Almost every profession I could mention is a thinly-disguised Masonic society. While the commercial, working individuals in the profession work hard to demonstrate (by practical application) how excellence can enhance life, the self-appointed ‘leaders’ of the profession invent unnecessary quasi-science, jargon, case-histories and awards celebrations to justify the profession’s existence.

A comic who walks onstage with a notice saying ‘I am funny’ is unlikely to get a laugh. Exactly the same things applies to those trying to canonise The Profession. Whereas if you do the job well, nobody will even have to ask why your chosen metier exists.

Perhaps the worst profession for this syndrome – ‘discipline’ would be a good word, if they showed any sign of it – is that of economics. As yesterday’s Slog piece tried to demonstrate, economics theories are like houses: when you start to look around, none of them areas nice as the one you already own.

The truly odd thing about economics is that it divides into schools (who disagree diametrically with each other about strategy) and within these, of course, are adherents (who argue violently about tactics). In turn, adherents of one school have to constantly check papers by maverick adherents of the opposing one, just to be absolutely certain they never wind up agreeing with each other.

Yet despite the obvious evidence that economics isn’t even a science let alone a creed, members of each school insist – often for over half a century – that without rigid adherence to crypto-religious rituals of carefully ordered behaviour, only disaster can befall humanity. The empirical reality in practice has been anything but: the safest thing under most circumstances is to avoid the rigid polemics of commerce. Almost all the ‘fathers’ of economic schools – Marx, Keynes, Smith and so forth – have at some time or another said their ideas were either being misinterpreted, or treated with far too much respect.

Worse still, devotees of one school or another quote their inspirations out of context, and out of time. This can still be seen today, with ‘respected’ economists taking Keynes’ thoughts about the 1931 Budget as Gospel.

The 1931 Budget was an ignorant, confused, gold-obsessed monetarist attempt to deal with a unique crisis; it came before monetarism had been defined, Keynesian theory invented, transistors perfected or chips imagined. Hitler was an obscure Bavarian politician. Most people thought the future could be seen in the USSR – and it worked. To suggest a contemporary policy based on those times is like extolling the virtues of a leech-peddling Venetian doctor in dealing with a serious viral mutation.

All of this perhaps explains why most attempts to take the obvious good bits out of all economic schools have been fairly successful. According to websites as varied as the WHO, the UN and the CIA, the most successful economies remain those using ‘mixed’ commercial aims and motives in the UK and USA between 1950 and 1970. This applies whether one is measuring productivity, social stability, material satisfaction or real gdp growth.

By contrast, where people went overboard on Keynes (UK), Friedman (Chile) or Marx (anywhere), the results were, respectively, bankruptcy, huge society-threatening wealth disparities, and corrupt stagnation. This isn’t much of an advertisement for those professional economists driven by the words of one Mammonesque God or another.

The truth is that economics (which I dropped after the first year at University, on the grounds that every rule one learned was immediately contradicted by the next one) is a very, very simple subject. But it is made to sound difficult by people who don’t understand (a) human nature (b) social anthropology and (c) order effect. The third of these is by far the most important, and must be applied to those things academics never like – events in the present with ramifications for the future.

For the past twenty to thirty years (depending on where you live) sovereign economic and fiscal management has been conducted according to the outlook, beliefs and ethics of greedy egomaniacs, insouciant media-academics, and management consultants. None of these know anything about what real people need, because they inhabit irrelevant worlds of vast Manhattan apartments, dreaming spires in New England and Oxbridge, or flow-chart process. They are, almost every last one, full of bollocks.

The simplicity of national and international economics is based on three principles:

1. Commerce is central to Homo sapiens. After beating the nearest tribe senseless for several years or centuries, trade normally follows – on a basis that becomes gradually more egalitarian as the decades pass.
2. Smart people know that there is always something the next tribe wants if you have the skills and materials to make it.
3. Nations with a higher percentage of smart traders know that if you sell more than you buy – and do so at mutually agreeable prices – you’ll have enough left over to alleviate the condition of the poor folks.

In order to rejuvenate this process of commercial intercourse (and meet all emerging needs over time) most small business needs to borrow from a financial institution. The latter exists to take a risk which – if calculated – will more often than not produce a bigger return than offering simple interest to investors. The institution also exists to lend towards a roof over the head of private citizens. If done with the right balance, this socially responsible capitalist form provides the closest thing yet developed to the Benthamite ideal: the greatest happiness of the greatest number. And a content society is infinitely more likely to be a libertarian society offering a very broad voting franchise. Together, these conditions have proved to be the best guarantor of democracy, free speech and equality before the law.

Two sorts of things can go wrong as time passes – and a deadly combination of damaged egos and/or muddled intellectuals forget the original purpose. These are:

1. The poor are given too easy a time, and become welfare dependent.
2. The greedy are allowed to believe that their way is good, and become selfish monsters.

Therefore one must balance the social welfare and wealth creation elements, keeping them under close surveillance at all times. Fail in the first, and you will go bankrupt. Fail in the second, and unrest will destroy the system.

Western societies tend to wobble from one near bankruptcy to another near unrest situation depending on the political Party in power.

Bankruptcy occurs when you spend too much on government and not enough on innovation. Unrest occurs when you spend too much on the selfish rich, and not enough on their victims.

In the UK over the last decade – for perhaps the first time ever – we have made both mistakes at once. This was New Labour’s unique achievement….and the only way out of it is to undergo a period of belt-tightening unparalleled in the experience of anyone alive today. We need to divert the maximum amount towards two tasks which matter above any others:

1. Payment of our debts before they take on an exponentially increasing size – and become unpayable. (In that context, longer bond terms help, but they are not the solution per se…or any reason to relax.)
2. Investment in innovation to ensure that future world consumers want what we have to sell.

There are many, many individual reforms required to make things fairer and more efficient, but those two actions come first. If we cannot be trusted, we cannot borrow; and if we cannot make desirable things, we cannot sell. Given that context, economists arguing about killing recoveries and increasing pain, about stifling demand and raising unemployment, are practising nothing more or less than professional onanism. Not repaying debt means the patient dies happy. Not restructuring our output means the patient survives in order to starve.

This isn’t an either/or, it’s a judicious balance. With a bit of luck, Tuesday’s Budget will deliver such a balance. But whether it does or doesn’t, judgement of it based on tired (and tiresome) polemics will get us nowhere. What we need to get is real.