There’s one bit of my debate on Philly NPR with George Ciccariello-Maher a few weeks ago that sort of stayed with me. Right at the start, the host asks me how such an oil-rich country could struggle to feed itself. I stress that the economy is garishly mismanaged, and that the government’s policies —printing money to cover budget shortfalls, imposing ass-a-nine price and currency controls, etc— are the kinds of policy gaffes you learn to avoid in chapter 1 or 2 of any intro economics textbook.
Ciccarielo-Maher takes my response and runs with it, arguing that having studied economics, he knows very well that “what you learn in economics lessons is actually free market dogma, and this is something the Venezuelan government has resisted and sought to create alternatives to.”
His response stayed with me because, in its own twisted way, it’s honest. If we could look inside Nicolas Maduro’s or Alfredo Serrano’s corazoncito, I think what we’d find is something like this: a heartfelt certainty that any reform that acknowledges the existence of market forces is a capitulation to free market dogma. Ni pensarlo.
But what is dogma?
A belief is dogma when it’s accepted without question on the basis of authority, rather than empirical evidence. At a basic level, dogma is not about the kind of reality you can perceive with your senses.
Take a Catholic faced with the Eucharist. It looks like a wafer, it smells like a wafer, it tastes like a wafer, and it came from a bag of wafers. All his senses tell him it’s just a wafer. But the Bible and the Holy Mother Church say the wafer is the body of Christ. And for him, that’s all that matters. Having an argument about the essence of the eucharist with a Catholic believer based on his sensory experience of communion is a spectacular bit of point-missing. What his senses perceive has no bearing on the question.
Standard economics, at the very basic level we’re discussing here, isn’t like that. It posits a series of cause and effect relationships, and makes falsifiable predictions on the basis of those relationships.
Basic economics predicts that if you set an arbitrary price ceiling that’s below the market-clearing price, the result is shortages. It predicts that if the market won’t finance your fiscal deficits and you try to get around that by printing money to cover the difference, the result is high inflation, tending to hyperinflation as the money-printing gets out of hand.
Whether you think these claims are true or not, it’s hard for me to make sense of them as dogmatic. The claims are about cause and effect, and open to falsification on the basis of data. Empiricism is as empiricism does, right?
What grinds, of course, is Ciccariello-Maher’s habit of casually slinging the “D” word at this kind of claim. Because, trust me, in Venezuela we know a thing or two about what dogmatism in economic policy-making looks like. It ain’t pretty.
Say you have a theory about the way the economy works. Say your theory is that making it illegal to raise prices above a certain level is a sustainable way to ease poor people’s access to essential goods. Say you test it in the real world, and you begin to see that your policy does something different than what you thought it would do. Say you react by imposing heavier and heavier penalties on people who skirt the controls and you find that the new penalties, alas, instead of easing people’s access to essential goods, are doing the opposite.
How do you react?
Bueno, an empiricist —of the left, right or center— reacts by sort of scratching his chin and asking himself “hmmmm, might it be that the theory I started out with is flawed?” An empiricist would, at a minimum, try some alternative avenues, experiment, test, evaluate, and let what he learns inform his policy response.
To a dogmatic socialist, by contrast, lengthening lines and deepening shortages are just as irrelevant to the question of the efficacy of price controls as the taste and smell of the communion wafer are to a catholic. To a dogmatic socialist, the rightness of policy is rooted not in its real-world effects but in its congruence with an esoteric belief system.
To be a dogmatic socialist is to privilege the integrity of the economic system of belief over the grubby minutiae about whether people have enough to eat or not.
Which is all a rather long-winded way of saying yeah, George, I think you’re right. Economic dogmatism is very much at the heart of Venezuela’s problems these days.
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