Tag Archives: financial crisis

A Dramatic Shift to the Right

Part 1 of 3 on Independent Australia.  These three pieces are taken from my long essay The Rise and Failure of the Radical Right:

DitchTheWitch

“In the first of a three part series, Dr Geoff Davies considers the worldwide shift to the political Right since the 1980s, and how traditional conservatives have now become radicals.”

 

 

Finding a Framework for a New Economics

[In preparing a pitch to some possibly supportive people, I realised I have not spelt out in brief form the argument that economies are complex self-organising systems.  There is a straightforward logic, it is not simply a preference pulled out of the air, or the depths of my psyche.]

Many economists, and more non-economists, agree that economics needs new ideas, given the comprehensive failure of the mainstream to foresee the Global Financial Crisis and its continuing failure to lift the US and Europe out of deep recession or depression.  Yet few seem to know where to start, and there seems to be little agreement on how much the subject needs to change.  When proposals appear that might begin to address fundamental problems, many economists seem to recoil, and others seem simply to fail to recognise that the proposals have any relevance.

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BoE Economist: Economies are Wild Horses, not Rocking Chairs

[After a break for family business and time out, here is a bit of vindication.]

Olaf Storbeck is the International Economics Correspondent with Handelsblatt, Germany’s business daily. Based in London, he is writing about current economic research.  Here he interviews Andrew Haldane.

Andrew Haldane is the Bank of England’s Executive Director for Financial Stability. I recently talked to him about the crisis of contemporary economics and the way forward.

You are vocal critic of mainstream macro economics. How does this square with the tradition of central banks who historically have been very conservative institutions.

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The political correctness of the radical Right

[Just published on ABC’s The Drum Unleashed.  It is distilled from The Rise and Failure of the Radical Right.]

What currently passes for political commentary includes excited discussions about whether the Leftist Labor dog is being wagged by a“toxic” Greens tail; why right-wing Labor is in dire straits; whether centrist Labor is resurgent; and whether the extremist Greens are doomed.

Balance, in political commentary, is supposed to lie somewhere between Labor and Tony Abbott, who often seems to be regarded as just a somewhat aggro conservative.

Such commentary reflects remarkably limited perspectives that fail to take into account two major developments over the past five decades. The first is the rise of the radical Right. The second is the manifest failure of radical Right policies.

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The Rise and Failure of the Radical Right

[For some time I have been frustrated by the very limited perspective of mainstream political commentary in Australia, and by the difficulty of establishing a longer perspective in the standard 800-word commentary piece.  So I decided just to write until the case was made.  Hence this 6000-word essay.  It refers to the Australian context, but there are parallel stories in other countries.]

The political spectrum is traditionally characterised in terms of Left and Right, but the way these terms are used has changed so much they have become quite misleading.  Today they are more about tribal identification, and their use is more of an epithet than a description.

The main reason for these changes is that the Right has shifted to quite extreme positions, compared with a generation or two ago.  The modern Right not only espouses free-market fundamentalism, it promotes an extreme individualism that overlooks or dismisses the importance of social relationships and even denies the existence of society.  There seems to be no standard of factual basis, sense or consistency required for its claims, so any opinion, however uninformed or misinformed, apparently is to be accorded as much validity in the public domain as any other.

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Eight Elementary Errors of Economics (slightly revised)

The long, and slightly modified, version of Eight Elementary Errors of Economics is now on SteveKeen’s Debtwatch.  Reblogged on Business Spectator, 22 June and The Bull 23 June.  I consolidated two of the previous points and added what is now the final point on emergent wealth of land. See also on Real World Economics Review Blog, 7 June, with long discussion.

Post edited 4 July:  the full modified version now follows, so it’s all consolidated here.

The Global Financial Crisis, the extreme inequality of wealth world-wide, the materialism of modern life and the dire state of the planet are not accidents, nor just unavoidable consequences of the nature of things.  They are the result of the modern practice of economics, which makes elementary errors of accounting, evidence, perception and theory.

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Eight Elementary Errors of Economics

[This is my most recent attempt to encapsulate the deep flaws in mainstream economics, and the sensible alternative struggling for recognition.  Posted 7 June at Real World Economics Review blog, with a lively discussion following.]

The Global Financial Crisis, the extreme inequality of wealth world-wide, the materialism of modern life and the dire state of the planet are not accidents, nor just unavoidable consequences of the nature of things.  They are the result of the modern practice of economics, which makes elementary errors of accounting, evidence, perception and theory.

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How banks destabilise the economy – and take your money

[Extract from The Nature of the Beast]

Almost every institution involved in the financial system is, in the jargon, highly leveraged.  This is as true of old-fashioned banks with fractional reserves and mainstream banks with capital adequacy requirements as it is of shadow banks. What does “highly leveraged” mean?  It means you are betting a small amount of your own money plus a lot of other peoples’ money on a large return.  If the return is positive, you make a handsome profit.  However if the return is negative you lose not only your stake but potentially everything you own.

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The Nature of the Beast: eBook now available

The Nature of the Beasthow economists mistook wild horses for a rocking chair.

Mainstream free-market economics fundamentally mis-identifies the nature of market economies.  Its record is of retarded growth followed by disaster.  It counts costs as positives instead of negatives.  It is blind to how the present banking system destabilises the economy.  It is relentlessly materialistic and adversarial.  It ignores most of what we know about real people and the real world.

The result is pseudo-scientific gobbledygook, and the unstable, inequitable, undemocratic, destructive and unsustainable mess known as the global economy.

The Nature of the Beast draws out the real nature of market economies using modern knowledge of systems, human behaviour, ecology, biology and physics.  It points the way to stable, prosperous, democratic market economies that can support people, societies and the living world into the indefinite future.

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