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Economics: Primordial Ooze Gets the Ignoble Prize, but LaRouche Represents the Human Species

Oct. 10, 2017 (EIRNS)—The peinlich (German for "embarrassingly egregious") presentation of the Ignoble Prize in Economics to Richard Thaler—the latest in a long line of Stockholm and Oslo embarrassments—provokes as much question as Barack Obama’s "Peace" Prize. What is the "economics" they are talking about? Does it have any more connection to an economics of human beings, than Obama has to the human desire for peace?

One clue came from Big Short author Michael Lewis, who wrote an article on Thaler entitled "The Economist Who Made Us Realize How Crazy We Are." That is as good a definition as any, of the Ignoble Prize Committee’s motivation. If you believe human beings should be considered essentially insane, Richard Thaler is your economist.

From the 1950s, and roughly coinciding with the Federal Reserve chairmanship of that Arthur Burns whose incompetence Lyndon LaRouche exposed very early, the economics profession and textbooks became dominated by the so-called "rational markets theory" identified with Paul Samuelson and his students—also often called the "checks and balances" theory. Its assumption was, fundamentally, that economies = stock and bond markets. These were always fundamentally rational, and their movements continuous, with no great singularities. The 1987 stock market crash, forecast precisely by LaRouche, discredited the rational markets hypothesis. The dangerous collapse of the Long-Term Credit Management hedge fund in 1999 destroyed it: The ultra-important LTCM was being steered by Merton and Scholes, the world’s then-leading "rational markets hypothesis" economists.

In reaction rose up "behavioral economics," the radical irrationalist method epitomized by Richard Thaler and "Nudge." Its assumption, also, was that economies = stock and bond markets. But these markets are irrational; and human beings innately irrational, especially whenever dealing with markets (including consumer markets); they therefore need to be "nudged" by a class of behaviorist economists calling themselves the only rational and superior beings.

Lawfully, Barack Obama and his Cass Sunstein pushed behavioral economics hard, including in Obamacare. And lawfully, this deeply sub-human economics thrived in the era of zero growth in productivity in the United States and Europe, the presidencies of Bush and Obama leading into and not out of the Crash of 2008. "Markets" are alleged to produce GDP; but they don’t increase productivity, even in Silicon Valley. Neither do "nudges."

Recently, "complexity economics" entered the lists, appearing at least realistic, though not human. It maintains that economies = nations, and that national economies which produce the full range of technologies and their industrial and agricultural applications, are higher on an "economic fitness scale" than those which don’t, even if the latter might have equal or larger GDPs. Thus for example, these economists have consistently and correctly forecast continued progress—and no financial crash—in China.

"Realistic," but not human. Missing here are the sudden changes to higher technologies and how they impact economies. Still missing is the idea that economies = human creativity and invention, transformed into economic effect through credit, and through the creation of new infrastructure "platforms." Thence comes, and can return, rising human productivity.

This is the economic field mastered by Lyndon LaRouche alone in the 20th Century; in the 17th by Gottfried Leibniz, and in the 18th practiced by Alexander Hamilton in launching the American Republic. LaRouche has explained its lawful development since the 1960s, with well-earned freedom from consideration by the Ignoble Prize Committee.