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The number of billionaires in Asia Pacific has increased by almost a third on pre-pandemic levels

6 days ago

Coronavirus has widened the cracks in this unequal system, fuelling a
pernicious cycle of poverty and economic inequality in Asia. The World Bank
estimates that coronavirus and rising economic inequality pushed 140
million additional people into poverty in Asia in 2020, and 8 million more in
2021.6 New variants alongside higher inequality levels than expected7 mean
these figures are likely to be underestimates.
Yet, while lockdowns and economic stagnation destroy the livelihoods of
many poor and ‘just managing’ families, the region’s richest elites have
recovered and even increased their fortunes. Between March and December
2020, Asia’s billionaires accrued enough additional wealth to cover a salary
of almost $10,000 for each of the 147 million equivalent jobs lost in the
region during

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new issue of WEA Commentaries

7 days ago

WEA Commentaries
Volume 11, Issue 4
download the whole issue

Pandora Papers and tax havens: what do they tell us?Mitja Stefancic
Brazilian Foreign Policy: crisis and preliminary effects on International Cooperation and DevelopmentPatrícia Andrade de Oliveira e Silva and Pietro Carlos de Souza Rodrigues
On Diane Coyle’s Cogs and MonstersLars Syll
Combatting Global Warming: The Solution to China’s Demographic “Crisis”Dean Baker
Regulation of international capital flows in developing countries: institutional and political challenges in their implementationJuan Carlos Moreno-Brid and Lorenzo Nalin
Please click here to support the World Economics Association

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How could the 1970s stagflation have been avoided?

13 days ago

From Philip George
How could the 1970s stagflation have been avoided? The stagflation of the 1970s is widely believed to have heralded the eclipse of Keynesian economics and the rise of monetarism. In a previous post (https://rwer.wordpress.com/2021/08/14/weekend-read-what-caused-the-stagflation-of-the-1970s-answer-monetarism/) I had argued that this was not the case and that the stagflation was directly caused by the monetarist policies of the time.
But there is an even more important question that does not seem to have been answered, or even seriously raised: How could the US have avoided stagflation? Considering our experience in handling the Great Recession and the Covid pandemic and in the light of theoretical advances, especially Modern Monetary Theory, this is a surprising

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Relative oil prices and differential oil profits

21 days ago

From Shimshon Bichler and Jonathan Nitzan
If you thought that oil profits are about producing oil, think again.
The enclosed chart, updated from our 2015 Real-World Economics Review paper, ‘Still About Oil?’, shows that the main determinant of oil profit — and specifically of differential oil profit — is not output, but prices.
The figure shows the correlation between two series: (1) the differential oil profits of the world’s integrated oil companies, computed as the ratio between their earnings per share and the earnings per share of all listed firms; and (2) the relative price of oil one year earlier, measured by the $ price of crude oil relative to the U.S. consumer price index. (The reason for the annual lag is that ‘current’ profits represent a trailing average of earnings

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COVID Déjà Vu

29 days ago

From Blair Fix
As 2021 comes to a close, I’m having a distinct sense of déjà vu. A year ago, I wrote a post celebrating COVID vaccines as a triumph of science. And I noted that vaccine discovery is a collective endeavour. The cumulative number of major vaccines tracks closely with the cumulative number of scientific papers, a bellwether for humanity’s collective knowledge. Here’s the trend:
Figure 1: The cumulative number of major vaccines tracks with the cumulative number of scientific papers. [Sources and methods]This trend is a beautiful reminder that science is a social endeavour. No matter how novel, every discovery builds on the work of others. Science, in other words, is the quintessential public good. And so are vaccines.
Looking at the roll out of previous vaccines, however, I

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Adam Smith’s idea is still the basis of the discipline of economics

December 11, 2021

Apology from the editor
This post has been withdrawn on grounds of misattribution.  But the readers’ comments, which relate to the section beginning on page 50 titled “Adam Smith and the Birth of Western Economics” in
Economies and Cultures: Foundations of Economic Anthropology

by Richard R Wilk and Lisa C. Cliggett | Jan 2, 2007

have been retained.

