Note: Much appreciation to Rebecca Adamson who triggered me to tackle this topic.
If you've muddled through microeconomics, you may recall kicking things off with General Equilibrium Theory also known as Walrasian Equilibrium -- or, without any hint of irony, General Welfare Theory. This has as its foundation assumptions about how people behave and the world works, notions we need to address.
Among these assumptions, there's "non-satiation" -- a fancy way of saying that, if they have the resources, people will always want to consume something. Another is that all consumers have "perfect information" -- they know everything about and can decide from the infinite set of combinations of consumable goods.
Even if you've avoided economics -- you know these assumptions with less awkward names. Because even though real economists claim them only as tools for modeling (or questions for problem sets) -- these notions have become the basis for all that's good and right in the world.
These assumptions seem as absurd to lots of economists as they're likely seeming to you. Perfect information doesn't hold if you fulfill the unfortunate stereotype of woman who knows nothing about cars getting fleeced by shady mechanic. And who can know and select from an infinite set of preferences that remain stable over time?
Criticisms of these assumptions have been made, more eloquently and in greater detail, by others. So, instead, let me turn to how making these assumptions into iron-clad rules has hurt not just our handling of the economy but shattered our belief in any collaborative endeavor. And by this I mean democracy.
Dismal though it may be, economics has desired to wear the mantle of science. Vying for this designation, it has allowed what are handy shortcuts for graphing simplified human behavior to become known widely as absolute truths.
Sadly, the assumptions behind microeconomic theory boil down to scarcity and competition. The pleasure of giving things away, clothing exchanges and do-it-yourself don't exist. Wikipedia makes no sense, Craigslist is largely a fiction, anonymous philanthropy never happens and so on.
But, far worse than getting the story about how real people produce, consume, save and invest wrong, this reification of microeconomics (beyond and besides what its architects intended) has cemented the idea that you're on your own and the pickings are slim.
These "rules" aren't just a way to contemplate human behavior, they've taken on the mantle of natural law. An apple falls on your head, that's gravity -- the basis of physics; you always want to buy that apple, that's crap -- the basis of what's become known as economics.
But economics isn't here to provide the meaning of life; it's a way of explaining the relationships between cause and effect in deliberately crafted, based-on-a-true-story scenarios.
Hey, some of my best friends are economists. The kind that don't believe in a free and unfettered market (or are withholding judgment till they actually witness one where government isn't subsidizing the rich.) They are toiling away in their academic warehouses, looking up occasionally, dismayed that the formal logic they use to teach undergrads has become Washington's unchallenged reason.
The belief that we are all competing with each other for scarce resources, that life is by nature a zero-sum game, ignores critical truths that rightly deserve the designation of "natural law". Humans are a social species. We are pack animals; we like to be together lots of the time. Some of our greatest joys and oldest cultural practices involve sharing: our homes with a stranger, bread and wine with friends, material goods with our families.
Competition and scarcity exist -- we're doing our best to make this so. But more true, and certainly more natural, is our need and desire to make living in close quarters work. Most of us have agreed, our best shot at this is through democratically-elected government, laws, social supports and mutual respect. These are the needs that cannot be satiated and this is the information we should attempt to perfect.
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