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Still in the danger zone

23 hours ago

From Shimshon Bichler and Jonathan Nitzan
In December 2017, we posted a RWERB entry, titled ‘Profit warning: there will be blood’. We warned that, although the Weapondollar-Petrodollar Coalition might no longer be in the Middle East driver’s seat, the oil and armament companies, the region’s oil-exporting autocracies and various non-state groups were all keen on seeing their oil incomes rise from record lows. And we observed that, in this context, ‘the prospects of a new energy conflict, whether premeditated or coincidental, seem extremely high’.
The above chart, which is updated from Figure 3 in our original 2017 article, shows the differential return on equity of the Petro-Core (the leading publicly-traded oil companies) relative to the Fortune 500: when the bars are grey, the

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Where’s the Barefoot Revolution in economics?

4 days ago

From Blair Fix
Yesterday I was reminded of what got me interested in economics. I’ll preface this by saying that I make my living as a substitute teacher in Toronto. It’s not glamorous, but it pays the bills. It gives me time to do research from outside academia.
When I’m in high school classrooms, I always browse the posters on the wall. It’s funny what you see. You find things (both good and bad) that you’d never see in institutions of ‘higher learning’. It’s a daily source of amusement for me.
Yesterday, while browsing the posters on a classroom wall, I came across a copy of the ‘Barefoot Economics Manifesto’. I was delighted to rediscover this document, and surprised that it was sitting quietly in an otherwise normal classroom.
If you don’t know, the ‘Barefoot Economics Manifesto’

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Petition and statement on violence at Jawaharlal Nehru University

5 days ago

To sign on to this letter, please click here.
We are shocked and horrified to learn of the terrible attack on the Jawaharlal Nehru University on the evening on 5 January 202, by a group of armed goons who targeted a peaceful gathering of teachers and students. We note that this terrible event comes in the wake of a prolonged struggle by the students against a fee hike that would force nearly half of them to abandon their studies, and after an even longer series of protests by the faculty and students of JNU against the many arbitrary and illegal actions of the JNU Vice Chancellor over nearly three years. We are extremely concerned at the apparent failure of the Delhi Police (which is directly under the Home Ministry) to identify the perpetrators despite much photographic and video

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The productivity of bullshit jobs

10 days ago

From Blair Fix
I recently read David Graeber’s book Bullshit Jobs: A Theory. If you’re not familiar, David Graeber is the anthropologist who wrote Debt: The First 5000 Years, a seminal book on the history of money and credit.
In Bullshit Jobs, Graeber takes aim at pointless work. Graeber describes a bullshit job as:
a form of paid employment that is so completely pointless, unnecessary, or pernicious that even the employee cannot justify its existence even though, as part of the conditions of employment, the employee feels obliged to pretend that this is not the case.
Bullshit Jobs is based largely around testimonials from people who feel that they have bullshit jobs. The testimonials are often hilarious and sometimes touching. I recommend reading the book for the testimonials alone.

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India is failing her young women even in terms of work

11 days ago

From C. P. Chandrasekhar and Jayati Ghosh
Anyone who has been following the upsurge of protests across the country in the wake of the CAA-NRC moves of the government would have been impressed and inspired by the role played by young women. They have been forthright and fearless in articulating their concerns and demands, even in the face of overt repression by the state, and there is no doubt that they provide much hope for the future of the country.
These young women have already displayed much courage and resilience—but unfortunately these qualities are likely to become even more necessary, because in addition to Indian politics and society failing them, the economy also deals them a terrible hand. Many of the multidimensional problems Indian women have to deal with (like violence,

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Making economics relevant

20 days ago

From Maria Alejandra Madi
This post was written by Carmelo Ferlito.  He is a senior fellow at the Institute for Democracy and Economic Affairs (IDEAS)
I taught economics in Malaysia for seven years. My students were mainly second and third year university students who attended my economics classes (microeconomic theory and policy and history of economic thought) after having already learnt the basic notions of macro and microeconomics.
Most of my students were double majoring in economics and finance. My impression is that, in general, they could see the relevance of finance in their daily lives (it can help in making or saving money) while they struggled to get enthusiastic about economics, which instead was perceived as a set of abstract graphs and formulas, somehow alien from real

