We need a Reformation in Economics – The salutary story of Semmelweiss

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First posted on Think Left as ‘Like heterodox economists, Semmelweis was ignored…’ 29th April 2013

 

In 1844, Ignaz Philipp Semmelweis graduated as a doctor, and was appointed assistant at the obstetric clinic in Vienna.  At the time, the great scourge of new mothers was ‘childbed’ or puerperal fever.  It was thought that the deaths were unpreventable… the result variously of overcrowding, poor ventilation, the onset of lactation or a dreaded ‘miasma’.

However, Semmelweis oversaw two maternity wards and couldn’t help but notice that the puerperal death rate was two or three times in one, to what it was in the other. In fact, the pregnant women were only too aware because they would go to all sorts of lengths, pleading to be booked in on the lower mortality ward.

The two divisions were apparently identical except that the first, with the higher mortality, was used for teaching student doctors, whilst the second was staffed with just midwives.  Semmelweis noted that the student doctors were coming to the maternity ward directly from the dissecting room, having just completed autopsies on women who had died from puerperal fever…. he suspected that somehow (at that time no-one knew about bacteria or viruses) that the students might be carrying the infection to healthy mothers on the ward.

As an experiment, he ordered the staff to wash their hands in chlorinated lime water before each examination, and within the week, the mortality rate dropped from 18% to 1%.  Furthermore, no women died on his wards between March and August 1848.

So with such an immediate, dramatic drop in the death rate, why was there no corresponding immediate and widespread acceptance of the practice of hand-washing?

Why did the editor of the Wiener Medizinische Wochenschrift write that it was time to stop the nonsense about the chlorine hand wash?  Why did pregnant women have to wait over 25y for the importance of hygiene to be accepted; with Joseph Lister being credited as ‘the father of modern antisepsis’ instead of Semmelweis?

The reasons are still relevant not only in medicine but also in politics and economics …

Despite various publications of results where hand-washing reduced mortality to below 1%, Semmelweis’s observations conflicted with the established scientific and medical opinions of the time and his ideas were rejected by the medical community… Semmelweis’s practice earned widespread acceptance only years after his death, when Louis Pasteur confirmed the germ theory and Joseph Lister, acting on the French microbiologist‘s research, practiced and operated, using hygienic methods, with great success.

http://en.wikipedia.org/wiki/Semmelweiss

In other words, Semmelweis’s findings required a ‘paradigm shift’ but the old-guard ‘power elite’ were ‘invested’ in maintaining the status quo in spite of all the statistical evidence of the efficacy of hand-washing.  The weight of authority stood against Semmelweis’s prophylactic practice.

Exactly the same is true of the ‘austerity’ which is being inflicted on the UK and across the Eurozone. The tenets of neo-classical economics are daily shown to be completely wrong, contradictory and ill-conceived.  Furthermore, the policies (just like puerperal fever) are inflicting enormous damage on the most vulnerable in our populations.  Nevertheless, our politicians and our media go on spouting the same mythologies and neglecting to see the obvious.

… the Tory/LD coalition government is borrowing £245bn more than expected in 2010 and the economy has grown by just 1.1 per cent, 4.9 per cent less than expected …

Sticking with TINA (monetarism) is clearly a madness akin to the rejecting of hand-washing on the labour wards of the 1850s.

There is an alternative!

However, just as the medical professors had not wanted to relinquish their status or their paradigm of miasmas, the 0.1% have too much to gain from pursuing the current paradigm.  In this, they have been ably aided and abetted by the embedded assumptions of the so-called ‘free press’ and MSM which are owned and dominated by the ‘oligarchs’.

Mainstream economist Paul Krugman writes in the NY times:

… the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.

You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.

 

 The ‘Deficit’ is the new ‘miasma’ analogous to the flawed theories of puerperal fever causation.

But the deficit is just a reflection of the state of the economy.  In a sovereign country like the UK with its own currency, it is not a cause of anything.  If there is no problem of excess demand, there is no ‘deficit problem’ regardless of the magnitudes, short term or long term The methodology of its calculation is wide open to dispute and in any event, one agent’s deficit is another’s surplus.   As Professor Bill Mitchell writes

Structural deficits – the great con job!

 

Similarly, with the so-called ‘debt’ problem …

but my intention is not to discuss economics but to show that disastrously ‘wrong thinking’ and manipulation can persist to our detriment and against all the evidence for extended periods of time… particularly when there is wealth and power to be gained.

As Paul Krugman concludes:

.. the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.

