Response to 'In Defence Of Microeconomics 1'

Mark Fabian’s recent rejoinder ‘In Defence of Microeconomics 1‘, is a seriously flawed piece of writing.

Fabian writes: “Corporations are indeed, ‘generally’ beneficial, or at least so says the last 50 years of research in development economics.”

For my own part I’m somewhat sceptical that Fabian has knowledge and command of 50 years of research in development economics—as his statement so suggests.

But what simply baffles me is the epistemology at play: I don’t see how such a generality can be sustained. How are these benefits measured? How is such a calculation made in a non-subjective and non-arbitrary manner? “Generally beneficial” in comparison to what alternatives?

Fabian also writes: “economics suggests that government intervention in market activity is generally inefficient.”

But such a statement is seriously misleading. Markets operate in contexts defined by governments; they always have done. Indeed, markets were brought into existence by governments: markets are a government-backed institution.

Just think about it for a second.

How would market economy work without government-backed currencies and government-run central banks? How would corporations exist without governments providing limited liability laws? How would private property exist without governments providing bureaucracy for its administration and police for its protection?

Finally, Fabian decries the “classic mistake of presuming that you can criticise something before you actually understand it.”

Yet I cannot but wonder: is Fabian making the same mistake? Is he at all familiar with the literature criticising economics?

There is a long tradition which criticises economics as an instrument of class warfare—or at least its dominant neoclassical strand. There obviously isn’t space here to go into it at any length (and I have no intention of pretending to be an expert.)

Some titles include: Against Economics by Rajani Kanth; Great Transformations by Karl Polanyi; Economists and the Powerful by Norbert Haring; Debunking Economics by Steve Keen; Economics: A User’s Guide by Ha-Joon Chang; anything by Joan Robinson—as well as plenty of others.

Most are available in ANU’s libraries.