta and 'laws' is a fantasyland often used to argue or aver that we live in the best of all possible worlds short of heaven itself, one wherein everyone who is rational has always been able to maximize his or her well-being, and, of course, we should pay no attention to irrational people who complain that this doesn’t seem to be true, for irrational people wouldn’t be in the bad situations they’re in if they’d acted rationally.

The theory is well-disguised as 'scientific'. It isn't. It's jargonistic balderdash. It only serves useful ideological functions. As it is, It is not about the economic activity of people or their economic behavior at all.. And it hides who has control over whether, how and if we provide for ourselves, and why those in control have the power they do. [Clue: This has to do with 'he-who-has-the-gold-makes-all-the-rules-affecting-others' in monetary systems of exchange.)

I'm about to arm you to fight back.

Most people can't fight back. Almost all, well, because economics is intimidating. More precisely, what's taught as economics is. I don't blame most people for thinking this. Even economists can't fight back. Due to their training as economists, they aren't fighting back even when they think they are. Their training blinds them to most of the problems intrinsic within what they were taught. So even when some question theoretical 'laws' as some do, they use what they learned to do so. Sadly, although small parts of what they learned can be used to question or partially refute commonalities like oft-claimed 'laws' of supply or demand, these economists cannot break free from the chains which bind them within the theory that they've learned.

Economists like Steve Keen, for instance, debunk economics as far as their training allows. And that's well and good and entertaining.

But it's not enough. It tinkers about within the margins/limits of what they learned. It is those very margins that they must escape from.

Their being stuck occurs because the assumptions underlying and supporting the structure of mainstream theory hide what economics is really about. These assumptions make all existing theory descriptively inadequate regarding our economic activity and behavior.

That descriptive inadequacy leads to prescriptive inadequacies. Serious ones! For following such prescriptions is akin to letting a drinking buddy perform open-heart surgery because he's a very good juggler.

Mainstream economists are expert at juggling the balls within their theory, but juggling those balls is not what economics is about. Expertise at juggling such balls does not lead to any expert knowledge related to the economic activity of human beings.

For instance, current economic theory, wherein consumers are implied to be people like you or I, simply endows consumers with never changing budgets even as prices change. This absolutely ignores the reality that consumers must, can, and do change their budgets whenever prices change.

Because all 'demand curves' derived within in all mainstream economic theory nowadays rely on consumers’ having ever-fixed, never changing budgets, one must ask if it is possible to derive 'demand curves' since budgets are, in fact, constantly being reformulated when prices change. [Note 1.I will show why budgets must be reformulated when prices change in a later section entitled “DEMAND AND ALL THAT!” Which will follow after the parts A and B of “UTILITY AND ALL THAT!”] For if such demand curves cannot be derived when consumers change their budgets as prices change, then the so-called 'laws' of demand, and the mechanics underlying all equilibria between demand and supply... [Note 2. An equilibrium is said to exist when the amount of a good purchased by a consumer (or consumers) at a given price is equal to the amount supplied by the sellers of the good at that price. Because a ‘market equilibrium’ is obtained at the conjunction of ‘total market demand’:: obtained by theoretically adding up individual demand curves :: with total market supply at a given price, it is necessarily the case that if individual demand curves cannot be derived, then neither can ‘market demand curves’.]... simply do not exist. In addition, if people are not maximizing preferences based on their likes between goods but are more affected in their choices by the kinds of benefits they need or want to have and realize, then we must not derive ‘demand curves’, including aggregate demand curves within markets, given the limitations of the theoretic itself.

So, what is economics about?

It's about how we provide for ourselves through how we use goods to obtain benefits that we need and want to sustain our lives and improve our well being as individuals, families, groups, communities, and societies. In brief,,whether, how, and if we provide for ourselves is the subject matter of economics. Throughout history, human beings have had to manage the use of what they had to provide for themselves. Though, across time and cultures, needs change--Viz, a technological society with its water, energy, and communications infrastructures generates needs for indoor plumbing, wiring, and domestic technologies as essentials one must have to get by with-- as have our 'wants’ the important subject matter economics :: whether, if, and how we provide benefits for ourselves by using goods :: never changes.

You won't find anything like the above definition in economics texts. [You can find that out for yourselves.] But with it we can begin to to deconstruct modern economic theory and, while doing that, reconstruct economics as it should be. That’s my plan here: to reconstruct economics in a manner that disposes with existing theory more or less in its entirety while giving you the ammunition to fight against it and what it prescribes. In the process, I’ll be laying new foundations for you to use.

We live in monetary economies.

In such economies, whether and if we can provide for ourselves as individuals, families, communities, and nations depends largely on how the distribution of income and the accumulation of wealth occurs. That is because monetary economies uniquely impose an architecture of price ratios between goods, one absent in non-monetary economies. That price ratio architecture, in combination with the distribution of incomes/wealth, determines the budgets consumers must have to purchase goods for their use. Every change in prices between goods forces budgets to become reformulated. When such budgets cannot be reformulated, this drives people out of some markets completely. This forcing out of a market regularly happens in monetary economies.

Current economic theory has this forcing out happening rarely and effectively as special cases within the theoretic. That is because the entire body of what is called the Theory of the Consumer has never addressed how budgets are determined when prices change (and thus price ratios between goods). Rather than seriously examining this very important issue and its impacts on human well-being, the current theoretic always endows consumers with fixed, unchanging budgets in the face of price changes between goods. Such endowments with ever-fixed budgets remove from economic analysis all matters related to whether, how, and if people can provide for themselves in monetary economies. In short, it removes the essential subject matter economics itself.

In some ways, I am building this airplane as I am flying it. I apologize in advance if you experience any difficulties understanding what I say. Sometimes I may not be as clear as I want to be, not to mention that what’s clear to me may be mud to you. Let me know when that happens, for I can and will clarify whatever you find difficult. I’ll do that either as quickly as I can, or by discussing the matter thoroughly in a section to come.[It's also true that I can't footnote in this format so, sorree.

Now we can begin with all of the above in mind.