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drawing attention to a deep and abiding ideology here: economics often presents itself as a science describing a universal and indeed physical phenomenon. remember that "the market" as we it is not only an ideal model but a very limited one that vehemently does not apply to most of the world, both inside and outside of California.

"Institutions are organisations or patterns of behaviour built by societies to help solve social or economic problems which the law or private markets cannot fully address."

institutions have existed long before the rule of law, or the existence of private markets.

what he does get right is the fallacy of "ceteris paribus" or "all else remaining equal" that is used in most economic arguments with their limited scope.




Calling ceteris paribus a fallacy is like objecting to the notion of integers because nature often presents quantitative problems involving things that are neither uniform not discrete; you may as well object to someone counting on their fingers because 'in reality they're all attached to the same hand, man.'

Ceteris paribus is a technique for decomposing complex problems into simpler elementary ones, not an assertion about underlying economic realities. It's employed most commonly in microeconomics, which works fabulously, in much the same way as classical mechanics continues to work fabulously for the vast majority of earthbound practical problems. Macroeconomics is beset by problems because our understanding of social and organizations structures is seriously incomplete, in much the same fashion as ants probably have extreme difficulty in forming ideas about the collective behavior of ant colonies.




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