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In the not too long run the economic process is inevitably dominated by a qualitative change

December 9, 2021

From Katharine Farrell   
If economics is indeed concerned with how humankind goes about sustaining its own life, day to day, then representing that complexity must be built into the ontology of economic models.  Adjustments to variables, parameters and reference data can all contribute to improving models, but they do not necessarily address the ontological limitation that, in the original liberal theory “representation, [read that of Jevons and Walras] the economic process neither induces any qualitative change nor is affected by the qualitative change of the environment into which it is anchored” (NGR71:2).  This limitation is carried forward, in neoliberal theory, which continues to rely on the mechanical-physics-based mathematics of Walras, albeit with permutations and sometimes

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The question before the discipline

December 8, 2021

From James Galbraith
Economics is a policy discipline. It is engaged with the problems, large and small, of social organization and the general good. As such it co-evolves with circumstances. It is historically contingent. The application of economic ideas to specific problems under specific circumstances may succeed or fail, and in the latter case, people with different ideas normally rise to prominence.
Capitalism is an economic system whose characteristics and problems have preoccupied economists since the 18th century. It is not the only such system; there were economists before capitalism going back to Aristotle. And there have been economists under competing systems: socialism and communism had economists of their own. Today it is common to speak of “varieties of capitalism”

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America’s drastically shrinking middle-class

December 6, 2021

This graph shows how in the USA the share of total net worth held by the 50th to 90th wealth percentiles has decline drastically in the last two decades.

https://www.trustnodes.com/2021/07/11/americas-middle-class-drastically-shrinks

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Neoliberalism’s conception of economic reality as . . .

December 3, 2021

From Lukas Bäuerle and PNLE

The most powerful and at the same time dangerous aspect of neoliberal thought is its conception of economic reality as governed by a separate sphere of absolute truths. In aligning with a long-standing tradition of perennial philosophies (lat. perennis: constant, lasting), neoliberalism has set out to reconfigure our world according to an image that was dead from the very outset. The myth neoliberalism is operating on philosophically is the idea of a world of hidden truths and principles behind the ambiguous and chaotic phenomena we are experiencing in daily life. There is a logic behind the chaos, reigning independently of time and space. This proposition is not just “talk” – it is a deep-seated ontological frame of contemporary economic thought that

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Amazon is not identical with your corner shop.

December 2, 2021

From Gerald Holtham (originally a comment)
Radford’s points are true but the microfoundations movement in macroeconomics is guilty of greater intellectual crimes than merely attempted reductionism. It is not as if the foundations are built on extensive empirical study of the decision-making elements in an economy. We have a representative consumer who behaves according to the axioms of rational choice under conditions of certainty equivalence. Similarly there is a representative firm modelled in the same way. So we start with illegitimate aggregates, illegitimate because the behavioural reaction functions are not strictly linear so the aggregate would behave like an individual only if all individuals were identical. Spoiler alert: Elon Musk is not absolutely identical with the homeless

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New WEA book

November 30, 2021

Kindle $8.00US UK DE FR ES IT NL JP BR CA MX AU IN
Paperback $22.00US UK DE FR ES IT JP CA

Contributors: Richard Parker, Richard B. Norgaard, James K. Galbraith, Lukas Bäuerle, William E. Rees, Jayati Ghosh, Richard C. Koo, Neva Goodwin, Max Koch, Jayeon Lindellee, Johanna Alkan Olsson, Katharine N. Farrell, John Komlos, Clive L. Spash, Adrien O.T. Guisan, Andri W. Stahel, Jamie Morgan, Edward Fullbrook

If you feel that there is nothing new or liberal about neoliberal economics, and that neoliberal economics is to understanding capitalism what astrology is to understanding the Cosmos, read this book!  – Yanis Varoufakis

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The proliferation and efflorescence of indicators

November 26, 2021

From Ken Zimmerman (originally a comment)
In the early 20th century the emergence of the United States as a global force unparalleled and nearly unrivaled in material might catapulted obscure economic indicators into central, abiding elements of national life. No “man on the street” would have given a thought to gross national product or national income in the 1920s or at any point before then, and not simply because that number didn’t exist. People wouldn’t have thought of their nation or their society or their own lives in terms of the collective material production of their country. And they would not have marked success or failure by a series of indicators.
That changed markedly after World War II, for two reasons. Though the basic contours of unemployment, GDP, and inflation were

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Consumer prices 1209-2020

November 24, 2021

From Jonathan Nitzan and Shimshon Bichler
This long-term consumer price series shows that, after 1900, inflation changed in two important ways:
1. Magnitude: Until 1900, UK’s annual inflation rate averaged 0.4%. From 1900 onward, it averaged 4.0%.
2. Direction: Until 1900, consumer prices went up and down. From 1900 — with the exception of the great depression — they went only up.
***
The reason for this change has had a lot to do with the new capitalist mode of power — specifically:
1. The emergence of large, government-backed corporate coalitions;
2. The rise of large-scale forward-looking capitalization/vendible capital;
3. The consolidation of full-cost/administered prices.

