Foundations of Probability 3

This continues from previous post (Three Types of Probability)  . Section 2 of the paper “Subjective Probability Does Not Exist“ is entitled “Risk Versus Uncertainty”, and explains how a (false) technical argument, which continues to be widely accepted and believed, banished uncertainty from the world, and replaced it by risk.

Section 2: Risk Versus Uncertainty. 

“… the race is not always to the swift, nor the battle to the strong …” Ecclesiastes 9:11

In this section, we recapitulate an intellectual battle about the nature of probability which took place in the early twentieth century, which was won by the wrong side, due to these confusions over the nature of probability. This victory has been enormously influential in shaping modern economic and financial theory. As Keynes recognized “The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else.” Wrong ideas about probability rule the world today. These ideas led to a false assurance about the predictability of the future, and left economists unprepared for the Global Financial Crisis. These ideas continue to dominate the theoretical discourse, especially in economics, with disastrous consequences.

All of social science must be grounded in theories of human behavior. Human decisions are generally directed towards the future. I take action A because I expect good consequences will occur due to my action. Investors invest based on expectations regarding economic prospects about the future. Firms make decisions to produce based on expectations regarding how much they expect to be able to sell, and at what prices, in the future. Recognition of the central role of probability in our daily decisions led the aphorism “Probability is the very guide to life”. In particular, decision making under uncertainty is at the heart of economic theory. Uncertainty reflects lack of knowledge about what might happen in the future. There are several different levels of knowledge about the future, which need to be distinguished.

Certainty: This holds when the future is exactly known, deterministically.

Risk: This holds when we can predict the pattern of the outcomes. To be more precise, there is a fixed and finite number of outcomes E₁, E₂, …, En which may occur. Decision makers, referred to as agents subsequently, know the events and also knows their ontic or epistemic probabilities of occurrence p₁, p₂, …, p_n.

Mild Uncertainty: There is a fixed and finite number of events E1,…,En but agent A does not know their ontic or epistemic probabilities. To make decisions, agents must acquire relevant knowledge regarding the past historical record, or the circumstances which create these outcomes, and transform this knowledge into an epistemic probability, which represents their best guess at the ontic probabilities.

Radical Uncertainty: The range of events which may occur is large and unknown, and the agent A has insufficient knowledge to allow for a guess at the ontic probabilities of these events.

Traditional economic theory assumes complete certainty about the future to derive decisions of consumers and firms. This theory can be extended to situations of risk, when all agents know the probabilities of outcomes of all possible economically relevant events. The theory breaks down under conditions of mild uncertainty, since decision makers cannot even calculate the expected values of the consequences of their actions. This makes the optimization decisions at the heart of economic theory impossible. Even worse is the case of radical uncertainty. Here, even the range of actions open to agents is not known, and innovators can come up with new ideas and actions which are not within the range of possibilities imagined by others. With this terminology in place, we can describe the intellectual battle as follows. Keynes (1921) and Knight (1921) argued the radical uncertainty is ubiquitous in economic environments. It is this uncertainty which created profit opportunities, according to Knight. In Keynesian theory, investors beliefs were based on “animal spirits” (recently renamed as “irrational exuberance”), because of the fundamental uncertainty surrounding the future. The concept of profit maximization for firms does not make sense when future consequences of current production decisions cannot be foreseen. In particular, future prices are unknown and unknowable. However, Ramsey and De-Finetti came up with a technical argument which appears to show that all situations of uncertainty can be reduced to risk. Rational decision makers facing uncertainty will assign probabilities to all uncertain events, thereby reducing uncertainty to risk. Thus, mild or radical uncertainty does not exist for rational agents.

John Kay (2019) writes the “It is difficult to exaggerate the practical consequence of the outcome of that technical argument. To acknowledge the role of radical uncertainty is to knock away the foundations of finance theory and much modern macroeconomics. But the reigning consensus (that uncertainty does not exist) is beset with glaring weaknesses. Keynes and Knight were right, and their opponents wrong. And recognition of that is a necessary preliminary to the rebuilding of a more relevant economic theory.” It is the central goal of this paper to explain why the reigning consensus, which banishes both mild and radical uncertainty from economic theory, is wrong.

