We need poets not economists

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IF an economy rose and fell with the change of certain mathematical figures or equations, as modern economists would have us believe, we would have known what caused the 1930s Great Depression or the 2008-2009 global financial crisis.

That we don't know them yet betrays modern economists' self-imposed isolation from reality.

Obsessed with mathematics, these researchers willfully reduce most economic activities to sheer numbers - numbers of GDP, of supply and demand, of investment and saving, of debt and asset. You name it.

Landslide of numbers

As professor Tomas Sedlacek points out, mathematics buries the meaning of economics - its ethical judgment about good and evil - in a landslide of twisted numbers. Sedlacek is a member of the National Economic Council in Prague and a lecturer at Charles University.

In his 2011 book, "Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street," he explores the philosophical history of economics and finds that, until 300 years ago, philosophers and poets - not mathematicians - were the drivers of economic thought and progress.

Mathematical economics sprouted around the late 1700s and early 1800s.

Armed to teeth with math, modern economists try to appear "objective" with numerical elegance, but two of their key assumptions are flawed in the first place, Sedlacek explains.

One assumption is universal utilitarianism, which says people act only for self-benefit. Another assumption is ceteris paribus, or "all else being equal."

Universal utilitarianism is wrong because it ignores selfless behavior like philanthropy. Ceteris paribus is wrong because all else cannot be equal - everything changes and no two leaves are the same.

Sedlacek does not deny that math can be useful to a certain extent. What he debunks is a myth the mathematician-economist creates: economics is less about humanity than about numbers.

"Economics tries, as if in a panic, to avoid terms such as 'good' and 'evil.' It cannot," the author points out. "Even the most sophisticated mathematical model is, de facto, a story, a parable, our effort to (rationally) grasp the world around us."

He says that economists who compare their work to that of physicists forget that mathematics is a human language outside the natural world, not in it. Modern economics is the most mathematical of social sciences, but it is not a natural science like physics or chemistry.

He mentions Austrian-American mathematician Kurt G?del (1906-1978) who is famous for his "incompleteness theorem," which states that certain questions are irreducible to mathematical analysis.

Indeed, how can "irrational exuberance" that led to uninformed purchases and sales of stocks, houses or financial derivatives in the past few years worldwide be measured by decimal points?

Human minds, by their very nature, are never as predictable as an apple fallen from a tree.

The myth about a mathematical magic, however flimsy, has worked its way into policy making in many countries in the past 300 years.

Capitalism and the Industrial Revolution are two prime examples of producing "efficient" numbers at the expense of humanity. Now we have GDP as the ultimate mathematical metric of prosperity.

"In the past 20 years, real US GDP per capita has risen by 37 percent. Impressed? Perhaps. But are we appreciative or satisfied?" asks Sedlacek. "Hardly."

Are you happy?

The same question can be asked about China's rapid economic growth in the past 30 years or so. "Are you happy?" CCTV has asked many people on the street lately, and the answer is often a frown.

Song Dandan, a prosperous actress in Beijing, asked in her personal Weibo (Chinese Twitter) this week where she could retire in the future, now that the capital city is so polluted by recurring smog?

Pollution is the inevitable result of an economic thinking that distances itself from ethical considerations.

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