Sunday, August 09, 2015

Approaches to Economics: A few definitions

Classical Economics -- complex model building using a combination of empirics and logic to explain those empirical observations. 

Econometrics -- making simple mathematical models of the economy and then recommending policies to make the real world fit the models.

Keynesian Economics -- given the institutions we currently have, what will fix or maintain the current situation right now, with little to no consideration of the future.

Marxist Economics -- an anti-empirical, logic-based system beginning with the premise that value is created through labor; given that value is subjective, the entire system completely collapses (much like actual attempts to realize Marx's vision in the real world).

Central Planning Socialism -- given econometric models as ideal and given the belief that the economy can be completely predicted and controlled (through econometrics), the ideal system; given that prices cannot ever be calculated, the worst idea ever.

Democratic Socialism -- replacing the market with votes; the end-result is the creation of government monopolies and the inability to determine prices to help with the most efficient distribution of materials, goods, or services.

Complexity Economics -- algorithmic model-building with the goal of getting the models to match the real world. Both negative and positive feedback taken into consideration.

Austrian Economics -- an approach to economics beginning with human action and human motivations to satisfy their perceived needs and values. It also uses empirics and logic to explain those empirical observations. It also uses algorthmic model building to explain the emergence of spontaneous orders and how they affect human (inter)actions.

Behavioral Economics -- humans do not act rationally, so we need equally arational humans to design systems to make people act more rationally, to fit our econometric models. Potentially, an insightful approach to economics, once it completely abandons mainline economics / econometrics.

Neoliberal Economics -- whatever system progressives disapprove of. It means anything and nothing.

Progressive Economics -- changing whatever we have, regardless of any understanding of economics, regardless of whether or not what we have is now working ir if anything in the past worked.

Fascism -- a form of political economy in which the government controls the economy through regulations and by allowing private citizens to pretend that they are the ones who run and own the means of production when it is in fact the government which does. Also known as corporatism, as it takes the corporation as the ideal model on which all of society should be designed. A combination of nationalism and socialism. Given its dominance in the world, the most successful threat to free market capitalism ever developed. Its success comes from the fact that it is structured in such a way that its failures can be blamed on a non-existent free market or "deregulations" that never took place, creating the conditions for more regulations to be imposed on the economy.
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