In order to explain its glaring weaknesses, we will replicate the argument of Ramsey, De-Finetti and Savage in the simplest possible context, stripped of all extraneous complications. The basic argument establishes the existence of revealed probability in certain decision-making contexts. There are two mistakes in the arguments for subjective probability, both based on logical positivism. One mistake is the rejection of ontic probabilities, and the second is the rejection of epistemic probabilities. Both of these are unobservable, and hence, meaningless concepts, according to extreme positivists. The empiricism which leads to the denial of meaning to concepts of ontic and epistemic probabilities is the key to the victory of Ramsey and de-Finetti over Keynes and Knight, and also the key to the persistence of this error for nearly a century.

Next Post: Section 3: Blinders of Empiricism (Part 1) (4/10)

Foundations of Probability 2

This continues from the previous post (Embrace Radical Uncertainty) , which introduces the topic, and explains how the foundations of probabilty, laid in early 20th century, were completely derailed by logical positivism. The first section of the paper explains the three main types of probability that MUST be distinguished, in order to understand the flaws in the arguments for personal probabilty. Unfortunately, logical positivism DENIES the existence of the first two types listed below. What is worse, it denies MEANING to concept, making it impossible to talk about, or think about, these concepts. These mental barriers are an important reason why the flaws in the argument for Bayesianity have remained un-detected for so long.

Section 1 – THREE TYPES OF PROBABILITY

De-Finetti’s (1974) famous book on The Theory of Probability starts with the sentence that “Probability does not exist”. The conflict between the title and the first sentence arises because of the failure to distinguish between different notions of probability, as we will clarify. Contrary to standard usage, throughout this paper, probability will refer to the probability of a unique, one-time event – known as a single case probability. Consider an experiment E, the outcome of which can be an event G, or its complement G*. We want to think about meanings which could be attached to the expression p(G) or the probability of the outcome G. We consider three different possible ways of interpreting this expression.

Ontic Probability: This is a probability which is created by the objective circumstances of the experimental setup, which are invariant across observers, and persist whether or not there are observers. Thus, the probability of the event G exists as a feature of external reality, and is not affected by mental states of observers, or by perceptions and observations. We will use p(G) to denote the ontic probability of G.

Epistemic Probability: This refers to an intermediate state of knowledge K of a particular observer A about the experiment E and its outcome G. A has complete knowledge if he can predict exactly what will occur: either G or not G. He has zero knowledge if he knows nothing which can allow him to say anything relevant to predicting whether or not G will occur as an outcome of the experiment E. The intermediate state of knowledge arises when past experience with experiments similar to E allows A to say something useful about the likelihood of occurrence of G. This likelihood will be denoted as P_A(G).

Revealed Probability: The epistemic probability P_A(G) is an internal mental state of knowledge of A, which is not directly observable by others. Observers can get access to this knowledge by asking A to choose over lotteries. If A believes that the likelihood of occurrence of G is greater than 50%, then he will prefer a lottery which pays $5 on occurrence of G to a lottery which pays $5 with 50% (ontic or epistemic) probability. Several such choices can accurately reveal the internal mental state of knowledge of A to external observers. Knowledge which external observers acquire by observing choices of A over lotteries will be called the revealed probability of G, which is short for the epistemic probability P_A(G) as revealed to observer B by actions of A.

Some examples will clarify the distinctions being made. There is a 50% probability that a free neutron will undergo radioactive decay within 10.3 minutes, whether or not there are any observers of this event. This is an ontic probability, which is a feature of external reality, even when there are no observers.

Epistemic probability refers to a state of knowledge intermediate between complete knowledge of what will happen, and complete lack of knowledge. This type of knowledge can arise from several possible sources. One source is knowledge of observed frequency of occurrence of outcome G in similar experiments E. Another source is knowledge of conditions of symmetry under which the experiment is performed, which lead to equal possibility for some types of outcomes. A third sources is expert opinion based on deep knowledge about the experiment, such as in the case of quantum probabilities, or in the case of weather forecasts.

Since epistemic probability is an internal mental state of A, it is not directly observable by external observers. Any method used by external observers to assess the state of knowledge that A has about the probability of occurrence of G as an outcome of the experiment E leads to a revealed probability.

