The Three Deadly Sins: The Pseudo-Nobel Economics Prize

Let the lie
Have time on its own wings to fly.
Arthur Hugh Clough

In Christian theology, there are enumerated Seven Deadly Sins: pride, anger, envy, covetousness, gluttony, lust, and sloth. As a group, economists are guilty of committing three of these Deadly Sins – pride, envy, and sloth. What, you may ask, is the basis for my accusation? Let us count the economists’ sins.

First, economists are guilty of the Sin of Pride because they are inordinately proud of what they and their predecessors in their illustrious discipline have accomplished. They believe that theirs is a more rigorous, accurate, dignified, and important science than any of the other social sciences. Many economists would be offended if one were to declare that economics is on the same level with other disciplines that study human behaviour, such as psychology, sociology, psychiatry, criminology, anthropology, archaeology, political science, linguistics, and history. Many of them also seem to believe that the impenetrable bramble of mathematics with which they have surrounded their discipline, like an intellectual moat that renders most economics papers incomprehensible to the great majority of the world’s human population, is proof – if such proof were needed – of the very precise nature of their laws, theories, formulas, and their not-very-rational expectations.

Second, that economists are envious is shown by their frequent allusions to the precision, methodology, and rigor of physics, the quintessential example of what is called a “hard” science. Not only do they envy the very precise results and predictive power of physics, and the unified, comprehensive, and logically consistent theories that have been developed by physicists, economists also envy the great prestige that physicists and their science enjoy throughout the world. This envy has led them to adopt the same mathematical methods in their study of economic data and phenomena, in the expectation that this would give their field of study the same precision and prestige that is enjoyed by physics. To the great detriment of humanity, the intellectual charlatans known as economists have succeeded in pulling the wool over the eyes and brains of many of the world’s human population.

Third, economists are slothful because, although they are diligent in studying economic theories as students, reading and writing articles, papers, and books as professors, attending conferences where they meet their brethren in this occult and dismal profession in order to discuss all matters economical, and compiling statistics which they pore over at their leisure, they do not bother to verify their theories, predictions, and hypotheses. Considering how important is the step of verification in the scientific method, the omission of it is sufficient to disqualify economists from calling themselves scientists and their discipline – or rather indiscipline – a science.

That economists do not bother to complete this vital step is shown by the fact that they almost never use the word “hypothesis.”[1] But, as every schoolchild knows, until a law, theory, or prediction is verified by experimental evidence, it remains merely a hypothesis, that is, a belief, idea, or expectation about the way the world functions, but which, as is true of so many of our untested beliefs, ideas, and expectations, may turn out to be wrong. In fact, when economic theories like free-market or laissez-faire economic principles have been applied in many parts of the world, and the results have differed from what their theories led their advocates to expect, rather than interpreting the results as a refutation of their theories, economists have instead declared that the real-life conditions did not meet the unrealistic assumptions of their cherished theory, and therefore this apparent refutation does not prove anything, and certainly not the falsity of their theory – which, if the truth be told, they hold as an article of faith rather than as a conjecture which they are prepared to abandon if the evidence disproves it. By behaving in this unscientific manner, economists have been guilty of presenting to the rest of the world their unproven – and frequently erroneous – hypotheses in the duplicitous guise of established scientific truths.

Instead of subjecting their theories, laws, predictions, and expectations to rigorous testing and verification, as all true scientists do, economists have assumed that mere argument, deduction, and logical or mathematical consistency are enough to ensure that their conclusions are true. In other words, the way that economists arrive at their conclusions about the world and the best way of organizing human societies is no different from the deductive method of reasoning and argument that was used by Aristotle and his numerous imitators throughout the centuries to arrive at their conclusions about the world, many of which, as we now know, were completely wrong. What this means is that economists adhere to a philosophical, rather than to a scientific, standard of truth, which shows that their so-called science is still in fact a branch of philosophy.

Not content with trying to explain human behaviour in their limited domain of dollars and cents, economists have more recently had the temerity to declare that their principles are valid for all human behaviours. Economists like Gary Becker have misled many people by their false declarations about the generality of economic theories, in particular the belief that human beings are rational maximizers of their utility. They have mistakenly claimed that economic exchange is the only kind of social interaction possible, even between a husband and wife or a parent and child, or that it is the best kind of social interaction, both of which suppositions are false. This kind of thinking has encouraged the selfish behaviour that results from thinking primarily of oneself and how one can maximize one’s “utility” in each and every interaction with other people. Gary Becker will be remembered for having done for economics what B. F. Skinner did for behaviourism, by claiming global legitimacy and applicability for a theory that turned out to be wrong, or is extremely limited in its range of applicability.

