Articles by Editor
From Nikolaos Karagiannis and RWER
This short article on neoliberalism comprises three brief sections which discuss key theoretical notions, general practical issues, and worldwide experiences respectively while offering a facts-based assessment. Brief concluding remarks end the article.
Neoliberalism gained momentum in the 1980s and became distinct and recognizable as an ideology by the 1990s as the “Washington Consensus”. Neoliberal theorists would suggest that their theories are universal in nature and that assumptions that underpin them are unimportant. This can only be true when the assumptions truly do not matter because they are compatible with all possible socio-cultural and institutional matrices. Neoliberalism seeks unrestrained accumulation of capital through a
Source “In the picture below I show the growth of $100 due to inflation using the traditional inflation metric (PCE deflator) used by the Fed in red, and an asset price adjusted metric, where the PCE deflator and the S&P 500 are equally weighted.”Read More »
From Duncan Austin and RWER
The “free market” advocate is in the dissonant position of wishing market actors to be the sole conferees of new property rights while also depending on the government to uphold a general rule of law which is the necessary condition for property to being meaningful at all. Indeed, because of the indispensability of the rule of law, we should be more accurate with our terminology. We never have “free markets”. We only ever have “enabled markets” – markets enabled by an authority capable of upholding the rule of law that gives property meaning. Language matters. “Free markets” is a highly misleading term – routinely deployed as an unassailable universal principle to cloak a more parochial agenda. Too often, what “free market” proponents are really advocatingRead More »
From Geoff Davies and RWER
Yet consider a model of the Global Financial Crisis of 2007-8 by Eggertsson and Krugman (2012), the latter a pseudo-Nobel prize winner. They made two models, one for before and one for after a crash, with the difference between the models being effectively that the amount of available credit was presumed to be less in the second. Nothing in the model determined the amount of credit, it was imposed from the outside. Their equations of optimisation did require sophisticated, though old-fashioned, analytical methods to solve, but that says nothing about the usefulness of the models.
Both models are equilibrium models. But if the “before” state of the market, with high prices, was an equilibrium state there would be no crash. Therefore the model must be
From Philip George
Until 1982 it was believed that stomach ulcers were caused by stress and lifestyle. That year,
two Australian scientists, Robin Warren and Barry Marshall, demonstrated that most gastric
and duodenal ulcers were caused by a bacterium, Heliobacter pylori. They cultivated the
bacteria which they discovered in biopsies of patients suffering from ulcers, after which
Marshall ingested the bacteria to prove that they caused gastric ulcers.
As this example shows, it is not uncommon even in science to try and explain real-world
phenomena using variables that cannot be measured, like stress. Such attempts inevitably turn
out to be incorrect.
In economics the most common of such fairy variables is “inflation expectations”; the other
popular one is of course “rational
From Tanja von Egan-Krieger and RWER
. . . the World Bank builds on a utilitarian definition of efficiency, which is of course a normative criterion. It is a criterion of judgement. The implicit aim is increasing the net value or total wealth. The World Bank refers to this idea in terms of a “social benefit”: “Even investments that are highly profitable for an investor will generate sustainable social benefits only if they are not associated with environmental externalities”.
An ethical reflection immediately raises the question for whom the net value is produced. Who does benefit from the increasing total wealth? From a utilitarian point of view this question doesn’t matter. The ethical maxim of classical utilitarianism is to maximise the sum of pleasure and pain and thereby the
From Richard Norgaard
. . . until early in the 19th century, merely two hundred years ago, an effort to intertwine reality and morality still existed in natural theology, the project to understand the character, will, and operating manual of God through the study of nature. Isaac Newton was both an accomplished moral philosopher and a path-breaking natural philosopher (Iliffe, 2017). The Physiocrats made moral arguments about who should be taxed based directly on what they understood to be physical realities (Schabas, 2007). Adam Smith wrote a treatise on astronomy to document his knowledge of natural systems before writing moral philosophy (Ross, 2010, chapter 7). Well into the 19th century, both natural and moral philosophy students as well as students of theology, medicine, and law
Source: Sighing for paradise to come | The EconomistRead More »
From Asad Zaman and WEA Pedagogy Blog
Reducing politics to rational calculation allows the destruction of entire countries, and killings of
millions, for the sake of political power or corporate profits. Today this “rationality” dominates
the world where corporations are busy destroying the planet for the sake profits.