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The social environment as a cause in economics

December 14, 2019

From Blair Fix

Have you noticed that economists are missing a word in their vocabulary? In microeconomics you’ll see words like ‘individual’, ‘utility’ and ‘maximize’. But you won’t see the word ‘environment’ anywhere. It seems that in microeconomics, individuals maximize their utility in a void. [1]

This lobotomy of the environment has led economists astray. By focusing only on differences between individuals, economists ignore a major part of human behavior. Individual differences are meaningful only in the context of an environment — especially a social environment.
The environment as a cause
To frame my argument, we need to leave economics behind for a moment. The problem is that economists treat the environment as something that is passive. It’s a stock of resources or a trove

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The “Nobel Prize” for Economics 2019… illustrates the nature and inadequacy of conventional economics

December 12, 2019

From Ted Trainer
The 720,000 pound Prize has been awarded for studies carried out in “developing” countries over several decades, applying randomised trials to determine the effects of interventions like school meals, small monetary incentives for school attendance and work motivation (Nobel Media, 2019.) Especially noteworthy are devices for reducing “…purchasing of temptation goods”, (…conceivably also of use in rich countries.) These are identified as “nudges”, only likely to make small differences in the right direction but claimed to be capable of adding to significant effects in large populations. Much if not all of this work would seem to be unambiguously worthwhile, such as exploring how to improve vaccination rates. But there are disturbing criticisms which go far beyond these

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Public trust in economists

December 11, 2019

From Lars Syll

People are obviously not so impressed by the “queen of the social sciences”. And rightly so. Mainstream economics today is more like an ideological-religious conviction than a realist and relevant social science that people can trust for making their lives or societies better.

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New issue of the Real World Economics Review – #90

December 10, 2019

Download whole issue
Making America great againShimshon Bichler and Jonathan Nitzan
2
American trade deficits and the unidirectionality errorKenneth Austin
13
The “Nobel Prize” for Economics 2019… illustrates the nature and inadequacy of conventional economicsTed Trainer
41
Greenwish: the wishful thinking undermining the ambition of sustainable businessDuncan Austin
47
An evolutionary theory of resource distributionBlair Fix
65
The case for the ontology of money as credit: money as bearer or basis of “value”Phil Armstrong and Kalim Siddiqui
98
Cross-current, or change in the direction of the mainstream?Arthur M. Diamond, Jr
119
Negative natural interest rates and secular stagnation: much ado about nothing?Leon Podkaminer
126
BOOK REVIEW
John Komlos’s Foundations of Real-World

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Economics is still in the pre-scientific age

December 9, 2019

From Michael Joffe
If you are interested in “creating greater economic equality, reducing the power of corporations” and so on, you have to understand how economic power works. I am using “power” here not as an ideological category, but in the sense of causation, the degree of one’s ability to bring something about. It is obvious that in the economy, some people and some organisations (e.g. firms) have more influence than others. What they want to happen is more likely to happen. This is causation, and it is power. So it is nothing whatever to do with the mere theological discussions that Ken Zimmerman appears to think this is about. And it is absent from economic theories (not just neoclassical ones).
To quote discussions among anthropologists about universal human laws etc is just

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Going Digital Discussion Forum

December 9, 2019

Going Digital: What is the Future of Business and Labour? Discussion Forum extended to December 16th
by Malgorzata Dereniowska

We are delighted to inform that the Discussion Forum for the WEA Conference Going Digital: What is the Future of Business and Labour? has been extended to 16th December, 2019. 
Join us to discuss recent contributions to the understanding of digital economy and its consequences for business trends and labour challenges!
All papers are available HERE. You can participate in the Discussion Forum by commenting on specific papers, or contributing to a general discussion on the Complexities in Economics. In the spirit of debate, authors are asked to respond to the comments on their papers as well as on related general remarks.
Comments are moderated prior

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Values and ideology in economics and other social sciences

December 5, 2019

From Peter Soderbaum
There is a tendency in mainstream neoclassical economics to claim value-neutrality. Economics is believed to be close to natural sciences where the scholar is standing outside observing what goes on in the economy. It is believed that experiments can meaningfully be carried out to arrive at “evidence-based” results. There is a focus on markets and markets are understood in terms of supply and demand as mechanistic forces. While reference to more than one perspective can add to our understanding, any ideas about value-neutrality have to be abandoned. Values and ideology are always with us as argued by Gunnar Myrdal:
“Valuations are always with us. Disinterested research there has never been and can never be. Prior to answers there must be questions. There can be no

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Can a service transition save the planet?