It is clear that the three notions of probability are very different from each other. Ontic probability concerns external reality, epistemic probability is an internal mental state of knowledge, and revealed probability is an assessment by an observer B, of an internal mental state of A, based on observed behavior of A. The argument of De-Finetti for the existence of subjective probabilities can be summarized as follows. Logical Positivism leads De-Finetti to the conclusion that ontic single case probabilities do not exist. Logical positivism also denies existence of unobservable internal mental states of knowledge, so that epistemic probability also does not exist, in the sense defined above. Additionally, there are no probabilistic events in external reality, so there is no knowledge to be had about probabilistic regularities in observed patterns of events. De-Finetti shows that rational human behavior in situations of uncertainty nonetheless satisfies certain rules which are the same as rules which would be followed if the human in question had epistemic probabilities. Thus a revealed probability can be inferred from a set of choices over lotteries. This revealed probability is taken to be an epistemic probability, representing knowledge or belief about the uncertain event. It is this last interpretive step which is wrong.

Our counter-argument to De-Finetti states that if there really are no probabilistic regularities in external reality, then we can only take arbitrary actions. These may appear to conform to an epistemic probability which displays knowledge about external reality, but this match is an illusion. Subjective probabilities arise from arbitrary actions based on ignorance, and these can be clearly distinguished from epistemic probabilities which lead to informed decisions based on knowledge. When A is ignorant, then the actions and choices of A do not actually reflect or reveal the epistemic probabilities P_A(G). Substantial elaboration is required to explain this brief sketch of the main argument of this paper.

Next Post: Risk Versus Uncertainty (3/10) 

Foundations of Probability 1

Embrace Radical Uncertainty: First post in a sequence of 10 posts based on my paper “Subjective Probability Does Not Exist“.

In this sequence of posts, I will go through a recent paper of mine, which explains that BOTH of the currently dominant approaches to probability are deeply, fundamentally, and irreparably flawed. The reason for this is that probability is a real-world phenomenon which is unobservable and unmeasurable. The early 20th Century foundations for probability were built at a time when logical positivism was dominant as the philosophy of science. Furthermore, despite its abandonment by philosophers, its central ideas continue to be widely believed, especially among economists. We will see that both frequentism and subjectivism are attempts to reduce the unobservable to the observable, but this is fundamentally impossible, and all such attempts are doomed to failure. Nonetheless, the charm of positivism and empiricism is so strong, that it prevents the formulation of the ideas necessary to see the problems with the current definitions of probability. An alternative method for thinking about probability, based on  Critical Realism, will also be offered. Based on my paper draft, I estimate that there will be about ten posts of about 1000 words each, though a few of them might be longer. So this post is 1/10 – the first of ten posts on this topic. It would be useful to being with a short post from John Kay entitled: “Embrace Radical Uncertainty“.

Between 1920 and 1950, a debate took place which defined the future of economics in the second half of the 20th century. On one side were John Maynard Keynes and Frank Knight; on the other, Frank Ramsey and Jimmie Savage.

Knight and Keynes believed in the ubiquity of “radical uncertainty”. Not only did we not know what was going to happen, we had a very limited ability to even describe the things that might happen. They distinguished risk, which could be described with the aid of probabilities, from real uncertainty—which could not. In Knight’s world, such uncertainties gave rise to the profit opportunities which were the dynamic of a capitalist economy. Keynes saw these uncertainties as at the root of the inevitable instability in such economies.

Their opponents insisted instead that all uncertainties could be described probabilistically. And their opponents won, not least because their probabilistic world was convenient: it could be described axiomatically and mathematically.

It is difficult to exaggerate the practical consequence of the outcome of that technical argument. To acknowledge the role of radical uncertainty is to knock away the foundations of finance theory and much modern macroeconomics. But the reigning consensus is beset with glaring weaknesses. Keynes and Knight were right, and their opponents wrong. And recognition of that is a necessary preliminary to the rebuilding of a more relevant economic theory.

