You are right to be suspect of the entire field of economics. Perhaps I can clear a few things up though:

Thatcher's famous 'no society, only individuals' remark is actually a restatement of 18th century philosopher Jeremy Bentham, whose Greatest Happiness Principle (now known as 'utility' forms the basis of all modern mainstream (neoclassical) economics. Mathematically it is the idea that the optimal choice for society in any decision can be determined by summing the preferences of all individuals and choosing the point of greatest combined satisfaction. This is the principle which allows microeconomic theory of firms and consumer behaviour to be extended to the macroeconomic level - and it's totally, provably, demonstrably wrong. Bentham and the other pioneers of neoclassical economics can be forgiven for the mistake, since mathematics was not sufficiently developed at the time to express the proof, but it is now so important to mainstream economics that none of the major academic journals will publish papers that question it. It is one of three such bad assumptions that form the impenetrable core of neoclassical economics: they are called the Sonnenschein–Mantel–Debreu conditions (unfortunately not well covered by wikipedia) and most academic economists work at a level so far removed that they are not even aware these conditions exist to be questioned. The problems with these assumptions were largely ignored by economists until Milton Friedman had an even better idea: to say that a theory can't be judged by the realism of its assumptions, only by the performance of its predictions. Determining the performance of mainstream economic theory today is left as an exercise for the reader. :-)

Marx was the last classical economist before the neoclassical school we have today began to dominate academia and politics in earnest. When Marx emphasises the importance of individuals he means it in a different sense - in the sense that individuals are the only source of value in society. This is called the labor theory of value, and it is absolutely essential to the theoretical stability (and inevitability) of socialism and communism. It basically states that nothing other than labour contributes value to production. A clock manufacturer who buys glass panels for the clock face does not pay for the value of the glass, but the value of the glassblower's labour, the value of the labor of the person who sold the ingredients for the glass to the glassblower, and so it goes on. These physical factors of production - materials and machinery - are called 'capital' and as technology improves both the price and performance of capital increases. Since less work will be required to produce the same quantity of goods, less workers will be required, and since the difference between what a capitalist pays his workers and what he charges for their produce is the only way he profits, so too will profits fall and with them the incentive to own lots of capital. The logical conclusion is communism, a state in which technology has become so productive that there is no opportunity to profit because all desires can easily be fulfilled. Marx recognised that the progression may be hampered by the political power of corporations, which is why he encouraged revolution. If the labor theory of value holds then a return to the old capitalist ways will be infeasible. Marx tried and failed three separate times to prove his labor theory of value and never really succeeded. Most of academic marxist economics since Marx has been attempts to reconcile the labor theory of value with the inescapable problem that it can't be traced back to what created value in the first place. Modern economics ignores the question of value entirely, replacing it with the much easier to digest concept of price.

So yes - they're both dodgy, but for very different reasons!

But bentham didn´t mean to inspire economists in the way he has, i think.

Economists reduce 'utility' to mere financial gain, while i think what bentham was all about is not as much his method, wich i think was a sort of pioneering...trying things out, as well as the idea that exactly the thing you call value has to originate somewhere.

Betham has once said:'is it possible to move the earth?, yes, but not without another earth to stand upon'.

I think that sentence holds the basis of benthams philosophy, wich is that our wellbeing and personal experience is this 'earth' we are standing on. Our needs originate from there and thus all our assesements of value.

Thát is the basis of utilitarian philosophy. Bentham would be the first to reject his method if he would have known it wasn´t effective, because utilitarianism is by definition a form of consequentialism..meaning results count.

I consider budhism to be a utilitarian philosophy as well, as it unequivocally states that ending human misery and suffering is it´s core value.

Both marx and bentham where right in many ways, but both their theories where also seriously flawed. I think that´s innevitable when you´re pioneering, like they did.

btw...bentham´s body is displayed in some english university building. I believe it´s the university of london. He wished to be stuffed like a dead animal after his dead.

Definitely - like I say, Bentham himself can be forgiven for his mistake - he was pioneering concepts far too advanced to be proven or disproven at the time, and we are richer for his influence. I don't mean to criticise Bentham or utilitarianism per se, you are quite right in supposing that Bentham would have abandoned the Greatest Happiness Principle if he could see the proof we have today. I can't find the exact citation, but he actually said something to this effect in his work on utility.

For that matter, so did the other pioneers of neoclassical economics - they actually intended for the static supply and demand graphs which are now synonymous with economic analysis to be eventually replaced with dynamical models when the emerging field of calculus was more developed. It never happened. We're still exclusively doing 'comparative statics' rather than proper time-based analysis.

