As someone who correctly predicted the last financial crisis, I have argued that the economics profession is indeed in crisis itself, due to its social and not science orientated stance. Even the Treasury admitted recently that economists failed to spot the build-up of risk before the 2007 slump and were guilty of what they referred to as ‘monumental collective intellectual error’.
The Bank of England’s chief economist was also right to demonstrate the challenges facing economists. Despite all this, the dominant economic model of financial liberalisation, monetary policies still dominate, together with fiscal austerity, which remains intact. And the rich get richer, whilst the poor have so often to rely on food banks.
In their defence, economists can’t be faulted for getting some forecasts wrong. Political events such as Brexit and even now General Elections are not easy to predict. Some would argue that they are instinctual or guesswork matters.
It is an ideology based on wealth, not science, that leads economists to wrongly assert that the market in money is like a market in gold, and must not be regulated or tampered with by governments or institutions. Financial flows across borders must be free, regardless of whether they cause instability or poverty. Bankers in this system, are simply intermediaries between savers and borrowers and should not create credit out of nowhere. Monetary and fiscal policies that serve the finance sector with bailouts are however tolerable, while those that serve the poor must be resisted.
So the reasoning that informs us that the micro-economy can be utilised to reach conclusions about the macro-economy is reached. In other words, the fallacy that the budgets of households, can be aggregated and compared to the budgets of governments and institutions in the macro-economy is determined. And the fallacy of an unregulated market is often broken to suit the establishment, such as quantitative easing or the creation of fictitious capital. Modern day money trees!
Unsurprisingly, these flawed theories and models are a great comfort to financial elites and media presenters, which is why so many economists are hired and funded by big banks, corporations and the establishment. And it explains why their words and ideas are repeated, but so often lead to wrong conclusions and division. All this can be changed.
But at least the wrong conclusions, together with huge resistance recently have led in the UK, to more progressive and left policies.
Ivor Timson 