Economics is beholden to a small group of trickster mathematicians from Bernoulli to Mandelbriot. They saw life as probabilities (variable) among a fixed game with constant variances. The number of black and white balls in the jar nor faces on the die did not vary.
From Goetzman’s book Money Changes Everything.
“Benoit Mandelbrot believed he had discovered a deep structure to the world in general and financial markets in particular. His insights, however, can be traced directly back to the special tradition of mathematical inquiry that has its roots in the Enlightenment. I think this is what most excited him about his work—thinking of it in historical context as a culmination of applications of probability to markets. Although not all quants are aware of it, when they use a stochastic process (like Brownian motion) to price a security or figure out a hedge, they are drawing from a very deep well of mathematical knowledge that would not have existed but for the emergence of financial markets in Europe.”
The application of the risk/probability analysis was not to the markets of Chaucer or Hardy or Smith, where grain and rabbits and shoes were sold, but to the market in financials. No longer investment to push up values through the creation of a new business, but in gambling to take advantage of pushed up or down values of existing business, or just financial contracts.
The result was a focus on financials, their vindication, enhancing their prestige, structuring their basis for class, and dragging most of economics into treating financial markets as the most representative of the market idea.
The world of daily life and small purchases for all sank out of sight. The wealth of nations narrowed to, lets face it, the wealth of the point oh one percent. The idea that as the ,01 % goes so goes the nation, is falling apart under the impact of technology and population.
Lets assume an outbreak of sanity. A need for a lot of new arrangements and attitudes has been a long time in the making. Perhaps nearly everyone gets it, just waiting for an occasion. If such as outbreak of sanity were to occur,
– — What kind if economics would be needed to support it?