Book review - Economics unmasked

Sometime late in the 19th century, someone decided that the fuzzy academic discipline of economics needed a little more oomph behind it. Up to that point economists had written tracts laying out theories for why things were as they were. Economics was seen to be little more than a justification for the inequality found in society.

That is until economists dressed up their theories with mathematical equations taken from physics. Now economics was a science! Those who defended the status quo could point to the mathematical rigidity of Neoclassical economics and tell the doubters that there was a scientific reason so many people were poor and just a few were incredibly wealthy.

And, just as gravity was the fundamental concept in physics, the ill-defined term "utility" became the lodestar of the economists.

I'm sure it's just a minor quibble that all the academics couldn't foresee the Great Depression and had no clue as to how to get out of it. In their conception of the world, there could never be excess supply. After all, the invisible hand was the mysterious god-like device that constantly matched supply and demand and kept us all in a state of equilibrium.

The Neoclassical school died a slow death at the hands of John Maynard Keynes but then made its great comeback as the Neoliberal school in the 1980's. Thatcher and Reagan did their utmost to heighten inequality under the guise of trickle-down economics. Neoliberal policies prescribed by the World Bank and the IMF have driven countries into catastrophic downward spirals and, coincidentally, opened doors for American and European banks and companies to exploit the people of the developing world to the utmost degree.

This is the world as seen by Chilean-German economist Manfred Max-Neef and the late American-Dutch physicist Philip Bartlett Smith. In their book Economics Unmasked they will take you on a journey around the world to see the effects of neoliberal economic policy on the people. Mr. Max-Neef was an academic and a proponent of neoliberal theory until he experienced poverty through the people he lived with in the Andes while working for the United Nations.

Neoliberal theory isn't as much as theory as it is a justification for the inequality we see all around us. The mathematical constructs that make up modern economic theory are based upon the equations physicists use to explain the natural world. There is no basis for these formulas in the context of economics. They are arbitrary and they were selected because they allowed a scientific patina to be put on the dismal science.

In Mr. Max-Neef's world, this idea of perpetual economic growth is as much a fallacy as a perpetual motion machine. There is no scientific basis behind the notion that economies will continue to grow until the end of time. And, if you stop to think about it, it defies logic. In order to produce goods, we use resources. Some of these resources are limited. As we continue to use more and more resources to produce goods and services, we run the risk of exhausting what's here on Earth. As an example - there is only so much pollution that our ecosystem can take and still sustain human life. Once we breach that limit, it's game over for us.

Economics Unmasked will make you think about the economic "truths" we are fed everyday. It will make you think about the effect of these policies on the people of the world.