Customer Reviews

The Skeptical Economist: Revealing the Ethics Inside Economics

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If you are someone who shies away from economics books, fear not. This is a book written for lay readers, and yet conveys an important message that economists (and aspiring students) would do well to heed.

I would sum up Aldred's major points as follows:

- Orthodox economists make assumptions about human behavior that are not only incomplete, but in some cases, completely opposite to reality. More recent developments (such as behavioral economics) are not only far from the mainstream, but offer only a limited recourse.

- Economics has encroached into areas where it is not appropriate. This is mostly in the form of applying monetary value to things (like human lives, the environment, the future) that real humans do not monetize. This leads to flawed decision-making apparatuses like cost-benefit analysis (e.g. 'what is the present value of future ecological calamity?') and over-commodification/marketization.

- Implicit, underlying ethical judgments made by economists can influence policy and create self-fulfilling ethical frameworks. Chief among these is the presumption that human individuals always act selfishly. While plenty of evidence suggests otherwise, this can lead to policies which actually increase the affected individuals proclivity to act selfishly.

Aldred's arguments give the reader the distinct impression that he is approaching issues from a center-left perspective. Conservatives should not despair, however. Behind Aldred's apparent political tilt, his points could be equally applicable to conservative agendas as liberal. His overarching theme is not that one ethical judgment is necessarily better than the other, but that they must be made visible in economic policy, and subject to philosophical discussion and democratic debate.

While I haven't read Bryan Caplan's The Myth of the Rational Voter, based on the synopsis, this book seems like a suitable rejoinder to it. Where Caplan seems to argue that democracy leads to bad economic policy because the average voter is uninformed (read: not an economics graduate), Aldred (who does briefly respond directly to Caplan in the book) might respond that economics professors lead to bad policy because they are unable to model real humans, or to recognize the unchallenged ethical assumptions at the root of many of their theories.

The Skeptical Economist by Jonathon Aldred is a wholly recommendable review of economics that is very fluent and widely readable. It deserves to be read by the public and politicans alike.

What is most needed in the world of academic social science as well as government is a radical re-examination of economics (and social science altogether) to see how we can improve it, both for the sake of truth and the common good (after all economics like politics is a practical knowledge).

Two books from "down under" (Australia) that deepen and more radically challenge the so-called science of economics are Steve Keen's "Debunking Economics" and "Deductive Irrationality" edited by Stephen McCarthy and David Kehl.

Steve Keen's "Debunking Economics" is a thorough and most challenging document in the ongoing struggle to understand the limitations of modern social science and economics in particular. It is similar to, but much longer than Hill and Myatt's "The Economics Anti-Textbook" in that they both follow the main topics of undergraduate textbooks (micro only in EAT). Taken overall, Keen's is the far more comprehensive, deeper, more integrated, and more cogent critique.

And what a critique it is! Eminiently clear and precise it is hard to find fault with it.

"Deductive Irrationality. A Commonsense Critique of Economic Rationalism" (073911624X) by Stephen McCarthy and David Kehl is based on the teaching and writings of Dr. Richard W. Staveley here in Brisbane, Australia from the 1960s to the end of the last century. It penetrates more deeply into the political and economic philosophy behind the modern "science" of economics by examining Hobbes, Locke, Smith, Marshall, Keynes, Hayek, Myrdal, and Rational Expectations Economics partly in the light of Aristotle.

Together, Deductive Irrationality and Debunking Economics are complementary and deserve assiduous study as part of the renovation of the social sciences.

Other books of interest reviewing economics include:
1. The Economics Anti-Textbook by Rod Hill and Tony Myatt;
2. The Skeptical Economist by J. Aldred;
3. Economics for the Rest of Us by Moshe Adler;
4. How Markets Fail by John Cassidy;
5. Animal Spirits by George Akerloff and Robert Schiller.

It is indeed an exciting time to think through the meaning of economics and consider what must eventually come after the failure of positivist social science.

Happy reading!

This was one of the easiest reads about economics I've read in awhile. I could tell that this book was written with the assumption that the person reading it had little background in economics and even if you have experience (I do)it still offers some intriguing concepts.

Below is the beginning of a summary for this book:

Aldred argues that economics pretends to be value free, but that idea doesn't hold up to scrutiny. Economics uses a black box to hide from challengers (2) and veto economics to defend assertions (2).

Economics claims that preference is given. This ignores the many factors that create preference. Framing effects, which involve the situation in which choices are made, can change the perception of the consumer (14). Branding is another factor. Branding is used by companies in order to differentiate identical goods by making one seem more familiar (16) and therefore more desirable. Peak end evaluation shows that our preference isn't logical because we remember the extreme and final moments of our experiences most vividly and use these memories to determine what we prefer (17). Nobody has preferences that are perfectly rational, perfectly knowledgeable and perfectly predicts their future wants (38).

Economics assumes that economic growth will result in increased happiness. Aldred says that once poverty, which results in shorter lives and lower quality necessities, is lifted then further economic growth will not necessarily result in more happiness (51). Adaptation, which economics ignores, is key to why we cannot be satisfied after surpassing poverty. As income grows we simply adjust until we are no happier at the increased level than we were with the past one (55). Income and its impact on happiness is relative to what those around the individual make (58). Consuming more or similarly to one's neighbor will likely make a person happier than consuming less than ones neighbor (58). Another aspect of this myth is that growth will result in less expensive public services (68). This is wrong because increasing productivity for personal services is slower than that of the rest of the economy (69). Which means that the amount of output per hour worked is less than other fields, but since the pay is similar to other jobs with higher outputs its more expensive to have (71).

Economics views taxation as a negative. However, one cannot own something without having legal protections to enforce it (82) and these protections are paid for by taxes. Ownership is dependent on government which is dependent on taxes (86). Taxes also redistribute the money from the wealthy to the poor (88). The poor gain more utility from a single dollar than the rich which means redistribution through tax can result in more utility overall (95).