And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?

Payam Sharifi quotes Mark Thoma, an economist who runs a popular economics blog :

“too many minds in the profession cannot be changed even when the empirical evidence is relatively clear…the politicization of the profession…plays a large role”.  Could it be that this reflects a crisis in economics, which is a crisis in its method of analysis and even the subject matter itself? 

That seems like good thinking .. there needs to be an Economic Reformation:

Economics in crisis – it needs a ‘Reformation’

 

As Antonio Gramsci wrote from his Italian prison cell, sometime in the 1930s:

‘The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

I think it is more than time for our politicians to ‘wash their hands’ of the ‘miasma of deficit reduction’ and act as ‘midwife’ for an economics which serves the 99.9% and the natural world.

For more information about heterodox economists and MMT (Modern monetary theory – macroeconomic reality):

Bill Mitchell – billy blog

New Economic Perspectives

Steve Keen’s Debtwatch 

and many other sites

Related posts:

Cameron and Osborne dwell on Bullshit Mountain, UK

Telegraph tosh on economics

Neoliberal TINA economics is flat earth thinking 

Like heterodox economists, Semmelweis was ignored…

Quote

In 1844, Ignaz Philipp Semmelweis graduated as a doctor, and was appointed assistant at the obstetric clinic in Vienna.  At the time, the great scourge of new mothers was ‘childbed’ or puerperal fever.  It was thought that the deaths were unpreventable… the result variously of overcrowding, poor ventilation, the onset of lactation or a dreaded ‘miasma’.

However, Semmelweis oversaw two maternity wards and couldn’t help but notice that the puerperal death rate was two or three times in one, to what it was in the other. In fact, the pregnant women were only too aware because they would go to all sorts of lengths, pleading to be booked in on the lower mortality ward.

The two divisions were apparently identical except that the first, with the higher mortality, was used for teaching student doctors, whilst the second was staffed with just midwives.  Semmelweis noted that the student doctors were coming to the maternity ward directly from the dissecting room, having just completed autopsies on women who had died from puerperal fever…. he suspected that somehow (at that time no-one knew about bacteria or viruses) that the students might be carrying the infection to healthy mothers on the ward.

As an experiment, he ordered the staff to wash their hands in chlorinated lime water before each examination, and within the week, the mortality rate dropped from 18% to 1%.  Furthermore, no women died on his wards between March and August 1848.

So with such an immediate, dramatic drop in the death rate, why was there no corresponding immediate and widespread acceptance of the practice of hand-washing?

Why did the editor of the Wiener Medizinische Wochenschrift write that it was time to stop the nonsense about the chlorine hand wash?  Why did pregnant women have to wait over 25y for the importance of hygiene to be accepted; with Joseph Lister being credited as ‘the father of modern antisepsis’ instead of Semmelweis?

The reasons are still relevant not only in medicine but also in politics and economics …

Despite various publications of results where hand-washing reduced mortality to below 1%, Semmelweis’s observations conflicted with the established scientific and medical opinions of the time and his ideas were rejected by the medical community… Semmelweis’s practice earned widespread acceptance only years after his death, when Louis Pasteur confirmed the germ theory and Joseph Lister, acting on the French microbiologist‘s research, practiced and operated, using hygienic methods, with great success.

http://en.wikipedia.org/wiki/Semmelweiss

In other words, Semmelweis’s findings required a ‘paradigm shift’ but the old-guard ‘power elite’ were ‘invested’ in maintaining the status quo in spite of all the statistical evidence of the efficacy of hand-washing.  The weight of authority stood against Semmelweis’s prophylactic practice.

Exactly the same is true of the ‘austerity’ which is being inflicted on the UK and across the Eurozone. The tenets of neo-classical economics are daily shown to be completely wrong, contradictory and ill-conceived.  Furthermore, the policies (just like puerperal fever) are inflicting enormous damage on the most vulnerable in our populations.  Nevertheless, our politicians and our media go on spouting the same mythologies and neglecting to see the obvious.

… the Tory/LD coalition government is borrowing £245bn more than expected in 2010 and the economy has grown by just 1.1 per cent, 4.9 per cent less than expected …

Sticking with TINA (monetarism) is clearly a madness akin to the rejecting of hand-washing on the labour wards of the 1850s.

There is an alternative!

However, just as the medical professors had not wanted to relinquish their status or their paradigm of miasmas, the 0.1% have too much to gain from pursuing the current paradigm.  In this, they have been ably aided and abetted by the embedded assumptions of the so-called ‘free press’ and MSM which are owned and dominated by the ‘oligarchs’.

