...............................................................post-autistic economics media archives

Light From The City Of Light

William Krehm
(Economic Reform, Vol. 12, No. 10, October 2000)

On Saturday 16/9 a chain email reached me that I had been awaiting for some
years. Nor was I surprised that its ultimate source was France. France has a
long tradition of beating revolutionary tambours when it becomes necessary,
and her students in particular are proud of a unique intellectual tradition.
Eventually they would resist surrendering all this money-grubbing to the
monomania of the "Washington Consensus" that has made a mockery both of
economic theory and the human mind.

Here is an extract from this 'Post-Autistic Economics Newsletter, #1,
September 2000.' "The French mainstream is in a state of shock and
apprehension following dramatic and unexpected events late in June.On the 21st the influential Paris daily, Le Monde, featured a long article
under the headline 'Economics Students Denounce the Lack of Pluralism in the
Teaching Offered.' Economics students at the Ecole Normale Superieure,
France's premier institution of higher learning, were circulating with great
success a petition protesting against an excessive mathematical
formalisation.

"The petition notes 'a real schizophrenia' created by making modelling 'an
end in itself' and thereby cutting economics off from reality and forcing it
into a state of 'autism.' The students, said a sympathetic Le Monde, call
for an end to the hegemony of neoclassical theory and approaches derived
from it, in favour of a pluralism that will include other approaches,
especially those which permit the consideration of "concrete realities."

"Le Monde found economists of renown, including Michel Vernières, Jean-Paul
Fitoussi and Daniel Cohen, willing to speak out in support of the students.
Fitoussi, current head of the jury of the economists' aggregation [highest
competitive examinations for teachers], said that 'the students are right to
denounce the way economics is generally taught' and that the over-use of
mathematics 'leads to a disembodiment of economic discourse.' Daniel Cohen,
economics professor at the Ecole Normale Superieure, spoke of 'the
pathological role' played by mathematics in economics. Meanwhile, the
Minister of Education, Jack Lang, assured Le Monde that he would closely
study the appeal from the students.

"French radio and television also reported the students' complaints and
confirmed their legitimacy. On the 21st, BFM said that it was now recognised
that 'the teaching of economics no longer has any relation with the real
world' and that 'this discipline is going through an undeniable crisis.'

"On the 23rd, Les Echos reported that a government report on university
economics teaching reached conclusions similar to those of the students.
'Under the guise of being scientific it has cultivated an anti-scientific
environment which leaves no room for reflection and debate."

"Alternatives Economiques carried an article "The Revolt of the Students'
which noted that French Nobel Prize winner, Maurice Allais had, despite his
mathematical approach, come to conclusions similar to those of the
students."

The email cites similar comments from La Tribune, Marianne, L'Humanite,
L'Express, and Politis.

"We have learned that the economics students' petition now has 800
signatures and the economists' petition 147."

It was almost inevitable that the counterattack to all this should start in
France. A whole submerged continent of vital economic theory exists -- a
veritable Atlantis -- and one of its main capitals was Paris. Of course, the
blame for what happened must not be put on mathematics as such. As early as
1959 the French economist, Jacques Austruy, writing in Revue Economique
('Methodes mathematiques et sciences de l'homme,' 416) remarked: "These
defects arise from the poor use made of them by certain 'scientific'
spirits, who, unlike 'literary' people turn their backs on concrete reality.
They want to squeeze human reality into the tiny portion of mathematics that
they are familiar with. Instead it is more to the point to see in the
immense mathematical universe the methods and the tools that are really
suitable to the scientific study of man in society."

One of these is systems theory which studies not only fictitious mannequins
on an idealised market, but the interaction of all subsystems of economy
including private, public sector, household economies, the various
subsystems of the biosphere. The essence of a system in this discipline is
that all its subsystems are essential to the functioning of the whole. If
one fails, or is cannibalised by another, the whole system becomes
non-functioning. That -- especially the cannibalising syndrome -- is the
plight of the world today. Without the conversion of economic theory into a
corrupted castratus, that could not have taken place.

To shed light on all this you must begin by disinterring the great
contribution of the late Francois Perroux who wrote: "It is impossible to
speak of a 'psychology' of maximisation: one can only talk of a rule of
maximisation, deduced from the algebraic properties of maxima and minima.
The theory of general equilibrium is not the simplification of economic life
as we are able to observe it; rather it is the polar opposite. At no time in
the history of the Western peoples has it been possible to discern a trend
towards the equality and homogeneity of units that one could express through
stylization as units of equal dimension.

"Nor has there been a tendency to eliminate or reduce the elements of
private power in merchant economy; nor a tendency towards the sovereignty on
all markets of prices determined by anonymous forces arising in equal
measure from the contributions of all participants. General equilibrium is a
gymnastic exercise of the mind that reduces the action of people to
mechanically organised forces, which under the set conditions will
inevitably yield the expected results. It is the product of a combination of
simple mathematics, distorted observations and -- unconsciously without
doubt -- an apologetic attitude."

Perroux's concept of the Dominant Revenue is indispensable for an
understanding of the plight of the world today. "Distribution is the end
product of a record of struggles that always reflects the relationship of
forces. Power asserts itself through the use of two weapons: information and
constraint. Against the providential equilibria of neoclassical theory, he
set up the reality of macro-decisions -- through conscious, informed
intention rather than as behaviourist responses to the stimuli of price.

"When such a unit has made a structured decision it is always possible to
assume that the unit has proceeded by adding and subtracting tiny dosages
until it has attained the new structure and volume reconstruct this decision
along marginal lines. Even the choices made by the state are not treated as
macro-decisions." (F. Perroux, Economie et société: contrainte-échange-don
(Paris, Presses Universitaires de France, 1960, pp. 7, 21-22, 342, 346)

Perroux's thinking passed on to thousands of his students contributed to and
articulated the remarkable transformation of France after WWII. He has been
a major factor in the rethinking of economic theory done by the Committee of
Monetary and Economic Reform, of which I am chairman. In my book Price in a
Mixed Economy (1975) there is indeed a chapter on The French School of
Economics.

The movement students in France have begun is complementary to and no less
important than the mass demonstrations that have protested at Seattle and
Washington to delivering the world to greed as auto-pilot.

A key factor in the success of the cause is to make contact with the work
being done along the lines that you propose. COMER through its publishing
arm is happy to make available gratis a set of our publications to any
French university that requests it.

William Krehm
Chairman
Committee on Monetary and Economic Reform

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Copyright © 2000 COMER Publications. All rights reserved.