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Book reviews in the RWER Blog

14 days ago

Two days ago in a comment, Yoshinori Shiozawa offered the following suggestion.
I have proposed to create a forum in which heterodox economists can inform each other and discuss the future directions of heterodox economics.
The simplest and easiest [way] to start is to organize a series of book reviews (or paper reviews if necessary) in this RWER Blog. If the editors of this blog offer a space (a post for reviewing a book or a paper) once a month, or each two months, for example, it will not be very difficult to realize this proposition. [emphasis added]
I have checked if there are goods candidates for this attempt. Two books seem to be a good candidate for the discussion:
(1) Foundations of Real-World Economics (2019; 2023) by John Komlos.
(2) Economic theory for the real world (2024)

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Threats to the US dollar’s role as global reserve currency

21 days ago

From Maria Alejandra Madi and RWEA pedagogy Blog
2021 marked the 50th anniversary of the “weekend that changed the world”, when US President Richard Nixon suspended the convertibility of the dollar into gold. From a monetary point of view, since then there has been continued dominance of the dollar as a vehicle for international transactions. However, Is the dollar as the world’s reserve currency under attack?
The dollar’s dominance in global markets is still significant, with its role in trade invoicing, international debt, and cross-border non-bank borrowing outstriping that of the US. This dominance has been attributed to the absence of alternatives, such as an inadequate supply of investment-grade government securities or limited liquidity and availability by regulation.

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Weekend read – Blood and Oil in the Orient: A 2023 Update

24 days ago

From Shimshon Bichler and Jonathan Nitzan [1]
The Hamas-Israel War
The 2023 war between Hamas and Israel elicits many different explanations. As with previous regional hostilities, here too, the pundits and commentators have numerous overlapping processes to draw on – from the struggle between the Zionist and Palestinian national movements, to the deep hostility between the Rabbinate and Islamic churches, to the many conflicts between Israel and Arab/Muslim states, the contentions between the declining superpowers (United States and Russia) and their rising contenders (like China, Iran, Turkey), the rift between western and eastern cultures, and so on.
The experts also highlight the growing importance of local militias – from Jewish settler organizations, to ISIS, Hamas, Islamic Jihad,

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new RWER issue – 105

28 days ago

Please click here to support this open-access journal and the WEA
RWER issue no. 105

download whole issue
In Praise of Rebellion?Peter Radford2
Professor Stiglitz’s contributions to debates on intellectual propertyDean Baker
America’s trade deficits: blame U.S. policies – starting with tax lawsKenneth E. Austin
Extending the concept of inflation beyond consumer pricesMerijn Knibbe
History and origin of money in MMT and Austrian Economics:The difference methodology makes?Phil Armstrong
Ownership illusions: When ownership really matters for economic analysisCameron K. Murray
From original institutionalism to the economics of conventions and inventing value:An interview with Dave Elder-VassDave Elder-Vass and Jamie Morgan
Some questions to Edward Fullbrook

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Mainstream economics — a methodological strait-jacket

October 24, 2023

Jamie Morgan: To a member of the public it must seem weird that it is possible to state, as you do, such fundamental criticism of an entire field of study. The perplexing issue from a third party point of view is how do we reconcile good intention (or at least legitimate sense of self as a scholar), and power and influence in the world with error, failure and falsity in some primary sense; given that the primary problem is methodological, the issues seem to extend in different ways from Milton Friedman to Robert Lucas Jr, from Paul Krugman to Joseph Stiglitz. Do such observations give you pause? My question (invitation) I suppose, is how does one reconcile (explain or account for) the direction of travel of mainstream economics: the degree of commonality identified in relation to its

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Weekend read – The Great Gatsby curve among America’s über rich

