Neoclassical Economics and Marxism

Ironically, many people who have reject Marxism out right have not read it.

I found Das Kapital one of the more illuminating books I’ve read from a sociological point of view.

When I was studying economics, I quickly realized there were some major flaws in the neoclassical methods we were being taught, most of which he pointed out in this Ted Talk.

My favorite class was the History of Economic Theory and Methods. It was the only class that exposed me to ideas other than neoclassical economic theory. I found this appalling. Many go throughout college and learn this prevailing neoclassical economic theory and its methods and have zero clue that other theories exist, that other philosophies exist. They might get a footnote about the Austrian school of libertarianism. But mostly your indoctrinated to believe that neoclassical economics is truth.

Considering how poorly it mapped onto my understanding of a stochastic world, and humans which are entirely irrational, and having learned about sociological theories which explain the role of institutions in imbuing humans with values which drive behaviors and purpose, I felt strongly there were more productive ways of conceptualizing an economic system. And when I took that history of economics class, I found plenty of them.

Marx had profound ideas that weren’t all that original, but were uniquely synthesized. He took many observations from Hegel and Ricardo and others and applied them to them to how the individual engages in economy. Marx was a phenomenal sociologist. Perhaps not a great economist. Alfred Marshall did a phenomenal job outlining economic forces and formalizing them, but sociology and psychology were still undeveloped subjects of study.

What caught my eye most was institutional economics, pioneered by Thorstein Veblen, which examined the evolutionary forces that shaped economic behaviors. Behavioral economics is an outgrowth of institutional economics, which has gained more widespread attention, because it accommodates irrational agents. But I’ve yet to see a comprehensive economic system that appreciates the sociological forces that account for economic behavior.

The reason why neoclassical economics took off is because of monetary policy. By operating under the neoclassical framework which can mathematize economics and human behavior, capitalists can push and pull levers to greatly impact economic outcomes. Unfortunately, as we have seen from stagnating wages, increased debt, and speculative investing, and this has not elevated the public good and the labor it represents, but has profited only those with the access to capital, which benefit from this financial manipulation, if they know how to navigate the game. The current economic system is a scheme that is showing its cracks. In the short run it can make predictions, but in the long run it falls apart. And we’re seeing it fall apart. It has no basis other than to serve capitalists with the time and money to invest speculatively. And the economic growth they point at the justify these measures has benefited only a few. Per capita consumption has increased along with debt, and wealth has decreased.

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