It is a peculiar thing, the terror with which inhabitants of early 21st-century America crawl into bed each night, uncertain if they will awake the next morning to an economy still growing. It is Growth to which they owe their prosperity, they believe, and Growth on which they must pin their hopes for their children. Yet they cannot see this Growth, nor hold it in their hands. They know not from whence it comes, nor how, nor why—only that its spirit surrounds them and shapes the course of their lives. From within ivory towers dotting the landscape, marble temples clustered in the Capital, and the pages of the Wall Street Journal, a powerful priesthood sets forth the precepts by which a pro-Growth society must live, measures the amount of Growth that has occurred, and predicts the amount to come.

In this week’s Compass Point, Marginal Prophets, Matthew Walther turns his perceptive gaze to the “magical thinking” of neoliberalism, and brings along a delightful guide: 19th-century anthropologist James Frazer, author of The Golden Bough and keen observer of humanity’s superstitious traditions and priestly castes. Economics may not do a very good job explaining what goes on in our world, but Frazer explains surprisingly well what goes on in economics. And we are fortunate to have Walther to explain Frazer:

It is Frazer who shows us how these shamans rule by fear—of failed harvests and rising unemployment, or disturbances in various auras such as total factor productivity. When deliverance is delayed, they “lure the weary enquirer, the footsore seeker, on through the wilderness of disappointment in the present by their endless promises of the future,” which turns out to be algorithm-driven digital entertainment and cannabis dispensaries.

After reading Walther, it is impossible not to see the telltale signs of magic wherever one looks in the contemporary economic discourse—Wall Street Journal editorials claiming vindication in every positive economic trend while blaming every disappointment on insufficient adherence to their fundamentalism, whitepapers offering ten-year estimates of GDP growth to the decimal point, the remarkable degree to which purportedly scientific assessments turn on “confidence” and “uncertainty” and “expectations.” At least John Maynard Keynes had the decency to admit his theory relied upon “animal spirits.”

Of course, economists and their craft have an important role to play in policymaking and governance. But to play that role constructively, both they and their audience must understand the quite limited nature of their powers.

Read Marginal Prophets.

Oren Cass
Oren Cass is chief economist at American Compass.
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