Book Review: Economyths by David Orrell

Economics is not the sort of subject I would normally grab hungrily at and I haven’t read a book or article on the subject since A-Level Business Studies. Yet our lives are driven by economics, our jobs and lifestyles depend on our countries having a strong one, the prices of the our day to day necessities are driven by fluctuations in the global market. In short, it is important to know about these things but it is not the most interesting subject to write or read about.

2008 saw the most horrific economic collapse arguably since 1929. In the wake of the banking collapse, the petty recriminations began. Both political sides wagged fingers “we told you this would happen” yet their disagreement was divided between those who claimed there was too little regulation and those who claimed there was too much.

Though my personal feeling is that there had been too much of a laissez faire attitude to banking, but it is important that we do not believe everything we read in the newspapers or accept everything our favourite political talking head says *cough*Rush Limbaugh*cough* so seeing this on Kindle Daily Deal, I bought it with the hope of being informed.

He begins by summarising a history of classical mathematics, leading into Newtonian Physics and explaining why the Neoclassical Economics philosophy that still forms the backbone of the theory is based on these two ideologies (one of them now superceded by another better explanation). The basic idea then is that an economy is (or should) be a constant and he carefully picks apart how flawed this thinking is by showing certain markets for the erratic variables that they are. In chapter 1 for example he looks at the unstable house prices and the incredibly volatile oil price – neither of which adhere to economic conventions of supply and demand.

I enjoyed the analogy of comparing scientific systems – firstly of the current economic thinking being akin (if not directly inluenced) by Newtonian physics and secondly likening the actual market place of one of chaotic yet predictable to a certain degree – such as meteorology. He paints a picture of a flawed economic system that does not take into account human psychology or sudden deviations but tends toward a slow and steady progress toward order. It is seemingly a system that has not advanced since Adam Smith.

He slowly and deliberately explains the wild risks increasingly taken by the banks, how their greed led them to take more risks and the failure to see that the bubble could burst at any time. I’m sure that those who have made a religion of economics, such as The Tea Party in the USA, will dismiss his entire book with accusations of Communism but it is a sobering read. He emphasises over and over again the lack of foresight, the insular and non-adaptive system and how it despite the veneer of being scientific with advanced mathematics is a lot of unscientific guesswork, risk taking and making bad assumptions about people while ignoring some basic human psychology.

The writing style, though devoid of passion (aside from what felt like a call to arms at the end) and with plenty of snark, is informative without being dry and is educational without patronising. Kudos to the writer for making a book about economics interesting and insightful! Sadly though, I have read through several reviews of the book from detractors and it seems they have generally followed the predictable pattern of accusing him of being anti-capitalist. He makes it explicity clear that he isn’t and if you read the book this is quite clear. Those people however have fallen into precisely the trap that he warns about and the tragedy they cannot see that they have done so.

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