Intellectual Inertia and Keynesianism

Anarchists face many challenges establishing a state-free society. One of the main challenges we face is the fact that an idea that is widely held will continue to be widely held. This intellectual inertia causes false, pro-state ideologies to be established and propagated long after they have been disproved. An excellent example of this is Keynesianism, which is used to justify some actions of the state. It was exploded by the stagflation of the ‘70’s, but it is still the most taught macroeconomic theory.

There are many reasons for intellectual inertia. People often believe things are true not based on evidence, but based on repetition. People’s brains begin to believe something if they have heard it enough times, and look for evidence that confirms their already-held bias. (This can apply to anarchists as well. Check your assumptions.) Second, when ideas are widely held people create incentives for other people to hold those same ideas. And third, because people have an incentive to learn some particular thing it can be more difficult to find someone or somewhere that teaches an opposing view. Despite these challenges, opinions that contradict widely held pro-statist ideologies are beginning to gain momentum.

Most Americans (and probably people in the world generally) really do believe that government spending does help people and can actually bring an increase in employment. Yet, very few hold this view because of time spent in focused reflection, but instead most hold it by its repetition in media. When enough very smart people have said the same thing repeatedly it can be extremely difficult to dislodge that idea. The second part of this-looking for evidence that supports your opinion and ignoring data that refutes it-tends to not be a problem for the man on the street as much as it can be for very well educated people. Probably both Bernanke and Krugman are aware of the crash in the early 1920’s and the great depression that did not follow. Yet, neither one will take the lesson from this episode that high interest rates at the fed as well as cuts in government spending are good for the rapid dissipation of malinvestment. This is because to believe that would necessitate a complete change in the way in which they think about the world. It is much easier for them to just dismiss 1922 as an anomaly and move on. And because almost the entire academic economic establishment will support this position, this is very easy for them to do.

This brings us to the next reason for intellectual inertia: it is easier, and often more profitable, to hold ideas that other people hold. It is rather difficult to get hired saying things that your potential employers don’t like to hear. This is true in any profession, but it is especially strong in academic economics because of the influence of the Federal Reserve. The Federal Reserve gives out millions in grants in an effort to influence which ideas get published in economic journals. And then there’s the private sector as well. Many options trading desks assume that markets are efficient. If you disagreed for whatever reason, why would they hire you when they can easily find someone else who will play ball? It is difficult to find a firm who will hire you if you fundamentally disagree about how the world works in a way that affects your job.

Because of this, most people go with the flow, and so there’s a demand to learn whatever the dominant ideology is. People want to learn about the EMH and Pareto optimality, and Kaldor-Hicks efficiency, even if these concepts are convoluted ways of saying very simple things, or just plain wrong. The state will pay money that’s required to be accepted by shop keepers for a policy analyst who can find a Kaldor-Hicks improvement (even if the concept makes no sense, even within its own idiotic definitions and assumptions that could never exist in a real situation). Because there’s a demand for the main ideology, it is mass-taught, reducing the marginal cost of learning it. A less popular ideology, on the other hand, can be more costly to learn. It can be harder to encounter in the first place, even if you’re seeking out the information, there may be social pressure against learning it, and if it is taught at all it may be taught at a higher monetary cost.

Despite these hurdles, anarchists are making progress disproving statist myths. In the past couple years there has been a boom in interest in learning Austrian Economics, even from academic professionals. Many hedge funds specifically scout for people who understand business cycle theory. Other dominant social themes like the infallibility of the state or the efficacy of democracy are being daily undermined, repeatedly reminding people of the problems inherent in any statist institution. All these things work against the advantage in propaganda the state has built up. The internet reformation has given those trying to push for better ideas an immensely powerful tool for overcoming the challenges anarchists face. Because of this, I suspect we have many reasons to be optimistic about the creation of a stateless society.

Regards,

Sima Qian
The Daily Anarchist

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