Me: From the preface to Wisdomics-Gracenomics:

The real problem with economics or any other human endeavor for that matter is the lack of wisdom regarding it. Wisdom being an integrative discipline and process it includes all of the details that science may have observed about a particular part of human life, and the ability to perceive essence at the same time.

As a paradigm is defined by both a single concept and the plauralistic pattern that single concept defines, wisdom and paradigmatic thinking are entirely analogous. In other words epistemology, or rather the lack thereof, is the problem, and wisdom is its solution.
And this is why we can be regurgitating well considered critiques while going nowhere for the last 10+ years since the GFC (Great Financial Crisis)….or being conscious of a problematic factor (finance) for 5000 years….and yet still be plagued by it. As the saying goes, “The Martians must be laughing.”

The problem is money, its longstanding paradigm and how to integrate a new monetary paradigm into the economy so that it serves us instead of being allowed to dominate and manipulate us. Focus on finding the concept that defines the new monetary paradigm and align the structural and regulatory apparatus with it and you almost can’t put a foot wrong.

And while you’re at it, if you focus on trying to discern the concept behind even the new monetary paradigm you might notice that aspects of it have indeed been the concept behind every paradigm change in human history. What an exciting discovery that might be!

KZ:  Robert, most social scientists believe in chaotic societies. Which means they accept that many parts, not all, of society are “accidents of history.” But such accidents of history are not random. They fit within the existing ways of life and history of a society. They are not culturally bound but they are culturally connected with what is happening and has happened within a culture. Many parts of WWI meet this description. The politics, the conduct of the armies, the expectations for soldiers, etc. But you’re correct the extent of violence, suffering, and nationalist hate, and societal disruption of that war was unheard of up to that time. You’re also correct that it is these parts of the war that require more study than those aspects consistent with existing culture. Schumpeter is wrong about capitalism and imperialism, particularly after WWII. Capitalism depends on growing revenues and returns. Even more so for economists of capitalism over the last 50 years. The mantra is growth. But even before that period, America was always seeking new places to conquer and use to aid its capitalists. Banana Republics got their name because American companies and Marines wanted a secure and cheap source of bananas for American companies selling to American consumers. US meddling in Central and South America began with just such aid to capitalists.

I want to understand economics and economists. The focus of their work is the economy, right? It’s seems practical to ask them to explain their views of what the economy is. Is it a societal institution that evolves with the other institutions? Is it a natural object subject to the same natural laws as described by physicists? Or is a scientific theory intended for prediction, control, etc.? These questions can only be answered by economists.

Robert, on your other comment, as I’ve noted before Polanyi was writing about events in the UK, mostly. The leading industrial power of the era. Polanyi set out to show that WWII was the result of the utopian endeavor of economic liberalism to “set up a self-regulating market system.” An institution invented mostly by the British. As this institution crumbled, Germany, Japan, and Italy rebelled and in Polanyi’s words, “sabotaged the crumbling institutions of peace.” At the same time Britain initiated an economic attack on Germany, Japan, and Italy. Laissez-faire was set aside for a time while three competing rebellious movements – socialism, fascism, and the New Deal – went to war.

RL:  Ken, if you want to know about economics, don’t ask economists, but historians who know a lot about them.

An example, Michael A Bernstein’s Economists and Public Purpose in Twentieth-Century America PUP 2004.

“It is about the economics profession in twentieth-century America, which began as a humble quest to understand the “wealth of nations,”grew into a profession of immense public prestige that now suffers a strangely withered public purpose. Bernstein portrays a profession that has ended up repudiating the state that nurtured it, ignoring distributive justice, and disproportionately privileging private desires in the study of economic life. Intellectual introversion has robbed it, he contends, of the very public influence it coveted and cultivated for so long.

Bernstein is Professor of History and Associated Faculty Member in Economics at the University of California, San Diego. He is the author of The Great Depression: Delayed Recovery and Economic Change in America, 1929-1939, and coeditor of Understanding American Economic Decline.

Me:  Correct, historians are very good at exposing the foibles of economists and their theories. Now when they get around to studying the signatures of paradigm changes and see that the concept behind every paradigm change is also the same one behind the new paradigm in Wisdomics-Gracenomics…maybe we’ll get somewhere about making economics serve us instead of simply being an intellectual hobby horse for pundits and theorists and a barrier to progress.

All of the erudition means nothing, and here’s why. It doesn’t recognize the simple fact that the problem isn’t economics….it’s the monetary paradigm coupled with the short cultural horizon of macro-economics which blinds them to the actual illegitimacy of the profit making business model of private finance….who dominates the economy with it.

Whether he fully understood the paradigmatic implications of it or not, Steve Keen recently expressed this truth at the end of one of his recent videos on his patreon page when he said that neo-classical economists couldn’t allow money to be a factor in their general equilibrium models because if they did they’d have to acknowledge that the money system is de-stabilizing.

Macro-economics is only about 90 years old. The paradigm of Debt Only for the sole form and vehicle for the distribution of money/credit has been the monopoly paradigm for 5000 years.

You’re all very, very smart, but you’re also all wandering around within the culture of private finance and its monopolistic paradigm. Try stepping outside of it. The view is beautiful and inspiring of faith and hope for the future. It’s like when Neo being chased by bots broke through the clouds in the last Matrix movie and saw the blue skies above the machine polluted cloud cover.

Me:  Yes, I see the truth in each of your points. My point is that economists are so culturally enmeshed in the paradigm of Debt Only that they cannot see outside of it…and not looking deeper at accounting so as to decipher the economic and monetary truths to be derived from it (especially its subset of cost accounting) they splash around on the surface of economic analysis. If as C. H. Douglas discovered “the rate of flow of total costs (and so by the convention of cost accounting that all costs must go into price) and so total prices exceeds the rate of flow of total individual incomes” then the economy is in a continual state of monetary and price instability. Steve Keen has re-discovered this same thing via macro-economic abstraction instead of cost accounting in realizing that as soon as the rate of change of credit falls without injecting more money/credit it will go into recession.

Douglas being a cost accountant was closer to the “on the ground” problem and devised a more direct “remedy” of a direct dividend and a reciprocal policy at the point of retail sale (because again he was closer to the problem) and recognized that the ending point of the entire economic process for every item or service WAS the point of retail sale….and so the effect of a policy there could not be altered further as it was also the point where production became consumption.

Douglas’s problem was he was still enmeshed in the 5000 year old culture of Debt Only, was also stuck within the culture of classical economics whose ideal was economic equilibrium and died before Kuhn wrote his book on paradigm change.

I’ve taken these insights, innovated and extended those policies and by integrating my studies of paradigm changes, quantum physics and the world’s major wisdom traditions devised a policy agenda that creates not a general equilibrium, but “the higher free flowing disequilibrium.”