October 20, 2023

From Blair Fix
Economists are not known for their literary imaginations. Flip through any economics textbook and you’ll find a barrage of terms like the ‘Philips curve’ and the ‘Fisher effect’. The jargon is simple enough — empirical relations are usually named after the person who discovered them. But this convention is neither descriptive nor fun.
The exception to this vanilla naming practice is a pattern called the ‘Great Gatsby curve’.1 It’s named after F. Scott Fitzgerald’s famous book The Great Gatsby, which explores the roiling inequality and tumultuous class dynamics of the 1920s. The Great Gatsby curve is an empirical relation between social inequality and social mobility. As inequality rises, social mobility tends to decline.
In this post, we’ll look at the The Great Gatsby

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Green education

October 10, 2023

From Maria Alejandra Madi

For instance, the growing quantity of legal proceedings pertaining to passivity on climate change represents a noteworthy advancement in the endeavour to safeguard the natural environment. The high-profile legal case known as the “Case of the Century” in France has garnered significant attention, as non-governmental organisations (NGOs) have levied accusations against the French state for its perceived inadequate efforts in addressing climate change. This litigation has propelled climate-related legal disputes to the forefront of public discourse. Over the past few years, there has been a significant increase in the volume of climate change-related legal cases, with numerous examples being observed globally. 

In her book titled “Justice Climatique:

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But critical thinking is not always appreciated

October 2, 2023

From Peter Soderbaum
Economists, like other people, are political economic persons guided by their ideological orientation. We are eager to become accepted in some social groups. Just as political parties often are afraid of departing too much from one another, an economist may prefer a comfortable life by positioning herself close to other economists with respect to conceptual framework and ideology. Accepting the norms and standards of neoclassical economics is rewarding and constitutes a natural way of life. And since students are not exposed to any alternatives to neoclassical economics, the acceptance of neoclassical theory is not necessarily the result of a conscious choice. At some stage, however, a person may feel that she or he is locked into this theoretical perspective and

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Weekend read – How the rich get richer

September 30, 2023

From Blair Fix
The rich get richer.
It’s a phrase that packs a lot of punch. It’s potent rhetoric, yet surprisingly accurate at describing how rising inequality plays out.
Of course, there’s nothing inevitable about the rich getting richer. We just happen to live in an age of growing corporate despotism. And our friends at Forbes have been there to document the disease.
Forbes who loves the free market. Forbes who loves obscene wealth. Forbes … the unwitting social scientist?
When Malcolm Forbes started publishing his rich list — the Forbes 400 — back in 1982, he surely wasn’t intending to do social science. By all accounts, Forbes simply loved opulence, and wanted to celebrate those who had the most of it.
It was part of a 1980s trend that fetishized obscene fortunes. For the

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The difference between a philosopher and a common street porter

September 27, 2023

From Adam Smith
The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause as the effect of the division of labour.  The difference between the most dissimilar characters, between a philosopher [economist] and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education.  When they came into the world, and for the first six or eight years of their existence, they were perhaps very much alike, and neither their parents nor play-fellows could perceive any remarkable difference.  About that age, or soon after, they come to be employed in

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Risk vs. Uncertainty

September 26, 2023

From Steve Keen

The key concept in Keynes’s summary was the impact of expectations upon investment, when those expectations were about what might happen in an uncertain future.
Investment is undertaken to augment wealth, and yet the outcome of any investment depends upon economic circumstances in the relatively distant future. Since the future cannot be known, investment is necessarily undertaken on the basis of expectations formed under uncertainty. Keynes was at pains to distinguish the concept of uncertainty from the simpler concept of risk.
Risk occurs when some future event can only be one of a number of already known alternatives, and when there is a known history of previous outcomes which enables us to assign a reliable and definite probability to each possible outcome. A

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weekend read – Billionaires Are So Predictable

