After slugging my way through four years of the myths, lies, untried and untested opinions of what I eventually called, Institutionalized Economics, I finally figured it out.
About four decades ago, I was a disciplined and resolute student of economics, dutifully enrolled and studying at an esteemed institution of higher learning, trying to hang on to a modicum of common sense while at the same time attempting to digest and regurgitate a steady diet of ideas dedicated to excising it from my thinking process: Institutionalized Economics and I were operating on two distinctly disparate goals!
Institutionalized economics is rigidly controlled only to align with what they can see has come before. The text-books have no vision, no foresight, no imagination or creativity and are they are always written by the professors teaching the classes. Of course, his or her book becomes the bible that you are required to study with pious religiosity.
These professors obviously fall proudly into the category of “institutionalized economic great thinkers” as that is the price of admission to the inner circle of those empowered to hold the heady positions, teach the classes and hand out grades and titles. Any new, creative or alternative economic thought is targeted as an enemy to survival in their dull and doomed world of rigidity and formality.
But if you play along long enough, they’ll reward you with a license to survive – the title most prized: a Ph.D. in Economics. Now you’re one of them. You can now be further rewarded with your own tethered position allowing you to indoctrinate young minds full of mush into studying institutionalized economics to perpetuate the myths, lies and opinions that you swallowed and regurgitated to get to where you are today. So it goes; on and on without end.
What I figured out – and what Howard Katz very ably outlines in the excerpts to follow from his article entitled, “No Depression” – was that I didn’t fit into the institutionalized economics way of thinking any more than he did. Rather, I was what is what he termed, an alternative economics thinker.
I have always been a seeker of truth and a proponent of freedom of choice; in the instant case, economic truth and the free market. The concept and reality of institutionalized economics study took me farther away from that goal in a way similar to what a prisoner experiences after long incarceration – I became the unwitting effect of institutionalized economics, not dissimilar to the process of a person becoming institutionalized by the penal system.
Institutionalization or being institutionalized is a pejorative term. It is antipathetic to the ability of anyone to think for themselves. It requires inmates to give up the freedom to make their own choices and decisions and this process requires what is a painful adjustment for most people. Some adapt easily, some never adjust to it. Over time, however, prisoners gradually adjust to the muting of self-initiative and independence that prison requires and become increasingly dependent on institutional contingencies that they once resisted.
Eventually it begins to seem natural or even desirable to be denied significant control over day-to-day decisions and, in the final stages of the process, some inmates may come to depend heavily on institutional decision-makers to make choices for them. The structure and schedule of the institution to organize their daily routine takes on a level of comfort and predictability that is considered desirable.
The study of economics in most institutions of higher learning follow the same pattern of creating an institutionalized mind set in the student not dissimilar to that of a prisoner. Happily, it didn’t go that far in my studies as I recognized the early stages and was able to avoid the inevitable result.
I admit that perhaps I am more of a philosopher than an economist. But as I see it, life is 9/10ths economics. If the study of economics doesn’t include the application to the lives of people, what good is it? What they are preaching just doesn’t pass the “smell test” . . . it just doesn’t make sense. It may have looked good on papers, treatises, graphs and other devices used to “prove” their theories, but when put to the test in the real world, it just didn’t work.
What I was looking for in studying economics was a workable truth, or a philosophic truth that could be applied to help people in the real world of the living. I discovered that I needed to look far beyond institutionalized economics to find even a hint of truth. Rather, I found economic truth in studying alternative economic writers – such as Henry Haslett and others even while I continued my studies in the unnamed institution of higher learning where I was enrolled. In Mr. Hazlet’s book, Economics in One Lesson, he makes a powerful and persuasive argument in favor of a free market economy. And he wrote that the prime lesson is to not judge the economic consequences of what you see but rather to look beyond and consider the consequences that you don’t see (apparently an alien concept to many).
The persistent tendency of most institutionalized or establishment economic thinkers is to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary or unintended consequences.
In my opinion, most people only act out of their own self interest, specifically including those three-lettered economic professors looking down from their lofty, ivory towers. Only those who are willing to observe and who are sufficiently free-thinking to make up their own minds, should be trusted to act in accordance with the good of all the people. And these select individuals will be mostly found as members of the group called, alternative economists.
I’m proud to consider myself as a member of this group.
Now then, here is an excerpt of the recent article, “No Depression” by Howard Katz, http://www.thegoldbug.com. He introduces and explains the concepts of “establishment economists” and alternative economists.” I am indebted to him for the clarity and truth embedded in his words in this article and other writings. – daniel w. jacobs
NO DEPRESSION by Howard Katz
“First, the field of economics today is divided into two parts: establishment economics and alternative economics.
The establishment is rigidly controlled. The people in power teach courses and hand out titles. If you parrot everything they say, then they give you a title (such as a bachelor of science in economics). Great importance is placed on such titles in establishment economics.
Alternative economists, on the other hand, acquire their economics on the basis of freedom. They study it on their own. They visit libraries and hunt down the best writers via small out-of-the way publishers and bookshops. Their highest value is the judgement of their own minds. In our day, establishment economists preach garbage and are almost invariably wrong. Alternative economists preach a wide variety of doctrines, and a few of them have a record of being usually right.
Second, what are you, the seeker after economic truth, to do in this situation? First, you must completely ignore all establishment economists. When you are first starting in the field, you will naturally check them out. But after a little study you find that they do not know anything, and their predictions are notoriously wrong (the New York Time’s and Wall Street Journal’s support for “Dow 36,000” back in 1999 to take one embarrassing example – said objective to be achieved by 2002-2004, “The Great Depression of 1990” to take another example). Further, these establishment economists are not at all deterred by their repeated failures. Such failures roll off their backs. This is because they are not searching for truth. They are searching for the approval of authority. So they are not the least put off that they have not found truth.
When you have assigned the establishment economists to that great garbage dumpster in the sky, you must turn to the alternative economists. TBut here your search is not ended. Indeed, it is just begun. Because alternative economists have many different points of view. As I indicated above, some of us believe that the big threat to your economic well-being is a sharp rise in prices (what is generally but incorrectly called inflation). But here today I want to discuss those who believe that the big threat is a sharp decline in prices (generally but incorrectly called deflation).
If you went to think clearly about economics, it is important to keep these two possibilities in your mind. They are opposites. If you have one, you can’t have the other. And when completely understood, they cover all possibilities. In the language of the mathematician, they are mutually exclusive and exhaustive.” – Howard Katz