Andrew Yoder's Reviews > ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism

ECONned by Yves Smith
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's review
Jun 21, 2010

it was amazing
bookshelves: politics, non-fiction
Read on April 28, 2010

This is quite possibly one of the best books I've ever read. I've been desperately seeking a clearly written, thorough critique of neo-classical economics - the foundation of our entire modern capitalist economy. This is it.

It's a fairly well-known fact that modern economics sells itself as a "hard science" with clear, logically proven conclusions based on firm premises. Modern economics has become nearly synonymous with theoretical mathematics (without acknowledgment the "theoretical" party) adding to the illusion(delusion) that Economics is a "hard science" and not a non-quantitative exercise in the study of human behavior.

This book meticulously details the fallacy of treating economics like a hard science. It points out that economic theory have few testable hypothesis, and reveals how the entire basis of our modern economy rests on some utterly absurd premises of behavior that can be found to exist literally nowhere in nature.

The book further reveals who our modern economic theory has benefited a privileged few in the extreme, who have a vested interest in perpetuating economic theories that don't work (for the majority) for their own purposes.

This is not a conspiracy theory book. It is a clear and concrete examination of the basic premises of modern economics. Any truthful investigation into these premises will be an investigation into the absurd. As a long time industry insider, Yves Smith is a very rare person indeed. She can write about economics, Wall Street and our American markets from the perspective of a trained participant, rather than an external polemicist. It makes her evidence and arguments all the more compelling.

"In this Book, I have sought to explain to the lay reader how the widespread adoption of largely unsupported (or in some cases, disproven but nevertheless widely used) economic theories produced the financial crisis that began in 2007. Nearly all of their flaws have been described by economists and most are well known within the discipline. Yet these problems have been dismissed as inconsequential or merely inconvenient.

"The most comment retort is that economics "works," that it provides sound policy prescriptions. This book will demonstrate that this defense is patently untrue. Sweeping changes, backed only by unsupported beliefs of the neo-classical loyalists, resulted in indifference to rising levels of indebtedness, greater and greater risk taking by financial intermediaries and consumers, and more and more frequent financial crisis, finally culminating in the global debacle."

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04/28 page 160
06/02 marked as: read

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message 1: by Gary (new)

Gary Morrison Great review Yves, I have yet to read the book but the conclusions the author reaches, are now widely supported by heterodox economists who argue that Neoclassicism is a branch of 19th century materialist utopianism. What is baffling is that a system of thought disparaged in such detail by so many within its own discipline, can somehow retain the loyalty of so many otherwise reasonably intelligent people.

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