September 8, 2023

From Blair Fix
Have you ever wondered what it takes to become a billionaire? Do you need rare genius? Exceptional acumen? Miraculous foresight? An uncompromising work ethic?
On all four counts, the answer is no.
It turns out that to become a billionaire, what you really need is the right social setting. You need to live in a society that is suitably rich and appropriately unequal. Without those things, your chances of wearing the billionaire badge are low.
In this post, I’ll do the math.
Using data from Forbes, I’ll show you how the billionaire headcount varies across countries. Then I’ll show you how to predict this variation. Forget about character traits and personal histories. We don’t need them. To predict how many billionaires a country has, we can get surprisingly far just by

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August 30, 2023

From Jason Hickel and RWER
As the climate crisis worsens and the carbon budgets set out by the Paris Agreement shrink, climate scientists and ecologists have increasingly come to highlight economic growth as a matter of concern. Growth drives energy demand up and makes it significantly more difficult – and likely infeasible – for nations to transition to clean energy quickly enough to prevent potentially catastrophic levels of global warming. In recent years, IPCC scientists have argued that the only feasible way to meet the Paris Agreement targets is to actively scale down the material throughput of the global economy. Reducing material throughput reduces energy demand, which makes it easier to accomplish the transition to clean energy.
Ecological economists acknowledge that this

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Global food prices in “The rest of the world”

August 22, 2023

From C. P. Chandrasekhar and Jayati Ghosh
The dramatic increase in global oil and food prices from the start of the Ukraine War did not reflect real global supply shortages or demand-supply imbalances. Rather, it reflected the impact of market concentration and financial activity in commodity futures markets, which enabled some large private players particularly global agribusinesses and financial companies to make a killing. This is now so evident from the data that it is more widely acknowledged. The agricultural commodity that was most affected by the Ukraine war is wheat. Wheat prices in global trade surged from January to June 2022, then fell, so that by the end of 2022 they were back to around the pre-war level. But in this period, both global production and trade volumes of

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“So what has gone wrong?” 

August 18, 2023

From this Nature editorial
. . . income inequality within countries is rising, as measured by the Gini index, a measure of income distribution across a population. Globally, in the 15 years to 2019, economic output in terms of gross domestic product (GDP) roughly doubled, but the share of economic output earned by the workers producing the goods and services behind the increase fell from 54.1% in 2004 to 52.6% in 2019. So what has gone wrong? Between 2019 and 2020, the COVID-19 pandemic caused the steepest rise in global inequality since the Second World War. Some people couldn’t go to work or saw their jobs furloughed, whereas others — mostly in higher-level jobs — were able to move their work online, says Ida Kubiszewski, an ecological economist at University College London. Then

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Summary of the Great Transformation by Polanyi

July 29, 2023

From Asad Zaman and current issue of WEA Commentaries

Ever since the spectacular failure of modern economic theory became obvious to all in the Global Financial Crisis, the search for alternative ways of organizing our economic affairs has intensified. The vast majority of alternatives under consideration offer minor tweaks and patches, remaining within the methodological framework of neoclassical economics. In contrast, Polanyi offers a radical alternative, with unique insights based on a deep study of the history of the emergence of capitalism. A major obstacle to understanding Polanyi is the fact that living in a market society shapes our mindsets and behaviors, making it difficult to imagine radical alternatives. Understanding Polanyi requires standing outside the streams of

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A brief review of ECON 101 textbook options

July 27, 2023

From Junaid Jahangir and RWER issue 104
In terms of reviewing textbooks to teach economic inequality, three options are considered. First, the Mankiw, Kneebone, and McKenzie (2020) textbook, as I used it to teach microeconomics at the ECON 101 level. Second, the Ragan (2020) textbook, as it seems to be a bridge between neoclassical economics and perspectives found in options like the CORE text. Finally, the CORE textbook, which introduced a new module on teaching economic inequality in June 2021.
Mankiw, Kneebone, and McKenzie (2020)   
The Mankiw, Kneebone, and McKenzie (2020) textbook does not address economic inequality until Chapter 20 of the textbook. This chapter lacks a discussion on the impact of globalization and technological change on economic inequality. Starkly missing are

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War in Ukraine and global finance

