Radical Economics

I heard the announcement last year that economists had discovered that people value a gift given to them more than they would value the money that the gift cost. Would anybody who has actually lived with their eyes open be at all surprised by this result? Of course the value of a gift is far more complex than a simple dollar amount.

For me, the research amounts to final proof that the field of economics is a fantasy world. I'll save for another post any discussion about the false assumption in the US that taxes are bad for productivity. Right now, I want to propose a change in economics. What if we were to look at money as a proxy for time and skill? That's it. Nothing more. Not a substitute for worth. Not a basis for determining any sort of meaning. Just a portable way for people to trade different forms of work for things other people have made.

Of course, this doesn't provide a rational basis for markets. Maybe that's alright, though. Chances are, given that markets are operated by people, and people are basically irrational, markets are fundamentally irrational and chaotic. That fits a lot better with recent history than the pie-in-the-sky concept of the invisible-hand-of-the-market. Of course, I refer here to the idea that economic forces will naturally push decision-makers toward choices that are more efficient and ultimately beneficial for all concerned. The clearest contradiction is in cases like Enron. I guess the invisible hand of the market finally swatted the decision-makers in that one, but it mostly seems to have led to the irrational decision-makers getting rich, while everybody else ends up destitute.

The hardest part for economists to swallow in all this is that if markets are irrational, and money is just a way for people to flexibly barter, most economists would have to find a new way to make a living. Oh, well, that would just be an unavoidable readjustment of a market segment--painful for the few, beneficial for the many.