9/1/2018 Why neoliberalism is harmful (1)
Neoliberalism
is the most influential ideology in today’s world. It relies theoretically on
neoclassical economics, which has the following proposition: If all individuals
act from self-interest, the resource allocation of the economy will be
efficient. This is called the first proposition of welfare economics. Here I
would like to show that it has many theoretical defects. Most people in the
world are obsessed with a harmful ideology.
Each
firm in neoclassical economics is simply an exogenously given production
function, which relates the amounts of inputs to the amount of output. If
something is exogenously given in economics, it does not discuss how that has
become the present form. Thus neoclassical economics does not analyze how
production efficiency is achieved through innovations in organization
structure, human relations, physical capital, and so on.
This
means that neoclassical economics does not have organization theory. It does
not consider how production should be managed efficiently. I believe organization
efficiency or production efficiency is more important to society than market
efficiency because markets do not have sufficient supply without efficient
production.
Ask
anyone who studied neoclassical economics how firms should be managed or how
ideal firms should be. He cannot answer your question because it does not have
an answer, although it has an answer to the question “How should ideal markets
be?” This is another proof of the fact that it lacks organization theory.
Each
household in neoclassical economics is simply an exogenously given utility
function. It does not analyze how each family member behaves or can become happier.
It does not show in the first place how the happiness of each member is
aggregated into the household utility function. Thus it has actually no family
theory that considers household efficiency.
Comments and questions are welcome.
Kazuhiro Arai’s Japanese twitter: https://twitter.com/araikazuhiro88
Kazuhiro Arai’s Japanese home page: http://araikazuhiro.world.coocan.jp/
Kazuhiro Arai’s Japanese home page: http://araikazuhiro.world.coocan.jp/
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