Intellectual Inertia And Keynesianism

June 13th, 2011   Submitted by Sima Qian

Anarchists face many challenges establishing a state-free society. One of the main challenges we face is the fact that an idea that is widely held will continue to be widely held. This intellectual inertia causes false, pro-state ideologies to be established and propagated long after they have been disproved. An excellent example of this is Keynesianism, which is used to justify some actions of the state. It was exploded by the stagflation of the ‘70’s, but it is still the most taught macroeconomic theory.

There are many reasons for intellectual inertia. People often believe things are true not based on evidence, but based on repetition. People’s brains begin to believe something if they have heard it enough times, and look for evidence that confirms their already-held bias. (This can apply to anarchists as well. Check your assumptions.) Second, when ideas are widely held people create incentives for other people to hold those same ideas. And third, because people have an incentive to learn some particular thing it can be more difficult to find someone or somewhere that teaches an opposing view. Despite these challenges, opinions that contradict widely held pro-statist ideologies are beginning to gain momentum.

Most Americans (and probably people in the world generally) really do believe that government spending does help people and can actually bring an increase in employment. Yet, very few hold this view because of time spent in focused reflection, but instead most hold it by its repetition in media. When enough very smart people have said the same thing repeatedly it can be extremely difficult to dislodge that idea. The second part of this, looking for evidence that supports your opinion and ignoring data that refutes it, tends to not be a problem for the man on the street as much as it can be for very well educated people. Probably both Bernanke and Krugman are aware of the crash in the early 1920’s and the great depression that did not follow. Yet, neither one will take the lesson from this episode that high interest rates at the fed as well as cuts in government spending are good for the rapid dissipation of malinvestment. This is because to believe that would necessitate a complete change in the way in which they think about the world. It is much easier for them to just dismiss 1922 as an anomaly and move on. And because almost the entire academic economic establishment will support this position, this is very easy for them to do.

This brings us to the next reason for intellectual inertia: it is easier, and often more profitable, to hold ideas that other people hold. It is rather difficult to get hired saying things that your potential employers don’t like to hear. This is true in any profession, but it is especially strong in academic economics because of the influence of the Federal Reserve. The Federal Reserve gives out millions in grants in an effort to influence which ideas get published in economic journals. And then there’s the private sector as well. Many options trading desks assume that markets are efficient. If you disagreed for whatever reason, why would they hire you when they can easily find someone else who will play ball? It is difficult to find a firm who will hire you if you fundamentally disagree about how the world works in a way that affects your job.

Because of this, most people go with the flow, and so there’s a demand to learn whatever the dominant ideology is. People want to learn about the EMH and paraeto optimality, and Kaldor-Hicks efficiency, even if these concepts are convoluted ways of saying very simple things, or just plain wrong. The state will pay money that’s required to be accepted by shop keepers for a policy analyst who can find a Kaldor-Hicks improvement (even if the concept makes no sense, even within its own idiotic definitions and assumptions that could never exist in a real situation). Because there’s a demand for the main ideology, it is mass-taught, reducing the marginal cost of learning it. A less popular ideology, on the other hand, can be more costly to learn. It can be harder to encounter in the first place, even if you’re seeking out the information, there may be social pressure against learning it, and if it is taught at all it may be taught at a higher monetary cost.

Despite these hurdles, anarchists are making progress disproving statist myths. In the past couple years there has been a boom in interest in learning Austrian Economics, even from academic professionals. Many hedge funds specifically scout for people who understand business cycle theory. Other dominant social themes like the infallibility of the state or the efficacy of democracy are being daily undermined, repeatedly reminding people of the problems inherent in any statist institution. All these things work against the advantage in propaganda the state has built up. The internet reformation has given those trying to push for better ideas an immensely powerful tool for overcoming the challenges anarchists face. Because of this, I suspect we have many reasons to be optimistic about the creation of a stateless society.

10 Responses to “Intellectual Inertia And Keynesianism”

  1. BrettNo Gravatar says:

    I believe this article has a lot of potential for validating the theory that a state maintains support through the incentives of the intellectual class. However, the fact that the tide is turning is more of a statement than a theory as to why the tide is turning. In order for a new idea to arise and start to change the culture, especially one that has all of academia against it, it requires people with a high (nearly irrational) tolerance for incurring costs while gaining very little in return. Stefan Moleneux asked in Practical Anarchy:

    “Why would anyone want to get involved in a series of ideas that can never be achieved, that are alienating and frustrating to discuss, that eject these thinkers from anywhere close to the mainstream of social thought – and which create endless awkward silences at dinner parties, sweaty-palmed avoidances in one’s early dating life, endless impossibilities in educational environments, teeth-grinding frustration when reading the newspaper or watching a movie, a reputation for eccentric and strangely intense thinking patterns, habitual eye-rolling from friends, a suspicious intellectual monomania that people kind of have to steer around if they wish to avoid “setting you off” – and, last but not least, some fairly endless challenges when it comes to raising your children, and filling them full of ideas that will doubtless set them approximately one solar system’s league away from their peers.”