Considering how much falsehood is contained in economics, even in the very foundations of their indiscipline, how is it possible that a theory that is not much more true than astrology, psychoanalysis, alchemy, communism, the Ptolemaic theory of the heavens, or the four humours theory of the human body could have gained so much undeserved prestige and influence over the rest of humanity? A large part of the answer lies in the existence of the duplicitous award that is usually called the Nobel Economics Prize.

In his will, Swedish industrialist Alfred Bernhard Nobel left a part of his fortune for the annual awarding of monetary prizes in five domains of human knowledge and endeavour: peace, literature, physics, chemistry, and physiology or medicine. These five prizes were established by Nobel to reward, honour, and encourage scientific research and exemplary accomplishments in key areas that would benefit humanity. In 1968, seventy-two years after Nobel’s death, the Bank of Sweden and the Nobel Administrative Committee decided, over the protestations of Nobel’s grandson and others, to add a sixth prize in economics, which was first awarded in the following year. Considering the aura of eminence and wisdom that are bestowed on their recipients by the Nobel Prizes, this was a very grave mistake – a mistake that has had deadly and tragic consequences on great numbers of innocent people all over the world who know little or nothing of the claims and predictions made by economists about the way they behave, or ought to behave, if only they were rational maximizers of their utility, as the great and glorious theory of economics declares.

The majority of people know little about economics and therefore are not able to judge whether economists know what they are talking about or whether they are talking nonsense. The existence of the Nobel Economics Prize has led many people to believe that economics is on a par with physics, chemistry, and biology or medicine in its accuracy and ability to guide or determine future events for the benefit of humanity. In many instances, the Nobel Prizes that are awarded in these fields bestow the aura of infallibility on their recipients. To give just one example of the harmful effects of the application of false or overly simplistic economic theories and principles, in this case the principle of comparative advantage, which is the underlying rationale for free trade, there have been thousands of farmers in India who have committed suicide because the financial aid which they formerly received from their government was eliminated at the behest of the governments of wealthy agricultural countries, who – hypocrites that they are – continue to bestow many billions of dollars in subsidies to their farmers and farming companies so they can flood the Indian market with their cheap rice and other agricultural products. Of course, it is impossible for poor Indian farmers to compete with these heavily subsidized and highly industrialized farming methods. The deaths of these farmers, along with the hardships that their families will endure because of their deaths, lies entirely on the heads of those economists who blithely continue to advocate free trade as the best or only way of lifting the inhabitants of poor countries out of the gutter of misery and want.

In many places where their false counsels have been heeded and their principles adopted by or imposed on unwitting populations, economists have spread death, injustice, inequality, corporate tyranny, environmental devastation, and the disruption of traditional ways of living and doing things all over the human world. Like a blind and bumbling monster, they have been wholly indifferent to the traditional ways of doing things – ways that, let it be remembered, have enabled humanity to survive for hundreds or thousands of years before that vainglorious and ignoble breed known as homo economicus ignoramus arrived on the scene and, believing that they know better than everyone else, have proceeded to plague humanity with their false and untested beliefs. These age-old traditions have in many cases been destroyed by the indiscriminate application of economists’ supposedly universal principles. Economists have been guilty of subjugating more and more of us gullible and obedient simpletons to the abstract notions of the “free market” and “free trade,” which in reality are nothing more than particular models of human behaviour that, despite the reassurances of economists and those who blindly follow their pronouncements, have produced many harmful and tyrannical effects. In wanting to refashion the world according to their theoretical notions and beliefs, these economists have been guilty of committing a sin against their fellow human beings that is almost as great as the sin that was committed by communists.

Economists have become the High Priests and Priestesses of the voracious and tyrannical monster known as the Global Economy, which increasingly we serve rather than having it serve us, regardless of how much harm it does to human beings and to other living organisms, as well as to the environment. To reduce this harm, we must first of all cease listening to and obeying the many lies and falsehoods told by economists.

How is this necessary discrediting to be accomplished? One way is to cease paying any attention to the annual awarding of the spurious Nobel Economics Prize. By reporting the latest recipient or recipients of this prize, and by continually referring to its past recipients by the honorific title of “Nobel Economics Prize laureate,” we are guilty of participating in and perpetuating this charade that has been perpetrated over all of humanity by the well-intentioned but misguided fools who duly award this prize each year.