December 4, 2019

From Blair Fix
Let’s talk sustainability. Unless you’re an anti-science crank, you probably agree that we’ve got a problem with carbon emissions. We need to drastically cut emissions to avoid catastrophic climate change. On this we should all agree.
The question that’s open for debate is how to cut emissions. I think we actually know very little about how do to this. But even worse than knowing little is thinking we know a lot when we don’t. As the old saying goes, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
This post is about false solutions to climate change. These are ideas that seem like plausible ways to reduce carbon emissions, but that fall apart when we look at the evidence. If we’re serious about sustainability, we

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Digitalization and the transnational corporations. Rethinking economics

December 3, 2019

From Grazia Ietto-Gillies
Digitalization has been with us for a couple of decades and is now all pervasive. It affects every sphere of economic activity: from production to consumption to the interaction between the State and its citizens. The latter interaction is in terms of: the delivery of public services; the collection of revenue; and the development and implementation of public policies.
The transnational companies (TNCs) have been with us for much longer. Steven Hymer (1976 [1960]) – who developed the first theory of the international firm – dates the modern transnational to after the Second World War. Its very distant antecedents can be dated much further back even before the birth of nation-states. Transborder direct business operations were indeed part of the activities of

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Graphics from 4 empirical muckrakers – 4. Branko Milanović — Ancient Inequality

November 30, 2019

From Blair Fix
Branko Milanović is the oracle of ancient inequality. He has muckraked to compile inequality data for many pre-industrial societies. Here’s a chart of inequality versus GDP per capita for ancient societies:
Ancient Inequality Data from Branko Milanović. (Source)
The curved line is the ‘inequality possibility frontier’. This is the maximum inequality that is achievable at the given level of production. I have my own ideas about what creates an inequality frontier — I think it has to do with the growth of hierarchy. I’ll write about these ideas later. But I’m glad that Milanović has done the tedious muckraking so that I can come along and do ‘high theory’. Kudos to Milanović.
… And many others
This has been a brief tour of the empirical muckrakers who I admire. There are

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A reading list for economic heretics

November 28, 2019

From Blair Fix
Do you think that the discipline of economics is a sham — an ideology masquerading as science? If so, here is a reading list for you. These 10 books have influenced my thinking over the years. Read them and join me in the journey of the economic heretic.
1. Capital as Power. A Study of Order and Creorder
Jonathan Nitzan and Shimshon Bichler

Few books offer both a compelling critique of mainstream economics and a bold alternative vision for political economy. But in Capital as Power, Jonathan Nitzan and Shimshon Bichler have the audacity to do just that.
Nitzan and Bichler point out that orthodox theories of capital are built on non-existent units. Neoclassical theory is built on the non-existent unit of ‘utility’. Marxism is build on the non-existent unit of ‘socially

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Starting again, and relating the schools

November 27, 2019

From Geoff Davies

The need for a new start in economics arises regularly on this blog site, for example: Economics — enslaved by the wrong theory  And here is an edited extract addressing this issue from my book Economy, Society, Nature..  The point is not that ‘complexity’ gives rise to another ‘school’ of economics, but that it provides a general framework that accords with observations and is capable of accommodating many existing schools, but not all.
 
Many of the ideas presented here have been around for some time but the subject has been in some confusion, with a tendency still, among dissenting economists, to think of ‘schools’ of thought and to promote a ‘pluralist’ approach. Whereas it is laudable to consider a wide range of ideas, rather than the sterile monoculture of

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WEA conference: Going Digital

November 25, 2019

From Malgorzata Dereniowska

Going Digital: What is the Future of Business and Labour?

