Most Popular Myths of Mainstream Economics

These are in my opinion the most popular myths of mainstream (neoclassical, neoliberal) economics. Comments, critiques and suggestions are welcome.

Note that most of these myths are also the myths of modern Western industrial education that generally fosters a sufficient level of ignorance in disciplines like philosophy, ecology, anthropology, history, music and other fine arts. In most cases, these broad-viewed disciplines help us see the complete picture related with big economic questions.

(1) If a company is earning money in legal ways, it must be producing something useful for the society, and creating new jobs.

Ignores many legal ways of earning money with huge hidden (social and ecological) costs to the society, like dirty mining/industry/energy projects, or industrial agriculture based on mechanistic monocultures.

A myth, much inspired by the “invisible hand” argument of Adam Smith, ignores invisible costs (negative externalities) to today’s societies and future generations.

This is probably the most central, most popular, and for the global finance/corporation/oil/weapon oligarchy most useful myth, which boils down to: “Every medium is right for earning money and power, provided that it has a legal and ideological cloak.”

Because politicians and governments can be controlled with money in our modern times (a global tendency since 1990s) along with mass media and mainstream (industrial) education, this in turn boils down to: “Money justifies everything!”

(2) Every country in the world can become developed to reach better living standards by following the same historical path of a developed country like Germany (education, industrialization, organization, technology, urbanization, modern institutions…)

Ignores military and industrial imperialism, global oligarchies and monopolies, physical and ecological limits of the world.

Erroneously assumes, there is, or there must be, a single direction of development and progress for every society in the world (racist Western ideology of progress, misinterpretation of cultural evolution, industrial & neoclassical worldview).

Living standards is also a very much disputed term. Societies cannot be compared or measured by living standards because there are different cultures and lifestyles. How can you compare the living standards of a lion and a leopard? For example, the concept of education (i.e. what is a good education?) can be different for every society and lifestyle.

Believing in this myth is like believing, everyone in a society can become rich by stealing from others. The money mogul of the village didn’t become rich because he worked more, smarter or more efficiently than the others, but because he controlled and monopolized strategic resources much earlier than the others.

(3) Let’s make the cake bigger (GDP growth) so that everyone can get a larger slice (popular growing cake analogy for economic growth).

By ignoring the non-monetary production of nature and society (through narrow focus on money and market only) erroneously assumes that GDP (Gross Domestic Product) is a good measure of economic production and welfare (mechanistic and monetary reductionism).

Also ignores hidden costs (externalities) to society and nature due to destructive and exploitative business practices that earn millions of dollars for their investors and other stakeholders.

Considering the complete picture, including non-monetary production of society and nature, many economies are not growing at all as the fallacious GDP numbers imply. In fact, ecological carrying capacity of the world, which is a much more complete and important measure than the narrow-sighted GDP, is rapidly decreasing.

Highly recommended video on YouTube: The Lunacy of Economic Growth by Vandana Shiva

You may find in my 4. PhD progress report (February 2020) an extensive critique of the GDP measure and growthism, beginning on page 35.

(4) Let’s develop our economy first; we can think about the environment later.

Erroneously assumes, there can be an economy without the primary production of nature (air, water, soil, stable climate, forest and marine products…) and soil (healthy agriculture and food).

Also erroneously assumes, environmental health is a luxury (optional, secondary) good, because it fails to recognize the ecological connection of environmental health with human health (i.e. atomism and separationism of mechanistic worldview as an antithesis of organic worldview that says everything is connected).

In fact, there cannot be healthy food if the soil is not healthy, and human health requires first of all healthy food, and healthy environment.

Besides, health of economy (?) cannot be more important than the health of society.

(5) As you know, factors of production are land, labor and capital.

Ignores the primary production of nature (living ecosystems like forests, rivers, oceans etc.) For mainstream economics, land is a non-living, non-destructible, mechanistic entity (human-centered worldview of industrial paradigm).

For mainstream economics, there is only one producer: Human. Nature is not a producer; it is only a raw material resource, and a dumping ground for waste. Nature doesn’t produce things like food, air, water, soil, fire wood, medical plants, stable climate…

(6) Especially for developing(!) countries, foreign investment is the key for economic growth and development.

Ignores the fact that (if not assessed and regulated properly) most of these investments are channeled to (for the investors) very profitable, but socially exploitative and destructive projects, like dirty mining/industry/energy and industrial agriculture. See: Ecosystem Mutilation and Patching Business

(7) Humanity has progressed continuously with industrialization, urbanization and technological progress.

Ignores the real history of civilizations, and the discoveries of modern anthropology and archeology (Western cultural racism and its ideology of progress).

Highly recommended: Progress and Its Critics by Cristopher Lasch

Technological fundamentalism or over-optimism: Blind faith in technology, generally fostered by ecological and historical ignorance, which erroneously assumes that technological progress (human-made tools & devices) can solve every kind of social and ecological problem.

Erroneously assumes, human condition (living standards etc. as if there were universal standards for living) improved continuously all over the world (wherever there is economic development & growth in the neoclassical sense) within the last centuries.

(8) Industrialization and urbanization are primary keys for economic development and progress.

Progress in what? Progress in general well-being of the society, including future generations? No, progress in the monetary wealth of the privileged minority (investors & other stakeholders of corporations).

See speech by Lorenzo Fioramonti (economist), author of Wellbeing Economy, for exploitative industries that transfer wealth from the society (including next generations) to the privileged minority (i.e. refined and disguised methods for stealing from the majority of a society):

“According to a joint research by United Nations & World Bank, 20 largest industry sectors of the world including energy, mining, transport and food production (industrial agriculture) cause much more damage than their total profits.”

Urbanization makes people much less self-reliant in almost every aspect of life including food, shelter, clothing and entertainment. City people are much more dependent on the commodities and technologies of corporations.

In fact, destruction of self-reliant & sustainable local economies for the benefit of exploitative & industrial urban economies (in the name of economic development) plays into the hand of the parasitic Ecosystem Mutilation & Patching Business.

See also meta externalities by Neva Goodwin

One of the many adverse effects of urbanization (extremely high population densities in limited areas): Ecological Rift (or metabolic rift) by Foster & York

Ecological Rift creates new problems, needs and necessities; hence new profit and monopolization opportunities for corporations.

Another excellent book that explains the problem of urbanization and ecological rift: The Unsettling of America: Culture and Agriculture by Wendell Berry

Whatever the intended purpose or public story is, the real function of modern industrial education is, in my opinion, producing tamed specialists for the industry (i.e. well-behaved specialists for government and corporate bureaucracy) who don’t ask inconvenient questions like “what am I working for?” or “whom am I working for?”.

“Just do your job well in the narrow technical sense (like the Nazi high-bureaucrat Adolf Eichmann) and don’t ask nasty questions about the meaning or purpose!” (see Hannah Arendt’s challenge to Adolf Eichmann by Judith Butler)

Tamed specialists should be ideal consumers who ask nothing more than money; that is, comfort, convenience, security, high living standards (!) and a bit of luxury if possible, to have even higher living standards (hence status) than the other tamed consumers.

Because asking inconvenient questions is in most cases connected with questioning the big picture and ultimate purpose, modern industrial education tend to assign very low priorities to disciplines like philosophy, ecology, anthropology and holistic history, that help students see, or at least question the complete picture.

As a consequence, most students of modern industrial education today tend to believe in the economic myths that I listed above. I was personally not much different as I finished my master in electrical engineering (in Switzerland) 25 years ago.

Written by Tunç Ali Kütükçüoğlu, on 23. July 2020

PS: You can send your comments, critiques and suggestions to phd at tuncalik dot com.