October 16, 2021

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Many reasons economists can’t manage our economies well

By   Francis Ogbimi

 

Nigeria is a good example of a nation poorly managed. It is a nation faced by mass unemployment, prevalent poverty, highly indebted, high level of insecurity, a failed nation? Have you ever asked why? President Muhammadu Buhari and other twelve men who have ruled this nation are only told what to say and do about the economy. It is economists and other social scientists, accountants, bankers, lawyers, the World Bank & IMF who claim to know how the economy works and who have been determining what is done to the economy and the living standard of Nigerians during the past over 60 years. The economists claim to know how to promote rapid economic growth, full employment and stable prices. So, economists have long convinced non-economists that they (economists) are the people who know how to manage our economies. Have they been successful in their attempts to achieve their claimed objectives? No, not at all! Why? This article explains why they cannot and will never be able to manage our economy well.

All the rich nations of the world are industrialised. They were poor for centuries when they had agricultural economies. They toiled for centuries before achieving industrialised and rich. The primary focus of any nation with agricultural economy should therefore be to promote industrialisation. Industrialisation, the process through which a nation achieves industrialisation is scientific. The principal reason economists and others Western social scientists, accountants, bankers, lawyers, administrators, etc., cannot promote industrialisation is that they cannot understand the science of the process. No one solves a problem s/he does not understand. This is the reason they would never be able to manage our economies well and promote industrialisation and reduce poverty. 

There are many other reasons economists cannot manage our economies well. All economists constitute the cult of economists. The members of the cult of economists can never be the source of fundamental changes in the beliefs, values and practices of economics. Hence, though many influential individuals and groups of economists have complained bitterly over the decades that economics does not address the basic problems of societies, no economist has the ability to address the debilities of economics, because of the inherent inabilities of the discipline of economics. By this, I mean that whether the economist is one of the most famous professors of economics, he or she is plagued by the inherent debilities of economics, which prevent him or her from being able to manage any economy well. What are the inherent debilities of economics?

The first inherent debility of economics as an area of knowledge is its methodology. Economics like other social sciences adopted the scientific method developed for the physical and biological science, believing that the application of the scientific method to social science, especially economics, would transform them into social physics that would provide for students of society, the excitement which natural sciences were providing for the students of the physical sciences (DeFleur, et al., 1977). By conceiving social sciences as social physics instead of social biology, social scientists, including economists, made a fundamental error from the onset. The consequences of the methodological error are many and fundamental too. They should therefore be considered as the fundamental debilities of economists.

The second inherent debility of economics is that it is ahistorical and mechanistic. That is, economists’ understanding of the economy lacks a sense of history. Economists find it hard incorporating history into their analyses. They are not aware that European and American cultures were not counted as the Great Medieval Civilizations (GMCs). The Chinese, Indian and Islamic cultures were the GMCs. Because economists do not understand the industrialisation process, the equations (laws) of physics and mechanics adopted by economists are about time-independent responses of solids like metallic rods, springs, wires, etc. By adopting such laws, economists claim that economies behave like iron wires, spring and rods subjected to small strains. They write timeless functions suggesting that development does not take time. But the economy cannot behave like strained solids and development takes time. The third debility of economics is that it is unable to distinguish between trivial and sustainable economic growth. Economists therefore, measure growth as mere change in the GDP or growth without development.   The fourth defect of economics is that it does not know the primary source of sustainable economic growth. Mainstream economists who parade the developing world claiming that African nations should provide favourable environment for the inflow of foreign investments to promote economic growth  are all liars. Douglas (1948), Abramovitz (1956), Solow (1957), Gerschenkron (1966) and Ogbimi (2003), all demonstrated that capital investment is not the primary source of sustainable economic growth and industrialization. Those who claim that capital is the most important factor of production do not know that in the Middle Ages (450-1450), land was the most important resource in Europe. The claim about the special role of capital came after the industrial age, 1660-1815.

The fifth debility of economics is that it is based on equilibrium or supply-demand analysis. This defect is a very serious one. Real growth is a transformation.  Our research activities (Ogbimi, 1995; and Ogbimi, 2007) showed clearly that learning (education, training, employment and research) is the primary source of sustainable economic growth and industrialisation. One who has learnt something is transformed relatively permanently. One who cannot read and write may learn to read and write and be transformed. So, true growth is a transformational process, not an equilibrium one as economists assume. It was through learning that agricultural/artisan European and Asian nations increased their knowledge, skills and competences over 2000-3000 years, achieved industrialisation and became transformed. The sixth weakness of economics is that economists do not understand the relationships among the fundamental variables of an economy. The fundamental variables in an economy are employment, productivity and inflation. The three variables must be reported together to understand the true state of an economy.

Ogbimi writes via fogbimi@yahoo.com

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