Mainstream economist Paul Krugman writes in the NY times:

… the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.

You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.

 

 The ‘Deficit’ is the new ‘miasma’ analogous to the flawed theories of puerperal fever causation.

But the deficit is just a reflection of the state of the economy.  In a sovereign country like the UK with its own currency, it is not a cause of anything.  If there is no problem of excess demand, there is no ‘deficit problem’ regardless of the magnitudes, short term or long term.  The methodology of its calculation is wide open to dispute and in any event, one agent’s deficit is another’s surplus.   As Professor Bill Mitchell writes

Structural deficits – the great con job!

 

Similarly, with the so-called ‘debt’ problem …

but my intention is not to discuss economics but to show that disastrously ‘wrong thinking’ and manipulation can persist to our detriment and against all the evidence for extended periods of time… particularly when there is wealth and power to be gained.

As Paul Krugman concludes:

.. the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.

And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?

Payam Sharifi quotes Mark Thoma, an economist who runs a popular economics blog :

“too many minds in the profession cannot be changed even when the empirical evidence is relatively clear…the politicization of the profession…plays a large role”.  Could it be that this reflects a crisis in economics, which is a crisis in its method of analysis and even the subject matter itself? 

That seems like good thinking .. there needs to be an Economic Reformation:

Economics in crisis – it needs a ‘Reformation’

 

As Antonio Gramsci wrote from his Italian prison cell, sometime in the 1930s:

‘The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

I think it is more than time for our politicians to ‘wash their hands’ of the ‘miasma of deficit reduction’ and act as ‘midwife’ for an economics which serves the 99.9% and the natural world.

For more information about heterodox economists and MMT (Modern monetary theory – macroeconomic reality):

Bill Mitchell – billy blog

New Economic Perspectives

Steve Keen’s Debtwatch

and many other sites

Related post:

Cameron and Osborne dwell on Bullshit Mountain, UK

Austerity and the Labour Party

Quote

The consequences of austerity

The Financial Times (as reported by Leftfootforward) set out a series of graphs which indicate the negative effect of austerity policies on the GDP of various European economies.  The graph reproduced below shows clearly the negative correlation:

Picture 37

 

Paul Krugman creates his own similar graph in the NY Times and writes that the graphs show that  “… the greater the tightening between 2009 and 2012, according to the International Monetary Fund, the bigger the fall in output.”

He adds:

In normal life, a result like this would be considered overwhelming confirmation of the proposition that austerity has large negative impacts. Yes, you can concoct elaborate stories about how it could be wrong; but it’s really reaching. It seems safe to say that what we have here is a case in which rival theories made different predictions, the predictions of one theory proved completely wrong while those of the other were totally vindicated — but in which adherents of the failed theory, for political and ideological reasons, refuse to accept the facts.

So what exactly does Paul Krugman mean?

He means that the ‘experiment’, conducted by Deficit Hawks such as George Osborne.. in implementing the remedies proposed by Neoclassical economics… has been shown to be completely wrong… but, for political and ideological reasons, the Hawks refuse to accept the facts.

Furthermore, he argues that the Deficit Doves, the Neo-Keynesians such as himself and Ed Balls, have been shown to be vindicated.

This is the case up to a point… but the problem is that the Deficit Doves are saying that whilst in the short term, the economy needs a Keynesian fiscal stimulus, in the medium to long term, the Deficit Hawks’ medicine of cuts will be necessary.

Hence, we have the Labour shadow cabinet only criticizing Osborne and the Coalition for cutting too hard and too fast rather than completely rejecting the fundamental argument for ‘austerity’ measures.   This is a profoundly weak argument but I would argue that it is also bad economics … and leads to policy decisions which in no way reflect the views of the grassroots LP.

As Michael Meacher writes:

What Labour needs now to make clear beyond any doubt is that the Osborne massacre of the innocent isn’t inevitable and that killing a few less and doing it in a slower and more kindly fashion is no answer either.   The only way to deal with the deficit in the pit of a deepening recession is through a huge programme of public investment where it is sorely needed – social housing, improved infrastructure, low-carbon economy – funded by quantitative easing (instead of throwing the money at the banks), taxation of the ultra-rich (who caused the recession and have contributed nothing to remedying it), instructing RBS and Lloyds (after all, we own them) to prioritise lending to to major agreed manufacturing projects, or borrowing at rock-bottom interest rates to generate a million jobs within 2 years.   

