In a front-page article with no less than four by-lines (7/03, “Enron Triggers a Slew of Proposed Fixes But What Will Stick?” by Steve Liesman et al.), The Wall Street Journal reports, “As more than 10 congressional committees pursue inquiries, 32 Enron-related bills have been introduced to address ills ranging from auditor conflicts of interest to the scams of an unregulated derivatives market. The Securities and Exchange Commission pledges to reform accounting rules, get tough on fraud and overhaul auditor oversight. General Electric Co. says it will issue a disclosure statement the size of a phone book, if that’s what investors want.” The trouble is that such a phone book, if it reflected the state economic science in its present gelded form, would omit the phone numbers of all emergency departments, the building inspectors, and notably the university faculties dealing with scientific method.An exaggeration? By no means. The supposed mathematical foundations of the official model assumes that all actors in the economy are of such tiny size that nothing they do or don’t do individually can have the slightest effect on prices, supply, and demand. That assumption turns up in the derivatives that were at the bottom of the supposed “risk management” of big hedging disasters like Enron, Global Crossing, and the celebrated Long Term Capital Fund that almost brought down the international financial system in 1998. That assumption was brought in to set up the fiction of “the level playing field” certainly the most overworked catchword among policy-makers in recent decades. It is supposed to cover the relationship between transnationals and the employees of their subcontractors in Latin America and Asia, of Wall St. and the defenceless temporary workers and the unemployed. It sums up the bottomless gap that has opened up between high finance and the productive economy, between the r...