In the case of the three Nobel Prizes that are awarded to scientists in the fields of physics, chemistry, and medicine or physiology, there are very few recipients whose work was later found to be wrong, whether in whole or in part. But this has happened frequently in the field of economics, where such notable recipients as Friedrich Hayek, Milton Friedman, Kenneth Arrow, Robert Lucas, and Gary Becker have all asserted things that were later discovered to be wrong. This in itself is sufficient to show that economists do not deserve to have their field of study, alone among all the many humanities that study human behaviour, distinguished by the awarding of a Nobel Prize.

I will propose something that I will call the “Nobel Hall of Shame.” Inclusion in this disreputable category is based on the criterion that the work for which a recipient was awarded the Nobel Prize is later found to be wrong. By far, the largest number of past winners who belong in the Nobel Hall of Shame are economists. These include Kenneth Arrow (for applying general equilibrium analysis to economics), Robert Lucas (for his theory of rational expectations), Gary Becker (for using economic theories to explain non-economic behaviours), Robert Merton and Myron Scholes (for their derivatives-pricing method), and Eugene Fama (for the efficient-market hypothesis).[2] Although their inclusion in the Nobel Hall of Shame is not their fault, since this is rather the fault of the incompetent fools who decided to award them this prize, the fact that they were awarded this duplicitous prize has greatly magnified the scope of their mistakes, by bringing their work to the attention of many more people than it would have reached otherwise, and thus making it much more influential than it would otherwise have been.

There exists no Nobel Psychology, Sociology, Psychiatry, Criminology, Anthropology, Archaeology, Linguistics, Political Science, or History Prize. And yet, there are writers and researchers in all of these fields who do interesting and important work. Moreover, when they make mistakes, as occurs in all fields of study, especially in those concerned with human behaviour, their mistakes are not amplified and widely repeated by others due to the awarding of a Nobel Prize to their originators. Why, then, is economics accorded a distinction that none of these other humanities enjoys? For the existence of the pseudo-Nobel Economics Prize has misled many people into believing that economics is more reliable, established, scientific, and accurate than all the other humanities. In the brains of many people around the world, the Nobel Economics Prize has given legitimacy to numerous ideas, beliefs, theories, and mathematical models that are wrong. And it is precisely the existence of this undeserved prize that prevents both economists and non-economists from recognizing the gravity of these mistakes and from making the necessary corrections.

We need not petition those who are in charge of awarding and administrating the Nobel Prizes and ask them to stop perpetrating this dangerous and harmful falsehood, since, bound by tradition as they are, they are not likely to change course so abruptly. All we need to do is to ignore the pronouncement of the latest winner of the pseudo-Nobel Economics Prize and stop referring to its past recipients as having been awarded it. By these means, we will strip this prize of the undeserved eminence that it confers on its recipients, while reducing them, and economists in general, to the academic level which they in reality occupy, along with the many others – psychologists, sociologists, psychiatrists, criminologists, political scientists, anthropologists, archaeologists, linguists, and historians – who also study human behaviour in its many guises.

If there is any truth in the claims made by economists, then they will have to prove it and gain other people’s trust in the same way as those who labour diligently in other humanities: by making modest proposals, by presenting clear evidence, by repeatedly testing and debating their theories, by thorough efforts to determine the actual rather than the merely expected effects of their predictions, and by rejecting or modifying their cherished theories if they are contradicted by or inconsistent with reality – and not by the dangerous and intellectually dishonest shortcuts which they have employed until now, to the very great detriment of much of humanity.

If there is a Hell, as many religious people believe, a place where those who have done wrong during their life on Earth will receive divine punishment for their wrongdoings, then there is most certainly a large area reserved for economists, who have done great harm to many hundreds of millions of people around the world by their false theories, ideas, and pronouncements. And the mere fact that most of these proud, arrogant, envious, and lazy intellectuals intended to benefit society is no mitigation of their intellectual crimes against humanity and God’s Creation, since, as the proverb says, “The road to Hell is paved with good intentions.”

[1] The one prominent exception to this statement is something called the “Efficient Market Hypothesis,” a theory devised by Eugene Fama, who was awarded the Nobel Memorial Prize for Economic Sciences for his work. However, like much of economic theory, Fama’s EMH is wrong.

[2] These are recipients whose work I can personally evaluate as being wrong. There are probably other Nobel Economics Prize recipients who also belong in the Nobel Hall of Shame. I will leave it to others who are more qualified than I am to perform this evaluation in the case of physics, chemistry, and medicine or physiology.