July 25, 2023

From Marcello Spanò and RWER issue 104

Let us now turn to the signals of changes that are emerging with the war in Ukraine. The field of analysis regarding the relation of the war with the breakdown of unipolarism and its transformation into a multipolar world is certainly vast and complex. Here we limit the analysis some relevant aspects connected to the centrality of the dollar in the international monetary system.
If we examine the 25-year period prior to 2014, we can observe that the changes in the current account of the United States closely align with variations in the official reserves held by central banks worldwide. Since 2014, there has been a significant reduction in global dollar reserves. This has not resulted in a decrease in the US external deficit but rather a

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new issue of WEA Commentaries

July 20, 2023

Volume 13, Issue 1download the whole issue
Summary of the Great Transformation by PolanyiAsad Zaman
Economics, Anthropology and the Origin of Money as a Bargaining CounterPatrick Spread
“Capitalism is the most successful, but also the most destructive ideological-economic system.”An interview withLaibachMitja Stefancic
Brainstorming: Negative Impact of EconomicsAsad Zaman
Closing RemarksStuart Birks
Please click here to support the World Economics Association

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The Money Multiplier Fairy Story

July 13, 2023

From Steve Keen and RWER issue 104
The 6th edition of Mankiw’s Macroeconomics textbook (there’s now a 9th edition, but I’m not about to waste money buying a dead parrot) passes on the Money Multiplier Fairy Story by telling students to consider “an imaginary economy” in which the money supply is initially $100 in cash. Then, the population deposits all that cash in “First National Bank”. The money supply now consists of $100 in bank deposits, while all the cash is in the vault of First National Bank. Next First National Bank decides to make loans, so it lends out $90 in cash. The money supply now consists of $100 in demand deposits and $90 in cash. Mankiw declares that:
The depositors still have demand deposits totaling $100, but now the borrowers hold $90 in currency. The money supply

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Ideology maintained the system that produced the inequality

July 11, 2023

From John Komlos and RWER issue 104
. . . for the first 97 percent of our species’ history, humans did not compete for status by amassing economic and political power and thus such inequality cannot be viewed as socially necessary. Such competition was proscribed because it would be destructive of these societies’ collective well-being. Instead, their rules of the game compelled them to compete in other manners beneficial to the community, such as by being good warriors, good hunters and gatherers, being generous, kind, smart, and artistic.  That  is, competition was channeled into expressions beneficial to the community. However, with the rise of the state, reproductive success and the aphrodisiac properties of status, wealth, and power through sexual selection came to hold the keys

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Annual league table of top hedge fund managers’ earnings

July 8, 2023

The Institutional Investor publishes an annual league table of top hedge fund managers earnings. The latest data at time of interview was from March 2022 and reported that “Altogether, the 25 highest-earning hedge fund managers earned a combined $26.64 billion last year, the second-highest amount in the history of the Rich List… Over the past two years, the members of the Rich List’s First Team have made more than $58 billion combined.”
Jan: For comparison: top Bank CEOs in the United States earn between $15-25 million a year – and Jamie Dimon of JPMorgan Chase made about $80 million in 2021 if options are included. However, top hedge fund managers earn far more, sometimes a few billion per year.
Jamie: If we tabulate

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RWER issue no. 104

July 4, 2023

Please click here to support this journal and the WEA
RWER Issue no. 104download whole issue
The Dead Parrot of Mainstream EconomicsSteve Keen
Why Hedge Funds Matter: An interview with Jan FichtnerJan Fichtner and Jamie Morgan
ETF shares as shadow moneyAlexandru-Stefan Goghie
The Dollar Centric Financial System and the Conflict in UkraineMarcello Spanò
A Note on Teaching Economic InequalityJunaid B. Jahangir
Book Review: Muhammad Ali Nasir, Off the Target: The Stagnating Political Economy of Europe and Post-Pandemic RecoveryJamie Morgan
Book Review: Jon D. Wisman, The Origins and Dynamics of Inequality. Sex, Politics, and IdeologyJohn Komlos
Book Review: Lars P. Syll, The Poverty of Fictional Storytelling in Mainstream EconomicsJesper Jespersen
please support