My paper about probability, which I will post here in short segments, one section at a time, is entitled: “Subjective Probability Does Not Exist”. The Abstract for the paper is given below. The next post in this sequence will introduce three different probability concepts which must be kept separate from each other, in order to understand the nature of probability. Unfortunately, logical positivism prevents us from thinking about two of these concepts, which is why those with positivist mindsets cannot see the flaws in the current approaches to probability.

Subjective Probability Does Not Exist

{1/12/19: Radically Revised and Updated Version of earlier paper with same name.}

Abstract: Probabilities of one-time events are unobservable and unmeasurable. According to empiricist and positivist principles, they must be meaningless. However, our cognitive limitations do not prevent entities and effects from existing. We show that the argument for existence of subjective probabilities relies crucially on the non-existence of objective probabilities. In this case however, the existence of subjective probabilities reduces to a triviality. When objective probabilities do not exist, we are free to believe whatever we like about these probabilities, without any consequences. The theorems which establish the existence of subjective probabilities are normally interpreted as establishing the existence of beliefs about probabilities. We show that this interpretation is not tenable when objective probabilities do not exist. We establish the validity of an alternative interpretation: in absence of objective probabilities, we are free to choose any arbitrary number as a subjective probability.

Next Post: Three Types of Probability (2/10)

Going Digital: What is the Future of Business and Labour?

Welcome to the second week of the Conference!

The objective of this conference is to discuss recent contributions to the understanding of digital econom y and its cons equences for bus ines s trends and labour challenges .

Read the latest comments!

DISCUSSION FORUM

The Discussion Forum is open until December 9th.

All papers are available HERE. You can participate in the Discussion Forum by commenting on specific papers, or contributing to a general discussion on the Complexities in Economics. In the spirit of debate, authors are asked to respond to the comments on their papers as well as on related general remarks.
Comments are moderated prior to posting to ensure no libellous or hateful language.

CONFERENCE PROGRAM

Keynote Papers

1. Grazia Ietto-Gillies, “Digitalization and the transnational corporations. Rethinking economics” 2. Peter Söderbaum, “Ecological Economics in relation to a digital world”

Selected Contributions

1. Bin Li, “How Could The Cognitive Revolution Happen To Economics? An Introduction to the Algorithm Framework Theory”
2. Marc Jacquinet, “Artificial intelligence, big data, platform capitalism and public policy: An evolutionary perspective”
3. Guilherme Nunes Pires, “Gig economy, austerity and “uberization” of labor in Brazil (2014 – 2019)”
4. Alessandro Zoino, “Predicting Stock Returns: Random Walk or Herding Behaviour?”

REGISTRATION FOR THE CONFERENCE

There is no fee for conference registration.
Registration is not required for participation in the conference – you can read and comment on the papers without it – but your registration will allow us to send you emails to keep you posted on announcements and progress of the conference.

If, additionally, you would like to receive a conference participation e-certificate, you can pay $10 and complete your official registration here.

We look forward to having you participate in the Discussion Forum.

Maria Alejandra Madi, Conference Leader and a Chair of the WEA Conferences Program

Malgorzata Dereniowska, Co-Leader and a member of the WEA Conferences Planning and Organization Committee

WEA CONFERENCE “GOING DIGITAL”. Deadline extended to 30 October

The advent of digital economy creates new challenges for businesses, workers, and policymakers. Moreover, business prospects for artificial intelligence and machine learning are evolving quickly. These technologies have transforming implications for all industries, businesses of all sizes, and societies. The digitalization of economic activities calls for a deep reflection on the forces that will shape the future of the global economy.

The objective of this conference, led by Prof. Maria Alejandra Madi and Dr. Malgorzata Dereniowska, is to discuss recent contributions to the understanding of digital economy and its consequences for business trends and labour challenges. The conference also focuses on bridging the gap between different economic theoretical approaches and the practical applications of artificial intelligence and machine learning.

The Conference calls for a focused reflection on the benefits and risks of the high-tech revolution is an important element of shaping sustainable business and just labor. Related topics include law, ethics, safety, and governance.