    The next step for this author is to ask, why now? Yes, the internet has made it easier for us nut-jobs to spread our hard-earned truth, but why do us nut-jobs exist? I am one of these loonies that has poured hours and hours into studying market-anarchy. I’ve read dozens of books, both those that are dry and technical and those that are exciting and clear. I expect my agitating has shifted the paradigm with at least some of my closest friends, but has not made large contributions. Why do I have a near masochistic fetish for truth?

  2. Sima QianNo Gravatar says:

    “I believe this article has a lot of potential for validating the theory that a state maintains support through the incentives of the intellectual class.”
    Thank you. That was what I was hoping to do.

    “However, the fact that the tide is turning is more of a statement than a theory as to why the tide is turning. ”
    You’re absolutely right. I didn’t mean for it to be a theory. I actually included the last paragraph because without it the article just seemed like a downer. Like the article was saying, “The elites have an advantage so there’s nothing that can improve” which is clearly not the case.

    The question of why so many people are willing to invest so much in learning about freedom and liberty is an interesting one. There are some fantastic sites like the Daily Bell http://www.thedailybell.com/ who try to track the progress of this phenomenon. But they don’t really go much into why, and seem to assume that it’s a natural process whenever there is a major breakthrough in communications technology. I agree that it’s important for us to understand why people are spending so much time and energy on these things.

    • Seth KingNo Gravatar says:

      I can’t speak for anyone else, but I’ve basically shifted the entire momentum of my life and finances towards the revolution. I’m essentially “going for broke” as they used to say.

      I do this for a few reasons. Number one, I enjoy the hell out of it. To be honest, I find the typical person’s life to be rather boring. Television? I watched enough T.V. when I was a kid to want to watch anymore of that, even if it weren’t propaganda. Bars and clubs? I’m happily married and find the bars in America to be either total downers or testosterone factories. Working at some crummy job that I don’t care about? Pass. Would rather labor in the agora. Sure, there are plenty of things I enjoy outside of the revolution, but I don’t find the revolution to be inhibiting these activities.

      Secondly, my conscience wouldn’t allow me to blow off the truth after having found it. I was raised a libertarian and was indoctrinated with a strong passion for justice. Ignoring the plights of the world would cause me much more emotional pain than doing something about it.

      • BrettNo Gravatar says:

        There are a number of psychological reasons; Seth touched on a number of reasons that fit mine.

        Mises stated that economics starts after the acting individual chooses a goal. Based on the goal people act on limited knowledge to best achieve their goals. Economics does not state why certain goals are chosen. When we say, “People want wealth and comfort,” no one questions that as the most obvious goal of most of humanity. Most people in academia have this goal, thus the incentive structure will lead those in academia to act the way the author described. The study of economics suggests it’s the best way to obtain wealth in academia.

        I do not propose an answer why most people prefer to be distracted, complacent, and happy, pursuing wealth instead of truth. I can not understand why others choose a path of virtue, truth, and education when it means sacrificing on wealth. However, when there are people like that and incentives change because of communications technology, that small faction disproportionately benefit. Amongst truth seekers, anarchy will eventually win out. Morally, it is internally consistent. Truth seekers as well as the materialistic academia tend to be the opinion formers with the materialistic. If the internet can be a home for truth seekers and make formal academia more and more irrelevant, the the strength of the opinion makers shift from the intellectual class to that group of moralists. It can not be easily explained why the loonies such as Seth, Sima, and I exist, but if culture is defined by more than just academia but by all highly intelligent opinion holders, than the role of the internet as a means of subverting academia can not be stressed enough.

  3. I.M. PericlesNo Gravatar says:

    In case some of you still can’t figure out what is going on around you…Here is a nice little primer:

    http://board.freedomainradio.com/blogs/freedomain/archive/2011/06  /13/the-handbook-of-human-ownership-a-manual-for-new-tax-farmers .aspx

  4. I.M. PericlesNo Gravatar says:

    The above link is from a political terrorist’s view…Keynesian Terrorism is presented at about 28:30

  5. Mark DavisNo Gravatar says:

    Good point and article.

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