Welcome to the second week of the Conference which discusses recent contributions to the understanding of the digital economy and its consequences for business trends and labour challenges.
Read the latest comments on the DISCUSSION FORUM which is open until December 9th.

All papers are available HERE. You can participate in the Discussion Forum by commenting on specific papers, or contributing to a general discussion on the Complexities in Economics. In the spirit of debate, authors are asked to respond to the comments on their papers as well as on related general remarks.
Comments are moderated prior to posting to ensure no libelous or hateful language.
CONFERENCE PROGRAM

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Graphics from 4 empirical muckrakers – 3. Thomas Piketty — Modern Inequality

November 25, 2019

From Blair Fix
I don’t think I need to say much about Thomas Piketty. He’s probably the most famous economist in the world. Since publishing Capital in the Twenty-First Century, he’s become an academic rock star.
Many heterodox economists think Piketty’s theories of inequality are naive. I would be one of those economists. But this does not detract from Piketty’s empirical work. He’s a prolific inequality muckraker.
Together with other researchers, Piketty has created the World Inequality Database. It’s an invaluable tool for understanding modern inequality. I’ll leave you with one of Piketty’s most famous charts. Here’s the history of inequality in the United States:
This may be the most famous chart in modern economics. It’s Piketty’s data for the income share of the top 10% in the

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7 Wall Street theories

November 22, 2019

From Ken Zimmerman
Wall Street is about investing. To get a large return on money invested. There is no shortage of theories on what makes the markets tick or what a market movement means. Some of which influence investor decisions. The two largest factions on Wall Street are split between supporters of the efficient market theory and those who believe the market can be beaten. Although this is a fundamental split, many other theories attempt to explain and influence the market, as well as the actions of investors in the markets.
1. Efficient Market Hypothesis
Few people are neutral on the efficient market hypothesis (EMH). You either believe in it and adhere to passive, broad market investing strategies, or you detest it and focus on picking stocks based on growth potential,

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Graphics from 4 empirical muckrakers – 2. Vaclav Smil — The Energy Oracle

November 21, 2019

From Blair Fix
Vaclav Smil is by far the most prolific energy muckraker out there. I’m not going to try to summarize his research. Just look at his list of publications here.
But I will leave you with a beautiful chart of Smil’s data. Gail Tverberg has used Smil’s data to make a fantastic series of charts on world energy consumption. She uses Angus Maddison’s population data too. See the whole series here. Below is Tverberg’s chart for energy use per capita. Credit to Tverberg for such a pretty chart, and credit to Smil for muckraking the energy data.
Gail Tverberg’s chart of world energy use per capita. She uses data from Vaclav Smil. (Source)

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Graphics from 4 empirical muckrakers – 1. Nitzan and Bichler’s Buy-to-Build Indicator

November 17, 2019

From Blair Fix
During the 1990s, corporate mergers became part of the public zeitgeist. But what is the deep history of mergers and acquisitions?
Jonathan Nitzan and Shimshon Bichler piece together the puzzle with their ‘buy-to-build’ indicator. This indicator measures the dollar value of mergers and acquisitions expressed as a percentage of gross fixed investments. It tells us how much corporations are spending on buying other companies, relative to how much they are spending on actually building things. Nitzan and Bichler muckrake to put together a century of US data:
Nitzan and Bichler’s Buy-to-Build Indicator (Source)More recently, Joe Francis compiled an open source update of the buy-to-build indicator. This is great empirical muckraking.

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Facts, fallacies and echo chambers

November 12, 2019

From Iconoclast
The above discussion “The new minds of young people will be open to the new empirical evidence.” illustrates the difficulties encountered by heterodox thinkers. Orthodox thinkers share a dogma, or at least a set of a priori assumptions, and usually a methodology. In essence, this makes orthodox thinking an echo chamber where basic ontology is never questioned. When the heterodox argue, as in the economically heterodox here, the argument eventually descends (or ascends?) into metaphysics; into ontology and epistemology. This is both the benefit and drawback of thinking and arguing from any kind of heterodox position.
While we are all drawn here by our rejection of orthodox economics, each of us has a particular perspective. That perspective is drawn from our

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