it eats through just about every traditional concept, and leaves in its wake a revolutionized world-view, with most of the old landmarks still recognizable, but transformed in fundamental ways.The same thing is true of economic choice theories: The logic of equilibria based on rational actors making marginal adjustments started as a description of the market, ate its way into “above market”-institutions such as regulatory agencies (regulatory capture) and government (public choice), as well as “non-market”-institutions such as families and – in a nice little satirical Ourobos-move – the discipline of economics:
The way I would describe Academic Choice theory is that it is “the sociology of economists, without romance.” Is this right? What an insightful comment. As you say, Academic Choice theory is a descriptive project, with no normative orientation. We apply a critical approach in order to counterbalance pervasive earlier notions of economists as scientific heroes struggling against popular ignorance in order to serve the common good.The post is
What would you identify as the central insights of Academic Choice theory? The theory begins by identifying three principal ways in which economists try to maximize their utility. First, they receive salaries from universities, which can be increased if their course enrollment increases. Course enrollment is primarily driven by students with future careers in business and the financial sector, so an economist has an incentive to propound theories that CEOs and financial institutions find attractive. Even if adoption of these theories leads to substantial public costs, these costs will not be shouldered by the economist personally. Second, by developing such theories an economist can open the door to future wealth as a lobbyist or consultant. Third, the support of economists is critical to creating and maintaining special privileges for the financial services industry and for top corporate officers. By threatening to withdraw this support, economists can engage in rent-seeking. I call this last practice academic entrepreneurship.
Dr. Rauss Elysium had summed up the entire science of economics in four propositions, to wit:
1. Find out who profits from it.
This was merely a restatement of the old Latin proverb-a favorite of Lenin's-cui bono?
2. Groups never meet together except to conspire against other groups.
This was a generalization of Adam Smith's more limited proposition "Men of the same profession never meet together except to defraud the general public." Dr. Rauss Elysium had realized that it applies not just to merchants, but to groups of all sorts, including the governmental sector.
4. Every system evolves and expands until it encroaches upon other systems.
This was just a simplification of most of the discoveries of ecology and General Systems Theory.
4. It all returns to equilibrium, eventually.
This was based on a broad Evolutionary Perspective and was the basic faith of the Invisible Hand mystique. Dr. Rauss Elysium had merely recognized that the Invisible Hand, first noted by Adam Smith, operates everywhere. The Invisible Hand, Dr. Rauss Elysium claimed, does not merely function in a free market, as Smith had thought, but continues to control everything no matter how many conspiracies, in or out of government, attempt to frustrate it. Indeed, by including Propositions 2 and 3 inside the perspective of this Proposition 4, it was obvious-at least to him-that conspiracy, government interference, monopoly, and all other attempts to frustrate the Invisible Hand were themselves part of the intricate, complex working of the Invisible Hand itself.
He was an economic Taoist.
The Invisible Hand-ers were bitterly hated by the orthodox old Libertarians. The old Libertarians claimed that the Invisible Hand-ers had carried Adam Smith to the point of self-contradiction.
The Invisible Hand people, of course, denied that.
"We're not telling you not to oppose the government," Dr. Rauss Elysium always told them. "That's your genetic and evolutionary function; just as it's the government's function to oppose you."
"But," the Libertarians would protest, "if you don't join us, the government will evolve and expand indefinitely."
"Not so," Dr. Rauss Elysium would say, with supreme Faith. "It will only evolve and expand until it creates sufficient opposition. Your coalition is that sufficient opposition at this time and place. If it were not sufficient, there would be more of you."
Some Invisible Hand-ers, of course, eventually quit and returned to orthodox Libertarianism.
They said that, no matter how hard they looked, they couldn't see the Invisible Hand.
"You're not looking hard enough," Dr. Rauss Elysium told them. "You've got to notice every little detail."
Sometimes, he would point out, ironically, that many had abandoned Libertarianism to become socialists or other kinds of Statists because they couldn't see the Invisible Hand even in the Free Market of the nineteenth century.
All they could see, he said, were the conspiracies of the big capitalists to prevent free competition and to maintain their monopolies. They, the fools, had believed government intervention would stop this.
Government intervention was, to Dr. Rauss Elysium, just like the conspiracies of the corporations, merely another aspect of the Invisible Hand.
"It all coheres wonderfully," he never tired of repeating. "Just notice all the details."