Fundamentalism and realism in Economy

To 79 years of crack of the 24 of October of 1929, the present debate of economic science has shown the deep division between realists and fundamentalists as formerly it were it the debate between keynesian and monetaristas, been account that the Keynes was essentially monetarista (of there the title of its work: The General Theory of the Employment, Interest and Money) as they showed Clower and Leijonhufvud in years 60s.

The economic fundamentalism implanted by the neoliberal doctrine from principles of the 80 it has been contradicted with the present financial crisis that it has to the world surrounded in an ancestral psychological fear. Beyond the speculative bubble of the Dow Jones from aims of the 90s to the last year (that took it to a sobrevalue of more than 14 thousand points and must be sincerar around the 7,000) fundamentalists they have appealed to the unshakeable faith in the models to the point that if an observation does not fit in the context, must be excluded from the analysis because “the markets are perfect”. For the fundamentalists the crises do not exist because they are attributed “to market faults”. And its answer to solve the faults of the market is “with more market”. For the fundamentalists the one is the man that must adapt to the necessities of the economic system and not the economic model the one that must adapt to the human necessities.

The exposition of Adam Smith was a progressive model for its time. It’s proposal looked for to put in front to the hobbsiana thesis of homo homini lupus where the collapse of the humanity was inevitable without the presence of a protected regulator Leviathan in the force of the Law. The thesis of Smith was to reveal the collaboration and proactive impulses of the man (taken of David Hume) and to show that this one far from looking for its extermination looks for to develop the progress. This long ago more patent in the Theory of the moral feelings where Smith plays with harmony balance of the social invisible hand suggested by Mandeville and Newton. For that reason The Wealth of Nations marks the beginning of economic science, understood like a theory that it looks for to explain the growth and the social progress.

Smith was a liberal progressive in all the line. For that reason it does not have anything to do with the Neoliberalism the Friedman who makes of the market “only that matters”, in the this sense thesis of Friedman were questioned and its “intellectually corrupt” exposition, as it indicates Paul Krugman, is just beginning to be revealed. The market fundamentalism is what on the brink of madness has to the world in this present collapse and the global paralysis. Because the markets are not divine justice, but rather the force angry and destroyer of the nature. What we are seeing every day, perplex, is the fury of the market, ideologized by the fundamentalist currents of the free capital.

James Tobin, in his critic to Monetary Frame of Friedman (The Monetary Interpretation of History), of 1965, indicates the easy thing that he was to pass of the phrase “the money matters” to “the money is the unique thing that matters”. And this is what Friedman in his fundamentalist absolutism did: “the money is the unique thing that matters”, and made of the monetary policy and the control of the inflation the axis of the action of the central banks, closing the way to other preoccupations like the growth, the employ, the total use or the distribution of the entrance.

Tobin, in one more a “realistic” line, raised the necessity to dissuade the practices of financial speculation with a tax that increased in price it, to be able to develop to policies oriented to the total use and the growth of the real economy. However, the “Tobin rate” gradually was left by the governments and central banks and the capital flows freely circulated and at the speed of the light around all the planet looking for the differential of easy gain that it inflated the bubble that today falls resoundingly like a controlled demolition.

The realists of the economy have been more conscientious of the limits of the models and they are quick to settle contrastables decisions of economic policy with the direct experience, of in case complex. The neoliberal medicine far from solving the problems of the humanity as Friedman promised to it (the hunger, unemployment, the inequality), has created a polarized and unequal world more. It is clear that the patient must be put under a different treatment.

The basic prescription of the fundamentalists of the market was “to stabilize, to liberalize, to privatize” applying the prescription not to generate an increase maintained of the prices. Thus it was as the inflation were reduced remarkably to global level in years 90. But this also was consequence of the high temporary gains produced by the privatizations.

The fundamentalist models of the call “positive economy” and its estocastics dynamics of the general balance cannot explain the present crisis. This is the alert call that their models are incomplete and must be completed by economists who do not follow table-strickles the orthodox theoretical recipe book. It is necessary to return to direct to the economy towards the total use and this time with a growth model that bets by the conservation of the planet, the quality of life and environment. The easy gain to the Wall Street, does not go more.

Note: This post was originally published in El Blog Salmon. See the original version in Spanish.
Nota: Este texto fue publicado originalmente en El Blog Salmón. Vea la versión original aquí.

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