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For nearly the last 45 years the US has taken the wrong road

November 23, 2021

From Ken Zimmerman (originally a comment)
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
Robert Frost.
Frost’s poem is usually interpreted with a positive spin. I give it just the opposite interpretation here.
Commenting today on the world around us is difficult because for nearly the last 45 years the US has taken the wrong road. On the economic side the US has tried to force a brutal neoliberal agenda down the throat first of the world’s poorest nations, then the USSR after 1990, then the developed nations, and finally every non-wealthy American citizen. That effort increased world poverty, especially among children, even in the US, destroyed the US as a

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The real issue is what we mean by growth 

November 22, 2021

From Gerald Holtham (originally a comment)
People have come to expect and hope that life will be better for their children than it was for them. That can be true of some people in upwardly mobile families in societies with social mobility. If material welfare is stable in such a society, however, upward mobility must be matched by downward mobility. Therein lies a difficulty; the rich and powerful will not readily accept such an outcome for their offspring. Economic growth is the solvent that dissolves this incipient social conflict. Everyone can share in increasing material affluence. It is common to blame capitalism and the system does exemplify the problem but it goes deeper. It will occur in any society, however organised, where people’s expectations are for improvements in life

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Pixies and economic theory

November 21, 2021

From Ken Zimmerman (originally a comment)
When I was 12 and my sister 5 she was convinced that pixies lived in our backyard and protected our house from the coyotes, raccoons, and bobcats that were a problem for city neighborhoods all over Texas due to the drought.  I tried to convince her otherwise but couldn’t.  I agreed to go with her every night before her bedtime to search for the pixies. Never found them and by the time my sister began the new school year she had forgotten about pixies. This is my way of saying human life and knowledge begins and moves on through experience. Despite her detailed description of the pixies she  and I could not experience them. Pixies, like economic theories can be beautiful and fascinating when those who believe in the tell us about them. But we

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The feminist building-blocks of a just, sustainable economy

November 19, 2021

From Jayati Ghosh
Feminist economists have long argued that the purpose of an economy is to support the survival and flourishing of life, in all its forms. This may seem obvious but it turns on its head the prevailing view, which implicitly assumes the opposite causation: the economy runs according to its own laws, which must be respected by mere human actors. In this market-fundamentalist perspective, it is a potential angry god which can deliver prosperity or devastation and must be placated through all sorts of measures—including sacrifices made in its name.
Yet the economy, its markets and its various institutional forms are human creations, which can also be revised and reshaped according to democratic will. That means economic policies can and should be aligned with social and

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Black cats in dark rooms

November 11, 2021

From Ken Zimmerman (originally a comment)
At least part of the problem here is that these economists seem to have made up a way of doing science that exists nowhere else. To be sure their way existed once among some at or shortly after the beginning of science in Europe.  Scientists are depicted as patiently piecing together a giant puzzle. But with a puzzle you see the manufacturer has guaranteed there is a solution. Certainly not the case with the work of scientists. This view remains common among the general public and even some scientists. When most people think of science, it appears  they imagine the nearly 500-year-long systematic pursuit of knowledge that, over 14 or so generations, has uncovered more information about the universe and everything in it than all that was known

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Polluters adore net zero targets

November 11, 2021

From Yanis Varoufakis

It [capitalism] has always gained pace through the incessant commodification of everything, beginning with land, labour and technology before spreading to genetically modified organisms, and even a woman’s womb or an asteroid. As capitalism’s realm spread, price-less goods turned into pricey commodities. The owners of the machinery and the land necessary for the commodification of goods profited, while everyone else progressed from the wretchedness of the 19th century working class to the soothing fantasies of mindless petit-bourgeois consumerism.
Everything that was good was commodified – including much of our humanity. And the bad externalities that the same production process generated were simply released into the atmosphere. To power the capitalist

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Less cheer-leading and more realism

November 10, 2021

From Ikonoclast (originally a comment)
Comments are declining on this blog. People ARE hiding in their holes. Holes can be comfortably furnished. Just ask a hobbit. Of course, when the holes cease to be furnished and the supermarket shelves are empty then things get a little less comfortable.
You will note I wrote, “Every well thought out effort at sustainability postpones catastrophe a little bit.” That is the essential nature of life in an existentialist sense: postponing catastrophe for a little while. “Life is suffering. Existence is limitation.” These are Buddhist concepts. “Every day above ground is a Pyrrhic victory”. That was an attempt at black humor, not original and perhaps it fell flat.
I simply happen to think we need less cheer-leading and more realism. Over-optimism and

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The idea of  progress seems one of the theoretical presuppositions of modernity.

