[lbo-talk] The Misunderstanding at the Core of Economics

[Marv Gandall]

The misunderstanding is that the late acclaimed Kenneth Arrow’s famous mathematical theorem somehow captures economic reality. It doesn’t - not in a capitalist society where economic and political power is so unequally distributed, something Arrow himself acknowledged. 

Nevertheless, Arrow’s theory has provided the major ideological justification to oppose efforts to regulate markets. Collective bargaining, public spending on social programs, constraints on trade and other forms of welfare capitalist state intervention have come to be widely regarded as economically inefficient barriers which distort and retard the assumed movement of free markets towards general equilibrium.

The following piece is a succinct decoding of the fallacy.

https://www.bloomberg.com/view/articles/2017-03-09/the-misunderstanding-at-the-core-of-economics