Another Economist’s Anti-Economics

download (3)Ha-Joon Chang, development economist at Cambridge University, has published a new book: Economics: The User’s Guide. The Huffington Post publishes a selected excerpt that makes for utterly terrifying reading. Not only does this book “on economics” appear to be written as some form of dismissive narrative (?), but it makes assertions and produces stacks of baseless or misleading statements about economics that supposedly comprise “arguments.” And, to top it off, Chang claims open-mindedness in his narrow-minded “takedown” of economics.

I couldn’t resist going through the statements in the HuffPo excerpt one by one and put light on this shady reasoning. Chang seems happily ignorant of what economic analysis entails. He never produces an argument in the excerpt; the only thing he accomplishes is to advertise how limited his understanding of the field he represents must be.

From my commentary, Ha-Joon Chang, Yet Another Economics Skeptic:

At first glance, this may seem like a worthy criticism – look, economics is supposed to be value-free, but not even its supposed value-free methods are value-free. But it really just amounts to a dishonest application without much relevance even to neoclassical economists. As readers of this blog know all too well, neoclassical economists tend to use “models” based on rather absurd and highly simplified assumptions such as “perfect information.” Well, they also commonly assume “perfect competition,” but Chang somehow misses this point. Instead, he assumes that the use of the Pareto criterion in abstract models under such assumptions is applied directly and thoughtlessly on empirical analyses.

Granted, if we take the Pareto criterion without thinking about it and apply it on an empirical situation akin to the ones we find in the developing world, then it appears rather outrageous. There’s nothing “natural” or equal or just with the starting point, which means the Pareto criterion only cements this situation – where radical change may be more just. In this sense, one can only agree with Chang. Except, of course, for the fact that economists don’t use the Pareto criterion inductively; they use it deductively, which in fact means that it is a criterion only from a starting point that is accepted as “untainted” by politics, privilege, etc.

More here: Ha-Joon Chang, Yet Another Economics Skeptic

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