The economic ‘reforms’ of the 1980s are supposed to have set Australia up for an unprecedented run of prosperity: 27 years, and counting, without a recession. The economy’s robustness is supposed to have saved us from the Global Financial Crisis. In fact our economy has been unstable, and its performance has been mediocre verging on anaemic. Any appearance of robust prosperity is due to a huge run-up of debt, some direct intervention, high immigration, overwork, selective blindness and over-active imaginations.
[This longish essay was just published at Real World Economics Review Blog. It is addressed to the “heterodox” community, those diverse economists of various schools that are not the dominant neoclassical school, though otherwise it is not particularly technical.]
Much of the current discussion of reforming economics focusses on the need for pluralism, particularly in teaching curricula, and very recently again on RWER. Pluralist teaching is seen as challenging, because heterodox economic ideas are diverse, have little coherence, and are to a significant extent mutually incompatible.
This theme crops up frequently in discussions on RWER. Now Cameron Murray, in the first issue of Inside, published by the Institute for Dynamic Economic Analysis, proposes to identify over-arching themes that can bring out the relationships among the various approaches. This is commendable but it will not, on its own, result in a reformed economics.
[Probably last post until Sept – see previous post. The tax-cutting mania may have started in California, so it’s fitting if CA shows the way back. It was always nonsense. The real reason is to shrink government. Governments get in the way of rich people making money, because a few of the things they do are good for the rest of us. Well, used to be good for the rest of us. So Jerry Brown may be among the most subversive people on the planet at the moment, because he’s showing government isn’t all bad. It can do good stuff. Of course the lesson will probably be lost on Oz for another decade, it usually takes about that long.]
How Jerry Brown Got Californians to Raise Their Taxes and Save Their State
There’s a case to be made that Jerry Brown is the most successful high-profile Democrat in America today. And there is simply no debating that, after four decades in the national limelight, he stands out as an intellectually dynamic and politically untethered leader in a time of gridlock, frustration and dysfunction.
Non-mainstream economists are all-too aware of the failure of mainstream economists to anticipate, let alone avoid, the Global Financial Crisis and the ensuing Great Recession. The mainstream profession is also failing to fix the problem, and is actually making it worse.
It is hard to get alternative views heard, and the mainstream carries on almost totally unperturbed, despite being centrally responsible for a global disaster. This is of course extremely frustrating.
After reading yet another cri de coeur from yet another frustrated economist, I thought perhaps we need to spell out the message in all bluntness
My ebook Sack the Economists and Disband their Departments is now available.
Mainstream economists completely failed to anticipate the financial market crash of 2007-8. They then called it an unforeseeable event. This is a clear admission that they don’t understand how economies work. Yet many non-mainstream, marginalised economists gave clear warning of the approaching crash. This book shows how mainstream economics has not one but many fundamental flaws. It is not a science, it is pseudo-science. It lacks scholarly rigour and integrity. Once you understand this, it is not a mystery why the mainstreamers missed the approaching crash, nor why wealth is so unequally distributed, why we are so materialistic and unfulfilled, and why the planet is being destroyed. But modern knowledge and systems ideas reveal market economies to be self-organising systems, and they can be managed to support dignified livelihoods in equitable societies that can survive into the indefinite future, with nature thriving along with them.
See more at the book’s web site, including how to purchase your copy.
The honourable Alan Greenspan testifies before the House Financial Services Committee. (Photo credit: Wikipedia)
[My silence for some time here has been mainly because I was focussed on re-packaging my economic ideas in a form that might gain more traction. So, there is a new book manuscript of the above title. It will help to promote it (to publishers) if I have readers’ reactions. Therefore, if you will undertake to give me feedback, I will supply you with the draft MS (120 pages, 2.2 Mb pdf). You don’t have to be expert, it’s for a general audience and so I want feedback from that audience. Most helpful to me will be comments on its readability and interest. Of course any discussion of its arguments are also welcome.]
Here is the first part of the introductory chapter. I will post more in a few days.
Chapter 1. Economists Don’t Know What They’re Talking About
In 1994 Paul Ormerod published a book called The Death of Economics1. He argued economists don’t know what they’re talking about. In 2001 Steve Keen published a book called Debunking Economics: the naked emperor of the social sciences2, with a second edition in 2011 subtitled The naked emperor dethroned?3. Keen also argued economists don’t know what they’re talking about.
Neither of these books, nor quite a few others, has had the desired effect. Mainstream economics has sailed serenely on its way, declaiming, advising, berating, sternly lecturing, deciding, teaching, pontificating. Meanwhile half of Europe and many regions and groups in the United States are in depression, and fascism is making a comeback. The last big depression spawned Hitler. This one is promoting Golden Dawn in Greece and similar extremist movements elsewhere. In the anglophone world a fundamentalist right-wing ideology is enforcing an increasingly narrow political correctness centred on “free” markets and the right of the rich to do and say whatever they like. “Freedom”, but only for some and without responsibility.
Evidently Ormerod and Keen were too subtle. It’s true their books also get a bit technical at times, especially Keen’s, but then they were addressing the profession, trying to bring it to its senses, to reform it from the inside. That seems to have been their other mistake. They produced example after example of how mainstream ideas fail, but still they had no effect. I think the message was addressed to the wrong audience, and was just too subtle. Economics is naked and dead, but never mind the stink, just prop up the corpse and carry on.