 

Michael Meacher is a Deficit owl, not a Deficit Dove.

The Neo-Keynesian approach accepts that cuts in government spending will need to be made in the medium to long term.  Hence, the Labour leadership does not sufficiently vigorously oppose the Tory/LD cuts and privatisation of public services.  This adds another layer of incomprehensibility because it is not simply that austerity fails to make macro-economic sense but there is also no doubt that the cuts and privatization of public services will ultimately increase costs to the state (not to mention the human costs).

This is amply demonstrated by Matt Dykes who writes:

… beyond the acute economic problems, the UK is also in the midst of a very real ‘social recession’. As with the economy, the double whammy of crisis and austerity is plunging public services across the country into a vicious circle of decline.

He reproduces a ‘useful pictorial representation’ published in ‘Perfect Storms’ by Children England, which demonstrates how the economic crisis and government cuts impact on the provision of children’s services by local authorities and community groups alike.

Picture 40

 

It is clear from this diagram just how disastrous ‘the government’s needless and self-defeating cult of austerity’ is for children’s services, and how the cuts are storing up future problems … doubtless this same picture could be extrapolated across the whole of public services.

So why are there still many ‘senior figures from the discredited New Labour network (such as Patrick Diamond, former adviser to Blair-Brown, in the Guardian today) who continue to repeat the mantra of ‘financial discipline’ – as if we hadn’t had a bellyfull of this already from Osborne (and with 70% of cuts still to come) – yet with nothing but an imminent triple dip recession to show for it.   They show lip service to a growth strategy without giving any idea how it might seriously be achieved, since merely tweaking the Osborne cuts agenda – cutting less far, less fast – is just a recipe for economic decline, but a bit more slowly than the Tories?’ (Michael Meacher)

John McDonnell MP, suggests that “The Labour leadership comes from a neo-liberal background. They served their apprenticeship deep in the heart of New Labour and they’re looking to come back as New Labour mark two, slightly reformed but not challenging the system itself.”  He argues that it is the role of Labour’s left to make issues “safe” for the party’s leadership. “If you make an issue safe, Ed Miliband will shift. Whether it’s Murdoch, banks, welfare or benefits  But I don’t think they’ll just shift cynically, they’ll shift on to the terrain that is then safe, and you can have a proper discussion then.”  

This fits with part of Ed Balls’ 2010 Bloomberg speech, in which he emphasizes the lesson that ‘.. it’s not enough to be right if you don’t win the argument.  For – as Keynes found in 1925 and 1931 and Alan Walters found in 1990 – being right in the long run and well-judged by history is no great comfort.’ (A video clip of this speech is included  below the references – well worth watching in the light of the last 2.5y of Osbornomics.)

John McDonnell is spot on.  The role of the left, both within and without the LP, must be to educate, agitate and organise to make it ‘safe’ enough for the Labour leadership to adopt measures such as direct government investment into the real economy to create jobs, houses, restore the welfare state and mitigate climate change.  As Michael Meacher concludes:

‘Take your pick – more Osborne, more New Labour, or something the voters of Eastleigh might well have gone for rather than UKIP.’

What we need is a Labour leadership team full of Deficit Owls!  

Economics in crisis – it needs a ‘Reformation’

http://www.michaelmeacher.info/weblog/2013/03/lessons-for-labour-from-eastleigh/#more-4849

http://www.edballs.co.uk/blog/?p=907

http://www.leftfootforward.org/2013/02/austerity-isnt-working/

http://krugman.blogs.nytimes.com/2013/02/23/austerity-europe-2/

https://think-left.org/2012/10/15/how-to-be-a-deficit-owl/

http://touchstoneblog.org.uk/2013/02/what-does-the-uks-social-recession-look-like/

http://www.childrenengland.org.uk/upload/Perfect%20Storms%20-%20FINAL.pdf

The number of calls to the NSPCC’s child neglect line doubled between 2009/10 and 2011/12

From 2009/10 to 2010/11, the number of children in need increased by 42,400, with an 8 per cent increase in child protection plans.

Since 2007, there has been a 9 per cent increase in the number of looked after children.

By 2015, there will be 115,000 more children living in families with four or more vulnerabilities (defined by the Cabinet Office)

http://www.newstatesman.com/politics/2013/03/john-mcdonnell-interview-how-labour-moving-left

https://think-left.org/2013/02/26/economics-in-crisis-it-needs-a-reformation/

Ed Balls’ 2010 Bloomberg speech – ‘There is an alternative’