ECONOMIC GROWTH – A SHORT HISTORY OF A CONTROVERSIAL IDEA
By GARETH DALE
June 15, 2019
Comments by Charles Sulka
The URL of the original article is posted at the end of this commentary.
I have not had the opportunity to study the works of the writers referenced in this erudite essay, and unfortunately time does not permit me to do so at this point. Nevertheless, I think that this writer, Gareth Dale, demonstrates here that he is an authority on the questionable concept of economic growth as defined by current economic theory. [A subject which, in a decade of collecting material for the ISSUES Database, has usually been portrayed in a positive light, that being that growth is good. It is a concept which I sensed was in error, but which most economists were committed to, and few willing to question.] Dale provides us with a critical examination of the issue, something which is badly needed in the field of economics today, where questionable concepts — many just plain wrong — are taken as given. Falsehood is taken as gospel, if you will.
This article must be considered foundational — what I refer to as ‘definitive’ in the ISSUES Database. In other words, any examination of this subject should include this material at a minimum. Everyone studying political economics should think seriously about the true significance of the GDP growth paradigm.
Even though it is almost never acknowledged, one of the main reasons for economists’ devotion to GDP growth in modern economic thinking is that the metrics of GDP growth provide a convenient (if deceptive) portrayal of the field of economics as a real science. In reality the study of economics cannot be likened to the ‘hard’ sciences, where the study of observable phenomena and immutable principles is conducted using the scientific method. Economists long for legitimacy; they go to great lengths to quantify the unquantifiable. Economists, insecure men and women who have always struggled at the margins of legitimacy, want to be taken seriously. They would probably fare better if they didn’t take themselves so seriously.
There is another reason that GDP growth figures prominently in economic thinking. It is unclear how many economists even understand this simple truth, but ‘growth’ (enlargement of the numbers, the continual increases in valuation) provides a mechanism for the parasitic financial sector to levy its toll. Without growth there would be no way for the financial sector to accomplish it’s mission, that being the acquisition of all the wealth of society by the high priests of high finance, and the resultant enslavement of the human race to finance capital and the men who control it. Growth is an essential doctrine in what has become the new world religion — capitalism — where acquiring wealth leads to enlightenment (and to hell with all this nonsense about the eternal life of the soul.) Why do you think this new religion is called ‘capitalism?’ It is because mammon has replaced God as the object of devotion.
Growth (like compound interest) allows the parasites to continuously extract wealth from the real economy using nothing more than made-up numbers contrived via a process of buying and selling securities, often using other peoples’ money, taxpayers’ money, imaginary money (central bank credit), or no money at all. Over time, this process allows the financial manipulators to suck the lifeblood out of the whole economy, acquiring all wealth in the process.
Expropriation occurs through a gradual process which generally goes unnoticed … until, like today, the system is on the verge of collapse as the limits have been reached. When such chimerical growth is noticed, it is generally not recognized as the threat it really is. Instead, growth is celebrated as success in political economics. People have been conditioned to applaud when the stock market is rising, even though there is no positive correlation between the numbers reflected in the stock market and growth in the productive economy. Quite the contrary is true in fact.
GDP growth is a fiction and a fraud on the public. Growth in the real economy — the market for goods and services as envisioned in classical economic theories — has long been shrinking, and will continue to shrink so long as neoliberal economists continue to mislead the people with their nonsense. (Economist Michael Hudson calls their economic theories ‘junk economics’, an apt description.) Sound economic principles were abandoned when the Reaganites pulled a fast one, replacing the traditional meaning of the term ‘market’ — the market for goods and services — with a twisted definition which primarily reflects non-productive endeavor: speculation, usury, capital gains, and outright fraud. Thus a process of financialization has been the cornerstone of the New Economics. Today, purely speculative activity and non-productive endeavor is the basis for this so-called economic ‘growth.’
