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.
The Nature of the Beast: how 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.
Australia’s commentariat is thickly populated with right-wing guardians of the doctrine of free markets. Many of them have been groomed by right-wing think tanks in a long-term campaign to drag our perceptions to the right. Chris Berg and Sinclair Davidson, of the Institute of Public Affairs, are regulars on the ABC’s The Drum Opinion. The campaign has been highly successful, as the free market mantra has taken over both sides of politics and dominates economic discussion.
However it is very easy to demonstrate the doctrine is hopelessly wrong. The evidence is clear that free markets have retarded growth. The theory underlying the doctrine is plainly and absurdly unrealistic. The Global Financial Crisis was caused by financial markets building up mountains of debt, yet debt and money are absent from mainstream economic models and, apparently, from economists’ thinking. Hence their blindness to the GFC’s approach, its cause and its remedy.
These problems will be covered in a three-part series. First, the evidence.
The obsession on both sides of politics with cutting the Federal Government deficit is not only short sighted in the context of the recovery from recent floods. It is also economically insupportable when private debt in Australia is more than twenty five times public debt.
In a sane world, a shrinking GDP would be greeted with relief. However the world is not sane, and people suffer when the GDP shrinks, mainly by losing their jobs. Meanwhile, insanity has faltered slightly and disturbing thoughts are being put about. However our leaders are working to ensure normal insanity is restored as quickly as possible.