ECONOMISM

A spry manifesto that dismantles the many suppositions of modern economic theory.

The fundamental duty of a corporation is to increase the wealth of its shareholders, is it not? It’s in all the economics textbooks, and it rolls off the tongue of financial journalists and talking heads, all defended by the supply curve and the ineluctable laws of elasticity of demand. As Kwak (Business Law and Corporate Finance/Univ. of Connecticut School of Law; co-author: White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You, 2012, etc.) writes, “this is why Economics 101 has become the preferred conceptual vocabulary for people who defend and even celebrate the high levels of inequality in the rich world today.” Economics as it is now taught, Kwak charges, is not really economics at all but economism, a near-religious, certainly ideological belief system on par with communism and other -isms in providing all the answers a believer would ever need. Some of the author’s criticisms are aimed at the larger greedhead culture that thrives due to economism; some of them, too, are aimed at the discipline of economics itself, which uses such things as the demand curve to justify things as reprehensible as price gouging in times of emergency. The author excoriates economics for its mathematical soullessness and its lack of attention to “historical context, critical thinking or real-world applications,” as a survey of undergraduate programs put it. He even manages to do a nice takedown, along the way, of the Leibnizian notion that this is the best of all possible worlds; for surely, he asks, there must be something better than “consumer surplus plus producer surplus.” Indeed, as he argues, the world cannot turn on economics alone, and the notion of economism that the aim of all life is to increase wealth carries the prospect of social harm.

Do the better angels of our nature demand double-digit profit? For a soft-path, smart refutation, Kwak’s book is just the ticket.