When Marx was young he wrote a fiery PhD dissertation, slamming the economists of the day for refusing to progress beyond theories that had been proven false. He called for new thinking and total detachment from nostalgia and sentiment in the interest of further the noble field of economics. For most of his career he lived up to his word - he was the critic who discredited his own "proof" for the labor theory of value without shame or embarrassment, and then did it again a few years later. His progressiveness faded in his later life - the third proof for the labor theory of value has also been discredited, but Marx never conceded that point.

One last thing: economists do not reduce utility to mere financial gain, or at least not in the way you think. The idea that the 'happiness' or 'utility' has no measurable units is built deep in to the very foundations of neoclassical theory. It manifests visibly as the lines in supply and demand graphs always being straight through a complex chain of logic beginning with the immeasurable nature of happiness/utility in one of the core Sonnenschein–Mantel–Debreu conditions I mentioned earlier. It goes something like this:
1. The change in individual happiness that any individual feels for a given change in the outcome for society is not a number that can be added to any other individuals' happiness, therefore
2. The preference function (the line that plots the preference between two choices) for any given choices can not be summed across individuals if they are of different shapes, and
3. There must be a single optimal point that maximises happiness, therefore
4. The preference functions of all choices of all individuals must be both identical and linear.
This is why the supply and demand 'curves' on the ubiquitous charts are always straight, not curved at all. Interesting bit of history, if you're into that! :-)

..hey thanks for the added perspective dromedary, very interesting and helpful..

..i haven't actually read Bentham (i should), but i've heard it said he would probably not have appreciated Thatcher's England...?

For betham, the wellbeing of people in society was the most important thing. Not economic power, military power, political power or other things that have to do with a nations suposed 'glory', or all of the other outlandish political doctrines that have nothing to do with people. The method of getting there, whether by big or small government, as politicians like to call it, is not an issue. So no, i don´t think bentham would have apreciated tatcher very much.

Hardly anybody apreciates lady rustbelt ofcourse. Except for those few racist idiots who still wallow in long gone british imperialist 'glory', the people who´ve been proscribing her alzheimer med´s for the past few decades, and some old south-american dictators perhaps.

In a broad philosophical sense I suspect polytrip is right on the money, but there's another interesting bit of economic history there which leads to some enormously fun irony in modern "capitalism". This post came out a bit long, I have a bit of a tendency to waffle :/

Adam Smith is usually cited as the father of capitalism, but in fact he never used that word and in many cases did not advocate free markets as a solution to economic problems. When it came to credit he was especially wary, and claimed that interest rates should be fixed by the government at some low value rather than let the market decide higher rates, which might allow more risky loans to be made. He was particularly afraid that if the market determined interest rates then "the greater part of the money which was to be lent would be lent to prodigals and projectors, who alone would be willing to give this high interest". By 'prodigals and projectors' he meant 'people who borrow to finance excessive consumption' and 'people who gamble on fluctuating market prices' (today we call them speculators).

Bentham enters the story as a young scholar with a head full of ideas about how market prices reflect 'greatest happiness' or utility. He argued that this trumps any concern about 'prodigals and projectors' and managed to state it so well that Smith actually agreed and changed his mind. In that way Bentham had a profound impact on macroeconomic theory at the time. Throughout history since then the government has influenced interest rates to varying degrees and for various reasons.

Fast-forward to the great depression. After decades of gradually receding government intervention in markets and the collapse that came afterwards the prominent economists from before the crash lost all credibility, except a certain John Maynard Keynes who had been advocating a vastly different approach to stability from the start. It was a comprehensive model of the economy, using analytic methods developed by Marx (the dialectical methodology) that had never been used in Western policy, and described a strategy for letting private demand decide interest rates without them being 'free' in the usual sense. It sounded good, but mainstream economics absolutely butchered it to shoehorn it into the existing framework and it seemed to work anyway. In reality it was winning World War II that fertilised the soil for growth, but nevermind that: the world was using Keynesian economics, even if it had nothing to do with Keynes.

Fast-forward to Thatcher's regime. After the oil price shocks of the 70s the economy was in bad shape and "Keynesian" economics didn't seem to have any answers. Milton Friedman and his emerging field called monetarism did, and it did so by extensive control over interest rates. She went with it and it seemed to work and we're still stuck with monetarist central bankers all over the world today.

