Posted in : Economic evolution, Neoliberalism on by : petersen Comments: 0


Keynes wrote “the ideas of economists and political philosophers …are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt  from any intellectual  influences are usually the slaves  of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back”. This is very sound in principle, but too narrow.

Keynes continued  ” I am  sure that the power of vested interests  is vastly exaggerated compared with the gradual encroachment of ideas”(J.M.Keynes, 1936)  I do not think that this is true.

People are fascinated  by myths and stories – witness the huge number of novels read by billions of people today. Myths and stories are  sometimes consolidated and disseminated by priests into holy texts; and by academics  into  political philosophies. Over many millennia, such stories have  been  distorted and used by vested interests – led by tribal leaders, emperors, kings, feudal lords,  capitalists, or politicians – as powerful  weapons  to help them to gain and consolidate political power and riches. This process continues unabated  in twenty first century Western democracies.

Tawney showed  in Religion and the Rise of Capitalism how from the fifteenth century onwards,  the church failed to support  merchants and capitalists –  whose riches were growing – with the power and influence they sought. So classical  (followed by neo-classical) economists filled that gap. Notably, Adam Smith’s absurd myth of the “invisible hand” is still fulfilling this role today for neoliberal capitalism. In contrast, the Marx-Engels Communist Manifesto has been a magnificent weapon in the hands of ambitious politicians wishing to overthrow existing regimes.

It is the power of their rhetoric  rather than the truth or  logic of their arguments, which helps to turn stories and myths into powerful weapons in the hands of greedy and power hungry people  to support and sustain their political influence: The Protocols of the Elders of Zion was a forgery, but this  did not reduce its value as support for Hitler’s  policies.

The rise of electoral democracies has been accompanied by enhancement of the role of myths and stories in economics and politics, in which “truth”, even if it could  be found, has rarely ever played much of a role. Since about  1980, very rich capitalists have assembled a monumental collection of  myths and stories  which support international  capitalism;  and which have been widely disseminated most effectively by the use of enormous resources to employ very powerful modern means of communication.

The  neoliberal  capitalist system collapses every few years, continues to concentrate enormous riches  on a tiny proportion of the world’s population, and  afflicts greatly the vast majority of that population and the welfare of the planet itself. This  hardly makes a dent in its great worldwide popularity.

Reference: J.M. Keynes , 1936, The General Theory of Employment Interest and Money, Macmillan, London, page 383.

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