Steve is always right, but I want to propose an additional sequence through which to view the history of economics: the problems each generation was trying to solve as we passed through the sequential revolutions in sail, agrarian production, commerce, finance, industrial, and technological:
- Physiocrats: Solve the problem of government management of the economy
- Adam Smith and NeoClassicals: solve the problem of peace through trade
- German Austrian Economics: Solve the problem of Rule of Law + Social Science
- Jewish Austrian Economics: Solve the problem of the the consequences of german austrian economics of the commons – biased in favor of investors (and rent seekers) at the expense of the commons.
- Schumpeter-Austrians: solve the problem of innovative velocity.
- Keynesians: Solve the problem of employment. Probability, disequilibrium, and animal spirits create unpredictability (seeking disequilibrium)
- Chicago (Freshwater) School: Solve the problem of insurance against shocks. Social Science, Rule of Law, Redistributive goods, plus insurance against shocks
- NY (Saltwater) School: Maximize goods of consumption, tax revenue, and goverment spending now and worry about problems later.
- MMT (Clown World): the failure point of the Marxist -> Keynesian -> Saltwater utopia, where govts spend as if in a closed system despite the destruction of the pricing system, incentives, and maximizing political malincentives.
- The future requires ‘multiple economies for multiple capabilities’ vastly increasing the complexity in order to absorb the difference between tech requiresments and labor’s abilities, in the presence of declining populations.
So Economic Schools = Social Science and rule of law, vs Insurance at the cost of some disinformation and rule of law vs Disinformation that violates rule of law. 😉
As of 2008 we know that Austrian theory of cycles, prevails and there is no escaping it.
As of 2008 the field of economics has grown relatively silent because it is out of ideas by which to distort information as a means of maximizing human activity.
As of 2016 we understand that full employment, growth from population increases, are over, as is the excess of investable capital, and as are the returns on (basic, primary) scientific investment that produces increases in available energy – as such we have destroyed all behavioral capital necessary for other than the incremental restoration of intergenerational saving and lending, and we have no means of accommodating the collapse of demand for labor unable to program and use advanced machines and related technology. When 15% or more of the population is presently unemployable except under debt load, and that number will reach at least 25% in the next two or three decades.
Simple version is that (as steve hinted at the beginning) economics is the study of the relationship between energy conversion and the means of cooperation necessary to discover and apply it, resulting in increases in per capita energy consumption, and disappointingly there is no visible end horizon of limit that does not lead to our devolution in to hyperconsumption as the only objective of existence.
I sort of disagree with steve’s semi-religous criticism of capitalism, where it’s just a technology like any other, and all civilizations consist of mixed economies and have to.
The question is how do we produce an economy that maximizes the quality of human life while increasing the conversion of energy, when every generation of such progress leads to decrease in the productive classes and increases in unproductive classes that absorb as rents all proceeds until civilizations (families, businesses, industries, nations for that matter) cannot adapt to shocks.