Introduction: The dark underside of leading lights of the European Enlightenment has been skillfully concealed. Nearly all major enlightenment thinkers held abhorrent views about slavery, race, democracy, women, and equality. Even though their views are public, easily available in major works, there is a conspiracy of silence, and suppression of dissent. Even though there is an abundance of nauseating quotes from major Enlightenment thinkers, these remain hard to find .
[embedded content]Read More »
From C. P Chandrasekhar and Jayati Ghosh
Capitalism is supposed to be all about economic growth, through the dynamism that is created by competition. This growth is meant to be driven by investment (or accumulation) which in turn is used to justify the shares of national income that are delivered to private profits, to the owners of capital. “Accumulate, accumulate! That is Moses and the prophets” famously said a certain Karl Marx in the first volume of Capital more than 150 years ago. It is undeniable that investment is the fundamental driving force of capitalism.
Of course, there have been and continue to be many naysayers, who object to this obsession with economic growth at all costs. There are obvious problems with using GDP as the basic indicator for even material well-being, and
From Blair Fix
Over the last year, I’ve watched with horror and amusement as health agencies around the world flip-flopped their advice on how to deal with COVID.
My horror comes from knowing this flip-flopping breeds mistrust in science. But I am (morbidly) amused because I know that uncertainty is a basic part of real research. For the public, ‘science’ tends to mean authoritative knowledge. But for researchers, ‘science’ is an iterative process, filled with wrong turns, new evidence, and revised ideas.
With COVID flip-flops in mind, I thought I’d tell you a story about science in progress. It’s a story about how we should understand the stock market.
Three stories about the stock market
Here are three stories about how the stock market works.
The first story says that the stock
From Richard Parker and current issue of RWER
Let me now try to connect this little synoptic “longue duree” to the present and to the matter before us: neoliberalism and what might succeed it. We live in the early 21st century and the conventional economics we’ve inherited has now arrived at a moment when once-novel Victorian-era ideas seem not just inadequate but irrelevant.
A similar moment seemed, to many, to have arrived before, back in the 1930s. But apostles of marginalism such as Lionel Robbins or Mies or Hayek – faced with what they saw as the socialist implications of Rooseveltian politics and Keynesian ideas about states and economies – insisted on the singular “efficiency” purpose of “economics” as theory, and theory’s realization in the modern market world around them. For
From Jonathan Nitzan and Shimshon Bichler
Here we show the after-tax profit and market capitalization of the top 0.01% of U.S.-based corporations, expressed as a % of U.S. GDP.
Updated from ‘The Asymtptoes of Power‘.
From Blair Fix
The game I play is a very interesting one.
It’s imagination in a tight straitjacket.
— Richard Feynman
Like Richard Feynman’s game of science, evolution is stuck in a straitjacket. It is driven by chance. But evolution is not free to explore every path.
Take, as an example, the evolution of organism size. While it seems like there are many routes to bigness, I propose that there is fundamentally only one: sociality. In the march towards ever-larger organisms, there have been three major revolutions. All of them involved the merger of previously autonomous organisms into a new communal creature. I call this route to bigness ‘size through sociality’. It is a tale 4 billion years in the making.