So the irony is that Maggie Thatcher is famous for a Benthamite quote which she said while implementing economic policy which Bentham so powerfully argued against that he convinced the founder of capitalism himself to change his mind, which she did after throwing out a theory that was influenced by Karl Marx, which was never actually tried because Keynes' theory had already been corrupted enough to be compatible with Bentham's theory of utility that it was essentially no different to anything before it or anything that has come after it! The history of it is sheer undiluted madness.

Unrelated: it always makes me laugh to hear people say 'communism works great in theory but it doesn't work in practice' and then proceed to theorise about why it doesn't work.

..great and informative 'waffle' thanks dromedary..do we have any radical new (or untested old) economic theories to try out..?

No form of government will never last in my opinion at least not until all humans are truly enlightened, And when that happens we won't need government. No matter what style of government is put into action sooner or later it will be overthrown or will collapses. Think of the phi ration how it bonces back and forth getting closer and closer to perfection but never quite reaching it. The spiral theory of progression in sociology would be a good example. But these or just my opinions and are most certainly wrong=)

I think it is a central tenant of any political philosophy that humans as a population will never become enlightened.
But history shows that not only can no form of government last, neither can any form of human culture last. It is the same for all animal populations, a nation lasting forever is like an ant-hill lasting forever, the idea is absurd.


Now ants are politically interesting in this regard, they have a caste system, socialist and communist practices, a monarchy, something like a military/police force, they compete for resources, engage in warfare, sometimes engage in slavery, sometime have agricultural production, some ant forces are just raiders that go around consuming everything in their path and others stay in small groups living in symbiosis with trees. The actions and habits and modes of existence of ant communities are amazingly parallel in diversity to those of our own species.

Looking at many ant communities, they display many behaviors we view as a fault in our own species, slavery for example is not uncommon, as is genocide in terms of exterminating competing colonies. However i would say that compared to us, ants are enlightened.

Nature contains every political philosophy, but is a pragmatic anarchist. There is no one right way, not even for our species. It shows us that there is nothing wrong with any political philosophy, but that such philosophies must be able to adapt and evolve according to situation and need. Static political philosophies are bizarre and impractical, they must evolve to be able to endure, but evolution does not mean improvement, it merely implies adaptation. So no political philosophy will ever become the right one, none of them will ever work perfectly. Situation has more to do with what works than the theories of the philosophies themselves.

A single type of government would never be able to succeed with all cultures, economies and peoples. The very idea is itself absurd.

Each of the economic schools of thought bring some unique insight that is worth preserving, it is a complex matter of combining the strengths of each school in a way that produces useful results. Modern Monetary Theory brings us an accurate picture of how the monetary system works in a world of horribly inaccurate models of finance, post-Keynesian analysis brings powerful tools for dissecting the current state of the economy and predicting the quantitative effects of present policy in the future (using the Marxian' dialectical technique I mentioned earlier!), market monetarism offers insight into how monetary policy alters the term structure of money and econophysics (when physicists decide to model the economy using techniques from physical science) introduces highly complex and devastatingly accurate models of market behaviour. The lack of any particular insight or analytical tools is why I can't take the Zeitgeist movement seriously.

In general, the "radical" theory that needs to be "tested" is not really so radical or even theoretical: since net private savings + current account deficit = government debt, and since aggregate demand falls when people have low savings, and since unemployment rises when aggregate demand falls, we can make two undeniable conclusions which are nevertheless denied by mainstream economists:
1. It is literally impossible to reduce the government debt and net private debt at the same time (unless we find some amazingly valuable new commodity to export).
2. Any attempt to do so by reducing the government debt can only damage net private savings, thereby damaging demand, thereby creating unemployment.
The failure of governments to understand these facts is causing terrible suffering worldwide as eg: the ECB continues to try to impose "fiscal austerity" on european governments despite all the evidence showing that it has only increased unemployment and debt. The reality is not so complex that you need to be an economist to understand it, but the complicated denial reasoning employed by officials certainly is. It's time that economics met Occam's razor.

I would love to point you towards my own writing on the subject offsite, but this board is indexed by Google so I don't think it would be a very wise career move, unfortunately.

..intriguing dromedary..
i still can't get my head around - the value of currencies and land, the 'value' of different kinds of labor (e.g. doctor vs. nurse, politician vs. teacher),
..the simplistic view is that there is enough food and resources to go around, so why the inequality?
the business world is at it's heart adversarial..a very different model to the old animist 'custodian of the land' approach..
.