Topics include (but are not limited to):

The gig economy and recent economic theoretical approaches: advances and challenges.
Internet of Things in retrospect and today.
Machine learning: integration of people and machine learning in online systems.
Consumer transactions and Big Analytics.
Time Series Data & Data for Prediction in Economics.
Business Transformations though Internet of Things and Artificial Intelligence.
Impact of artificial intelligence on business and society: automation of jobs and the future of job creation
Artificial intelligence for manufacturing: today and tomorrow.
Disruptive innovation and transforming industries: telecom, finance, and travel/transportation, logistics, etc.
Machine learning and eco-challenges.
E-government, e-democracy and e-justice.
Ethical and legal issues of artificial intelligence technology and its applications.
Digital economy and economic inequality.
The impact of the digital economy on competition and economic growth.
We welcome submissions from scholars working in economics, law, political science, psychology, philosophy, and sociology.

We also welcome contributions from business executives responsible for AI initiatives, heads of innovation, data scientists, data analysts, staticians, AI consultants and service providers, and students.

KEY DATES

Papers submission: October  30th 2019.

Welcome

Discussion Forum: November 11th – December 9th 2019.

CONTACT

Maria Alejandra Madi alejandra_madi@yahoo.com.br

Małgorzata Dereniowska malgorzata.dereniowska@gmail.com

The Great Transformation of Economic Theory

In the Origins of Central Banking, we discussed how the Bank of England was created in 1694 to provide funding for a war with France. The success of this institution was noted, and it was replicated across Europe, so that Central Banks came into existence to finance the nearly continuous wars between European powers that characterized the 18th Century. The 19th Century was unusual in that European powers set aside differences to create a Hundred Years of Peace (1814 to 1914), in order to go on a spree of global colonization and conquest. The transition from war to peace also created a transformation in economic theories from Mercantilism to Free Trade. Some aspects of this transition are discussed below.

The Root of All Evil

An essential aspect of the Great Transformation from traditional, paternalistic societies to market societies involves re-engineering human motivations. The lust for money does not normally rank high as a driver of human behavior. When a capitalist society makes markets the central mechanism for production and distribution of essential commodities to the society, then the money motive must be strengthened. Capitalism cannot risk the baker taking a day off for fishing, or laborers deciding to take a break from monotony, disturbing the supply of essential commodities to the populace. Many mechanisms are used by capitalist societies to make the love of money enter the hearts of all members of the society. Max Weber noted that “In fact, the summum bonum of this ethic, the strict earning of more and more money, combined with the strict avoidance of all spontaneous enjoyment of life, … is thought of … purely as an end in itself,  … .  Man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic acquisition is no longer subordinated to man as the means for the satisfaction of his material needs.  This reversal of what we should call the natural relationship, so irrational from a naïve point of view, is evidently as definitely a leading principle of capitalism as it is foreign to all peoples not under capitalistic influence.” The Great Transformation changes the Biblical “Love of money” to the Shavian “Lack of money” as the root of all evil. These changes are reflected in politics, trade, and in economic theories, as we discuss below.

Finance for Wars:

There is a close connection between wars and finance. Central Banks were created for the purpose of financing wars, and for most of 18^th Century, the main function of Central Bank was to provide financing for wars. The evolution towards modern monetary functions occurred in the 19^th Century, where European powers avoided wars with each other, and concentrated on colonizing the globe. During this century, arranging finance for investment for ventures in the colonies across the globe became the main function of finance. Wars on European continent were avoided because of the influence of haute finance on political decisions. Similarly, the evolution of money in the 20^th Century has been strongly influenced by War. The gold standard collapsed due to World War 1. Attempts to re-instate the gold standard failed due to World War 2, at which point the Bretton-Woods agreement of 1944 created an alternative. This was a dollar-based system of international trade, called a gold-exchange standard since dollars could be exchanged for gold, at least theoretically. When all currencies are tied to gold through dollars, even notionally, this leads naturally to fixed exchange rates based on gold-equivalence. Financing expenses of the Vietnam War led to massive overprinting of dollars, making it impossible for the USA to redeem them in gold. In 1971, Nixon announced that dollars would no longer be redeemable for gold. This “Nixon shock” removed the anchor which had tied all currencies to a fixed gold value, and set them all adrift. The natural consequence was the world of floating exchange rates which we now live in.

