By Iftekhar Sayeed, OpEdNews, April 29, 2014
The story goes like this. Somerset Maugham finished his training as a doctor and went out to pay a visit. However, he couldn't find a particular vein where it was supposed to be. A mature colleague suggested he look elsewhere, and he found it. But that was not where it was supposed to be!
I have learnt from personal experience that you can take an eighteen-year-old and fill his head with ideas that are not, to put it mildly, congruent with reality. I speak of my experience at the economics department of Dhaka University.
We were taught two disciplines: neoclassical economics, and Marxism disguised as socialism. The latter first. Our teachers were dyed-in-the-wool Marxists. They taught us that history went through stages, starting with primitive communism, then slavery, followed by feudalism and capitalism. It would end, of course, with communism of a higher kind.
These stages were ineluctable and universal. But upon graduation I looked up the history books and found hardly any slavery in Egypt or Asia. Large-scale slavery was a western phenomenon. Then I learnt that feudalism was a western European entity, and that Japanese feudalism was very different.
Mind you! We were all youngsters and we thoroughly absorbed these ideas as Mosaic truths. Not one of us questioned them, for we had exams to pass and the teachers could fail us. No other books were thought necessary, and we were not taught about any other books. The syllabus was fixed. Thus, dialectical materialism became infused with our thought processes. In Bangladesh, also, the revolution would come; indeed, it would be absolutely necessary.
Meanwhile, the neoclassicals started from 'self-evident' propositions such as that utility decreased with consumption: this in the day when Euclid, with its self-evident axioms, had been overthrown. Furthermore, it was assumed that all human beings were absolutely rational. They knew what they wanted and they knew how to get it and they were never disappointed or misguided. All this despite the Freudian revolution. Thus, economics is an empirical discipline that rests solidly on the a priori and the bizarre.
And every individual by pursing their own good, would maximize the social good. If only markets were allowed to work, a magical harmony would follow.
These also we imbibed. In fact, we imbibed them more thoroughly than the superstitions of the other kind. Where Marxism was confined to only one paper, the other persuasion comprised almost the entire course. Furthermore, neoclassical economic theory used mathematics. And we were awed by calculus and matrix algebra. Who could argue with a secondary derivative?
Consequently, there was only one kind of society -- one in which everybody competed for scarce resources, and firms competed to maximize profits. In reality, I discovered later, there were many kinds of societies -- and some very benign, such as in Europe or Japan.
And what role would government play? Hardly any. The free market would make sure everybody got what they deserved. Again, this was counterfactual: we didn't notice that in east and south-east Asia the government was playing a major role in allocating resources, and that these economies were doing much better than ours, led by the Bretton Woods sisters, the IMF and the World Bank.
And what about those assumptions on which economics rests? Fortunately, psychology came to the rescue. Daniel Kahneman and his colleagues demonstrated that people are not so rational, after all. For instance, if your income rises two-fold, your satisfaction may not rise two-fold if you discover that your neighbor has had the same two-fold raise. Your satisfaction does not depend on your income alone.
What are we to say for the poor undergraduates? They don't stand a chance of seeing the world straight. If he challenges his discipline, he stands to lose a career. I had a smart student once whom I was tutoring basic economics. When I told him that people act only out of self-interest, he immediately objected. I told him he was right but to pass the course that was the line he had to adopt.
And most students adopt the line and finally even become professors. Some get to lecture other nations on their economic policy with disastrous results.
It is difficult for economics to jettison the rational individual, for then a key tenet of the Enlightenment would have to be abandoned. And one consequence of this tenet is the rational voter. We learn that since everybody pursues their own good rationally, and in doing so fulfills the social good, in politics too such harmony would be manifest. This is one of the lessons drilled into us by western governments and donors.
In reality, again, the opposite has prevailed. We have had the same two dynasties rather than individuals rotating in power. And they have certainly not been rational. Violence has pervaded our society to the detriment of the economy and social well-being. But if you have been prepared since eighteen to regard the individual as rational, then these are mere anomalies.
And what about the Marxist utopia? How was it to be attained? There was silence on this subject. Somehow, through sheer abundance and will-power, utopia would arrive. Meanwhile, we began considering the present in light of the future utopia, and everything fell short.
But in our schizophrenic minds, we had neoclassical economics to fall back on. We had the worst of both worlds. While we believed that the capitalist world must collapse through its own contradictions ushering in a universal revolution, we also believed that free markets would deliver whatever we needed. This was the fallacy and inconsistency of education.
It was small wonder that our teachers would tend to go off to the IMF or the World Bank, giving up their Marxist beliefs. And when the Berlin Wall collapsed, there was an exodus for the market. The agora seemed to have won for the time being.
During the Asian financial crisis, these boffins at the IMF were still prescribing low budget deficits and a small state when the reverse was needed. This was the result of the fallacy of education.
Since then, we have seen the reality of what the agora has done to the planet. Some are prophesying the end of humanity, calling this the 'anthropocene'. The latest financial disaster has been due to the market gone wild. The fallacy of education persists.
Iftekhar Sayeed teaches English and economics. He was born and lives in Dhaka, Bangladesh. He has contributed to AXIS OF LOGIC, ENTER TEXT, POSTCOLONIAL TEXT, LEFT CURVE, MOBIUS, ERBACCE, THE JOURNAL, and other publications. He is also a freelance journalist.