November 8, 2021

From Ken Zimmerman (originally a comment)
Uneconomic growth is growth that produces negative externalities which reduce the overall quality of life. This is also known as unsustainable growth, where the negative social and environmental consequences outweigh the short-term value of an extra unit of growth, making it uneconomic.
But in spite of this quandary growth remains the primary goal. It holds that place because growth is equated with progress. The idea of  progress seems one of the theoretical presuppositions of modernity. One can even regard it, not without reason, as the real ‘religion of Western civilization.’  Historically, this idea was formulated earlier than generally thought, around 1680, during the quarrel of the Ancients and the Moderns, in  which Terrasson, Charles

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Why economics is not an ecological science?

November 7, 2021

From  Gregory A Daneke and WEA Commentaries
As an academic discipline economics has actually been organized to have little use for the concepts of ecology (especially: population biology, systemic science, ethology, natural history or biogeography). With the rise of Neoclassical economics, it was specifically designed to be a sterilized, frictionless, and hermitically sealed void in which to suspend economic activity. But of course, this a-societal, a-political, a-historical enterprise was an epistemological impossibility and actually constituted an ideological agenda. This agenda became more pronounced following WWII and the rise of Neoliberalism. The static methods of Neoclassicism were rejuvenated by its clarified and enhanced ideology. It was especially rearmed to ignore the

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The global divergence gets bigger

November 3, 2021

From C. P. Chandrasekhar and Jayati Ghosh
The Covid-19 pandemic operated to expose various global inequalities in their stark form, but it has also further accentuated them at unprecedented scale and speed. The latest World Economic Outlook from the IMF, released in late October 2021, provides further evidence of how the global divide has increased through the course of the pandemic, most of all the gap between advanced economies and the rest of the world.
On the face of it, in terms of GDP changes alone, the divide does not appear to be so stark. Figure 1, which provides IMF estimates of GDP change in the current and past year, suggests that the advanced economies experienced larger declines and are recovering more slowly than emerging market and middle income countries.
Figure 1

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4 ways in which humanity’s consciousness needs to shift

November 1, 2021

From Richard Norgaard

1 – From material progress to holistic survival and morality
The coevolution of economism with the Econocene has led humanity to the brink of disaster. Faith in progress has long been a part of the problem. Actions to stave off climate change have been trimmed and delayed on the presumption that countering environmental destruction has the opportunity cost of foregone human wellbeing through further investments in technology that further increase the production or provide novel forms of material goods.  And yet studies show that wellbeing increases little, if at all, with further material assets after basic needs are met. Shifting from faith in progress toward a consciousness of holistic survival would be more appropriate given the challenges of climate change. I

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New issue of WEA Commentaries

November 1, 2021

WEA Commentaries
Volume 11, Issue 3Download whole issue
An egalitarian carbon tax: revenue-neutral and dual policy package     Fausto Corvino
WHAT IS ECOLOGY? What Economics Should Have Been     Gregory A Daneke
The Theory of Competition of F.A.Hayek as an Inspirer of the Neoliberal Turn of the 1980s     Arturo Hermann
Don Webber discusses his book, How to enhance your re- search: 100 practical tips for academics     Ana Luíza Matos de Oliveira and Magali N. Alloatti

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Common MMT and post-Keynesian beliefs

October 29, 2021

From Marc Lavoie
MMT is without a doubt part of the post-Keynesian tradition. Besides the link between the government and the central bank, as well as a few claimed novelties, such as the MMT view of the Phillips curve, the implicit MMT macroeconomic theory relies on post-Keynesian macroeconomics and its belief that the market cannot be left on its own and thus must be tamed; MMT relies on a credit-creation view of banking – the endogenous money view of post-Keynesians, more specifically I would say the horizontalist view – where banks are special financial institutions which are something more than financial intermediaries and where central banks essentially pursue defensive operations; there are obvious similarities between the circuit of State money as described by MMT authors and

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Unmeasured “illth” increasing faster than measured wealth

October 28, 2021

From Herman Daly
The basic issue of limits to growth that the Club of Rome did so much to emphasize in the early 1970s needs to remain front and center, with recycling considered as a useful accommodation to that limit, but not a path by which the growth economy can continue. Well before becoming physically impossible the growth of the economic subsystem becomes uneconomic in the sense that it costs more in terms of sacrificed ecosystem services than it is worth in terms of extra production. That richer is better than poorer is a truism. No dispute there. But is growth in GDP in wealthy countries really making us richer by any inclusive measure of wealth? That is the question. I think it is likely making us poorer by increasing unmeasured “illth” faster than measured wealth. Even a

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