No economic myth is more persistent than the idea that the stock market is a way that Everyman can share in the profits of the productive economy through thrift and hard work, and sound investments. In a collapsing market for goods and services and an economy awash with excess cash — not to mention unlimited free credit from the easy money policies of the central banks — nobody needs or even wants the small investor’s money. Indeed, banks have stopped paying interest on account holders’ deposits because they can find no productive use for the depositors’ funds. There may have been a time when The Little Guy could get ahead by investing in the stock market, but those days are long gone. It’s been a long time since honest working schmucks have been able to get ahead by investing in stocks and bonds. The stock market today is a rigged game — and it is not rigged in favor of the The Little Guy. The game is rigged in favor of the Wall Street swindlers. And when the Wall Street swindlers do not make enough profit from their financial manipulations, Congress will give them a bail-out of taxpayers money. The game is rigged. You cannot win.
[Economists make a practice of spoofing one another, just to see how stupid their counterparts might actually be. This process is used to establish what Dr. Jordan Peterson calls a ‘hierarchy of competence’ in the field. The more an economist entertains wacky ideas, the higher up he will be placed in this informal ranking. Those who percolate to the top — those who embrace the greatest number of nonsensical ideas, in other words — are viewed as bigger than life characters. Their pronouncements are regarded as Holy Writ. Some are awarded Nobel Prizes. This leads to serious competition in the field of economics. The pressure to come up with the next big idea in economics is intense.]
[The main purpose of this process is to deceive the public. The Nobel Prize awarded in the field of economics is not a REAL Nobel prize. The Nobel Committee has long viewed economists with suspicion (or worse, derision) and refused to establish a formal Nobel Prize in economics, a field which they regarded as a pseudo-science (this is a euphemism, a polite term for what is generally regarded an bunkum.) The banking cartel, having vast troves of money — ill-gotten gains from financial manipulation, usury, and financing the never-ending wars of kings and princes — and having absolutely no shame, licensed the Nobel name from the organization and set up a program whereby it confers prestigious-sounding awards to economists whose pronouncements make the greatest contribution to the profitability of the banks and the ruling elites. Like the Federal Reserve — a fraud on the people of the United States — the Nobel Prize in economics is a carefully crafted deception.]
GDP growth as a measure of economic output can perhaps best be seen in perspective if we examine the Parable of the Two Keynesian Economists, an inside joke favored by economists ….
Two Keynesian economists were out walking. They came upon a pile of dog poop on the sidewalk, whereupon one economist said to the other: “I’ll give you $10,000 to eat that pile of dog poop.” A devout capitalist always on the lookout for a way to make a quick buck without actually doing any work, the second economist agreed. He ate the dog poop, upon which he collected his $10,000 fee.
A little further down the road, they saw another pile of dog poop. Not feeling very well, and suspecting that he might have been duped (for economists are always playing such tricks on one another) the second economist decided to turn the tables. The second economist said to the first, “I’ll give YOU $10,000 to eat that pile of dog poop.”
Not wanting the other economist to be the only one to make a profit on the day’s activities, the first economist agreed. He ate the second pile of dog poop, at which point the second economist gave him back the $10,000.
A little later, the first Keynesian economist said to the second, “I don’t feel well. What a lousy day it’s been. We’ve both got the same amount of money we started with, and we’ve both eaten shit.”
“Yes”, answered the second Keynesian economist, beaming, “But look at how much we’ve accomplished. We’ve added $20,000 to the nation’s GDP in a single day!”
Much of the field of economics is based on flawed logic and baseless principles. When considering an economist’s proposition, think carefully about the line he is feeding you. Too much of modern economics is outright fraud, perpetrated by hucksters, and a lot is pure BS. The idea of growth as necessary and good is one of these questionable principles.
Question such ideas! The human race will survive and prosper only when it adopts reality-based thinking in addressing issues. Far too much is taken for granted, and the doctrinaire nature of economics education severely limits course correction in economic thinking.
Read Dale’s work thoughtfully.
(chs 06-25-2019 0831 -0500 / 06-28-2019 2131-0500)
[This article should be viewed in the web site HTML due to the extensive links and references.]
URL of Naked Capitalism (.com) blog post:
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The original article was posted on Open Democracy (.net):