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long read – The social consequences of inflation in developing countries

July 2, 2023

From Jayati Ghosh

The title of this article is a riff off a publication of G. C. Harcourt’s 1974 piece, ‘The social consequences of inflation’. He wrote this in a period of the global economy that bears some strong similarities to our own contemporary phase when inflation is suddenly back in the global headlines. There is at least one significant difference: at that time, Harcourt highlighted inflation as the outcome of an excess of total demand in real terms over available supplies of goods and services when the potential workforces and existing stocks of capital goods were fully employed. Current inflationary pressures, by contrast, arise from the combination of specific sectoral supply bottlenecks, rising profit margins in oligopolistic global markets for food and fuel

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No, AI does not pose an existential risk to humanity

June 20, 2023

From Blair Fix
In the last few months, there have been a string of open letters from tech leaders warning that artificial intelligence could lead to a ‘profound change in the history of life on Earth’. According to some insiders, AI poses an extinction risk, on the same level as pandemics and nuclear war.

I think this scaremongering is nonsense. It plays into popular science fiction tropes about machines conquering humanity. But the problem with these scenarios is that when you look at them through an evolutionary lens, they make no sense.
Competence, not intelligence
Let’s start with the elephant in the room, which is ‘intelligence’. Humans love to talk about ‘intelligence’ because we’re convinced we possess more of it than any other species. And that may be true. But in evolutionary

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new WEA book: “The Poverty of Fictional Storytelling in Mainstream Economics”

June 16, 2023

Kindle $4.99  Paperback  $11.99 
“No one does more than Lars Syll to identify and communicate the limitations of modern economics. An impassioned call and compelling sustained argument for economists to stop dwelling on the intricacies of irrelevant models and concern themselves with rest of the social reality.” –  Tony Lawson, Cambridge University
“Lars Syll’s new book gets to the heart of what’s methodologically wrong with mainstream economics and maps out foundations for a critical realist economics.” – John Davis, University of Amsterdam, and Marquette University
“This is a wonderful book. From the perspective of Critical Realism, it offers a comprehensive and powerful critique of the praxis and methodology of mainstream economics. In a clear and well-argued text, all the main

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Victoria Chick, 1936-2023 in memoriam

June 10, 2023

From Jesper Jespersen
Personal recollection
How I met Vicky
I was on a one year sabbatical leave at Cambridge University, King’s College by invitation of Professor Wynne Godley in the year 1988/89. Seriously speaking I was surprised, because except for Godley there were only few economists left at the Faculty, who called him-/herself Keynesian. The old guard of Keynes’ disciples had disappeared: Joan Robinson and Nicholas Kaldor were no longer alive; Richard Kahn very fragile.
Furthermore, the chairs of the old Keynes-guard were taken over by upcoming and increasingly dominating neoclassical economists of whom Frank Hahn at Churchill College was the most prominent at that time. Fortunately, there were still some Keynes-scholars left as tutors at the Colleges, who gathered ‘dissenters

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In Thrall to the Infallible Hand

June 5, 2023

From Duncan Austin
While Adam Smith’s Invisible Hand has many beneficial attributes, somewhere along the way the Invisible Hand was recast as the Infallible Hand, seeding today’s widespread faith that markets can solve large-scale social and ecological problems they are ill matched for.
In the formidable shadow of the Infallible Hand, non-market solutions – policy, regulatory, cultural, behavioural – are often deemed ‘impractical’, so remain under-utilized. ‘Green growth’, ‘sustainable profit’ ‘shared value’ etc. are the solutions of the day.

Yet, if a market system denies its external costs and consequences – as contemporary markets do in spades – then the Hand is not Infallible at all, but rather it is powerfully, ubiquitously, and possibly existentially very fallible indeed.

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