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Economic Rationalism

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One rainy day, we shut down the World Economic Forum.

Economic Rationalism: a strange kind of rationality...

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here is my old (2004) site campaigning against the US-Australia Free Trade Agreement: "The Pie grows bigger, but fewer people get to eat it"


If you went and sat in on a mainstream economics class tomorrow, you would need to make some big assumptions in order to understand:

-that economic growth automatically 'trickles down' to benefit the poor

-that free trade will lead to economic growth

-that large companies, if free to do what they like, will act benevolently, 'for the greater good'. (Click here for a summary of what's wrong with corporations)

Now if these economists were decent scientists, they would make their assumptions clear in their discussions. However, most economists neglect doing this. They claim their theories are valid because they work. But who do they work for? and who is missing out?

Neoliberal economists like to think of themselves as scientists, yet the axioms on which their theories are built are not value-free: many would argue that they are values in themselves, ultimately pointing to a narrow view of what it means to be human; what it means to cooperate, what is virtue.

Recently, I found a statement that my grandpa Jack Williams wrote in one of his old books: "Education is what's left over after the facts are forgotten". If this is true, then the main type of education that a student of mainstream economics gets these days is an unconscious re-orientation of values: until a point when they value money as an end in itself: for its own sake, rather than as a useful (but not always necessary) tool to achieving greater things.

The unexamined basis of modern economics continues to mislead students of commerce, allowing them to see their theories as apolitical and neutral. Here is an excellent article on the hegemony of growth economics, that talks about the coercive language of 'economic correctness', and suggests visions for a 'degrowth' economy.

Let us tear apart this statement:

Homo economicus is a rational being, who maximises self interest through his power in the market.

What do they mean by rational? What is self-interest? selfishness or evolutionary advantage? And what kind of power does the free market give people?

It is simply not a given that rational people should be selfish. Consistent with an entire human inheritance of humane philosophies, my Catholic school and home education taught me that I will have a happier life if I look out for others before myself. And that humans are not trapped by a crude order of survival of the fittest: rather, they should always reflect critically on their own actions and evaluate whether they were for the greater good. It would be arrogant and patronising to call such values "Irrational".

A step further from this stance is justifying global inequality. Apologists see Majority World (third world) poverty as a state of nature, or worse, that the people of these countries are responsible for their own poverty, due to 'economic mismanagement' and corruption. Yet corruption alone cannot account for the huge disparities that are legacies of colonialism and neocolonialism. (And corruption cannot be analysed in an individualist sense. Moral focus should also analyse the structures that support corruption: not just bribery, but also a culture of siphoning off money from those people who earned it, by selling their labour and their homelands. In addition, the degree of political empowerment that people have in a neo-colonialist situation.)

Many of us can hardly imagine a time when children in Africa and Asia were not starving, so we often assume that it has always been the case. Another variation is a fatalist belief that 'the poor will always be with us' -yet this statement fails to see trends of rapidly increasing poverty.

Our own governments continue to have a major role in supporting unfairly dependent relationships- only this time around the colonialism is happening through corporations rather than imperial conquest. In recent years, the phenomenal increase in the lobbying power of business interests over government decisionmaking, ensures that the big business-government connection is rock solid.

Unless we take action to reverse this trend, we in rich countries are implicated in the policies that condemn our Majority World friends into cycles of poverty. We need to hold our governments accountable. And deconstructing the economic myths is one step.

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Here is an account of the September 2000 protests against the World Economic Forum in Melbourne, which we shut down successfully. This was my first major protest.

Here is a story I wrote about these protests.

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