The Unusual Nineteenth Century

Given the close connection between finance and war, Mercantilism is based on the acquisition of gold from foreigners to enhance domestic ability to make war, and also to weaken foreigners’ ability to finance their war efforts. This is perfectly natural in a world of constant warfare. The exceptional 19^th Century occurred because the process of colonization of the globe temporarily made available vast resources of the entire globe to the colonizing European powers. The conquest of colonies raised standards of living among peoples of European descent at an astonishingly rapid pace, while impoverishing the colonies and the entire planet to a far greater extent. Vast numbers of books have been written to explain the MYSTERY of the ascent of Europe, and the corresponding failure of the rest of the globe. James Blaut in “Eight Eurocentric Historians“ and “The Colonizers Model of the World” has listed and debunked over thirty of these myths. Meanwhile, no one has mentioned the elephant in room (except to dismiss it): massive expropriation of global resources created by conquest of 85% of the planet enriched Europe and impoverished the globe. In fact, Lefken Stavrianos in “Global Rift: the Third World Comes of Age“ has put forth and documented precisely this thesis. Unfortunately, this book has been out of print for some time. The 19th Century was unusual in that vast non-monetary resources available in the colonies – men and minerals – were exploited, so that trade was carried out for enrichment of mother countries in terms of commodities, as well as gold and silver. This change in orientation from Mercantilism was reflected in classical economic theories of the 19th Century.

General Equilibrium (C-M-C’) Versus Karl Marx (M-C-M’)

The transition from constant warfare in the 18^th Century to the Hundred Years Peace in the 19^th was accompanied by the transition from Mercantilism to the free trade theories of Adam Smith and Ricardo. To understand the difference, we must look at the purpose of trade. When trade is carried out for the purpose of making money, the M-C-M’ paradigm applies. That is, traders use money to produce commodities, and sell them to make more money. Trade is adversarial in this paradigm – either I will make money or you will make money, both parties cannot get more money given a fixed and finite supply of gold. Using unbacked currencies, MMT accounting identities show that if exports are greater than imports, domestic profits and savings must increase by the amount of the difference. Conversely, if imports are greater in value than exports the difference reduces net profits and savings in domestic economy. Thus, trade is a zero-sum game when played for money. The win-win solution at the heart of General Equilibrium models of trade is based on trade for commodities, or the C-M-C’ model, as explained below.

Modern economic theory has its roots in the peace of the 19^th Century, where economic activity produced commodities to raise standards of living, and money was an intermediate good; the C-M-C’ paradigm. The theory of comparative advantage argues that both nations can get both of more goods if the colonies specialize in raw materials while the center specialize in manufacture and industry. The theory assumes that the goal of trade is to get more commodities C-M-C’, and not to earn more money. Similarly, general equilibrium theory of Walras is also focused on the acquisition of commodities as the final outcome of trade. These theories are not compatible with a world where trade is for the purpose of acquiring gold and the financial power to make wars. They emerged and became powerful and widely accepted because of sudden change in the interests of haute finance, represented by Central Banks, from war to peace.

Finance for Peace:

Karl Polanyi writes about the sudden shift from war to peace that occurred at the beginning of the 19^th Century as follows – (parenthetical expressions are mine; for full original quote, see Polanyi Quote)

The “balance of power” ensures that three or more units capable of exerting power will always behave in such a way as to combine the power of the weaker units against any increase in power of the strongest.  (BOP) attained this end only by continuous war between changing partners. The fact that in the nineteenth century the same mechanism resulted in peace rather than war is a problem to challenge the historian. The entirely new factor (which explains how BOP produced peace instead of war) was the emergence of an acute peace interest. (The State, the Church and the Public were strong advocates of war as a means of protecting the national interest.) Few things were regarded as more detrimental to a community than the existence of an organized peace interest in its midst. As late as the second half of the eighteenth century, J. J. Rousseau arraigned trades people for their lack of patriotism because they were suspected of pre­ferring peace to liberty.

After 1815 the change is sudden and complete. The backwash of the French Revolution reinforced the rising tide of the Industrial Revolution in establishing peaceful business as a universal interest. Metternich proclaimed that what the people of Europe wanted was not liberty but peace. Gentz called patriots the new barbarians. Church and throne started out on the denationalization of Europe. Their argu­ments found support both in the ferocity of the recent popular forms of warfare and in the tremendously enhanced value of peace under the nascent economies.

When the interests of haute finance (central banks, and the transnational financiers behind these banks) became aligned with peace, then the public minds were aligned with peace, instead of war. The vast proportion of Colonial trade in the early 19^th Century was between mother country and colonies, and not across colonies. The colonies were generally poor in gold but rich in resources. So, the Mercantilist model of acquiring gold for making war became obsolete. Instead, theories were developed which were aligned with acquiring resources for the mother country by exploiting the colonies. This process was hugely successful as massive amounts of global resources were transferred to nations of European origin, enriching them while impoverishing the rest of world. Stavrianos provides historical details in “Global Rift: The Third World Comes of Age“.

Power and Knowledge

The popular picture of economic theory as a body of knowledge created by neutral searchers for truth is dramatically wrong. From Adam Smith onwards, the ascendant economic theories have been closely linked to the interests of the wealthy capitalists. Free trade suited the interests of England, which had a fifty-year lead over Europe in the Industrial Revolution. It is no coincidence that free trade theories were strongly advocated by England. At the same time, theories of protection were developed by  German economist Friedrich List, and other European and US economists in the early 19^th Century. After the US and Europe caught up to England using protectionist policies, the West collectively imposed free trade on the rest of the world. Wars with China and Japan were carried out with the only objective of opening these economies up to free traders of the West. For this history see Ahmad & Zaman “Free Trade and Development“. For a more general view of how economic theories are devised to favor the rich and powerful, see ET1%: Blindfolds Created by Economic Theory of the top 1%. Analysing the links between power and knowledge opens the door to deep insights. As Foucault said, “My job is making windows where there were once walls”.  More transparently, “The history of the struggle for power, and consequently the real conditions of its exercise and maintenance, is still almost totally hidden. Knowledge is not a part of this: that should not be known.”   In order to create people who are ready to die for their country, the truth that the war is about control of resources like oil, must be concealed — see “The Business of War” for a detailed discussion. Even more important, our entire educational system is designed to create human resources for the labor market essential to the survival of capitalism. Knowledge about the potential for excellence contained within every human being must be concealed for this purpose. The journey of life begins when we remove the blindfolds created by our education, and make the strenuous efforts required to discover our true identities — see “Learn Who You Are!“

Enhancing Pluralism: 1st Colloquium on Economics Education

To understand economics means to be equipped with the intellectual tools allowing us to appreciate the dynamic and complex nature of the capitalist markets. This understanding can be better acquired through engaging on the importance of pluralism in economic education, and reviewing critical economic issues from alternative perspectives.

The Center for Market Education invites to submit abstracts for the 1st Colloquium on Economics Education which will be held at The Saujana Hotel (www.saujanahotels.com) in Kuala Lumpur, Malaysia, on 10-12 December 2019.

The theme of the conference is Issues in Contemporary Economics Education. Abstracts can deal with the following topics:

1. issues deriving from a standardized economics education and in particular with the unique predominance of the neoclassical paradigm after World War II;
2. the enrichment for students and the academic community that can derive from a pluralistic approach in general and from the contributions that can be delivered by specifics heterodox schools;
3. the importance of economic history and history of economic thought for a sound economic analysis;
4. the importance of epistemological foundations and multidisciplinarity.

The event is planned as a colloquium and not as a traditional academic conference. Abstracts and/or papers will be distributed in advance in order to facilitate an interactive discussion during the colloquium.

Ten papers will be selected for presentation on the basis of the abstracts. Conference participation is free of charge and the  Center for Market Education will cover accommodation (two nights) and meal expenses, while the travel expenses are covered by the participants.

The papers can be submitted after the conference for publication on MarketEdu, the official journal promoted by the Center for Market Education (www.marketedu.ideas.org.my) that is  an academic and educational initiative supported by the Institute for Democracy and Economic Affairs (IDEAS).

The Colloquium is peculiarly designed for: academicians in the field of economics and related social sciences and post-graduate students.

Abstracts can be submitted to carmelo@ideas.org.my before 1 November 2019.