The drive towards sociality, I argue, is a response to a basic feature of
From David Taylor and WEA Pedagogy Blog
Looking now at anticipations of Shannon’s information systems in recent economic research, Maria Madi found American pragmatist C. S. Peirce studying scientific logic cycles and semiotics (signalling) in 1873. In the latest Real Word Economic Review, Katherine Farrell found Marshall starting economics from everyday life (small is beautiful) instead of the funding of government. Andri Stahel started from Aristotle and found Dilthey studying hermeneutics (Shannon’s decoding). However, the story told about computing is that Babbage showed it to be a mechanism, which Turing turned into a tape recorder using von Neumann’s architecture and linear programming. Unsurprisingly, Shannon does not surface in Jamie Galbraith’s brilliant survey of current
From Mitja Stefancic and current issue of WEA Commentaries
“Power and Influence of Economists: Contributions to the Social Studies of Economics”, edited by J. Maesse et al reflects upon the multifaceted relationships that exist between science and society – a domain in which economic experts play a very influential role and often have a direct impact on society by and large. It offers complex insights into the forms of power in economics and provides a broad overview of recent developments in the evolving field of social studies of economics. The book comprises 14 chapters, which are grouped into four main parts: a) Economic knowledge and discursive power; b) Economic governmentalities; c) Economists in networks; d) Economics as a scientific field. Each chapter takes a detailed viewRead More »
From James Galbraith
The evolutionary and biophysical approach to economic phenomena is not a new thing, and actually long predates the neoclassical orthodoxy from which some believe it now springs. It began with the intellectual interplay of Malthus and Darwin, developed through Marx and Henry Carey and (to a degree) in the work of the German Historical School, brewed and fermented in the pragmatic and pluralist effervescence of late 19th century American philosophy, and achieved a first full articulation in the hands of Thorstein Veblen (1898). It thereafter developed in the Institutionalist tradition of John R. Commons (1934) and Clarence E. Ayres (1944), among many others, and emerged as the dominant intellectual force in American economics under the New Deal.
From David Taylor and WEA Pedagogy Blog
After the invention of printing, pedagogy began with Machiavelli’s The Prince teaching politicians to lie, and Francis Bacon’s The Advancement of Learning advising a new king to develop an encyclopedia of science “for the glory of God and the relief of Man’s estate” by “taking things to bits to see how they worked”. Bacon’s doctor Harvey took men’s bodies to bits and discovered the circulation of the blood. In France, Descartes took brains to bits, envisaging a “spiritual” mind (what we would now call information) controlling the brain’s matter.
Economics began to go wrong when Locke denied Descartes’ “spirit”, mistaking Newton’s proving his gravitational hypothesis by observation for his starting with a “blank slate”; perhaps seeing that
From James Galbraith
What is to take the place of neoclassical economics and its neoliberal policy offshoot? There is no shortage of candidates, grouped under the broad banner of economic heterodoxy. Some of these successor doctrines – behavioral economics and complexity economics are examples of note – take the neoclassical orthodoxies as a point of departure. They therefore continue to define themselves in relation to those orthodoxies. Others avoided the gravitational pull altogether – or, as in the exceptional case of Keynes, made a “long struggle to escape”.
The behaviorists depart from neoclassicism by giving up strict assumptions of rational and maximizing behavior. Complexity theorists explore the dynamics of interacting agents and recursive functions. Both achieve a measure of
From Richard Norgaard
Economism has been modern capitalism’s myth system, or in computer parlance, capitalism’s operating system. It has stressed utilitarian moral beliefs compatible with economic assumptions that are critical to neoclassical economic theories. These beliefs include the idea that society is simply the sum of its individuals and their desires, that people can be perfectly, or at least sufficiently, informed to act rationally in markets, that markets balance individual greed for the common good, and that nature can be divided up into parts and owned and managed as property without systemic social and environmental consequences (Norgaard, 2019). Especially after World War II when the industrialized nations globally organized around economic beliefs and set out to spread
From Clive Spash and Adrien Guisan
Economics has become increasingly detached from its object of study and the orthodoxy is fundamentally flawed as a social science because it advocates a prescriptive methodology while lacking any serious engagement with epistemology and ontology. The resulting epistemic fallacy means it promotes a narrow implicit world view as if a factual truth. Failures here include imposition of limited quantitative methods and mathematically formalist methodology that exclude qualitative aspects of reality and the use of isolated/closed systems thinking for an open system reality.
Economies are the socially structured institutional process involving the interaction of humans with the natural world. Social reproduction is achieved only within the bounds of
From Jamie Morgan and current issue of RWER
If climate emergency indicates anything, it is that we are urgently in need of an economics that is “fit for purpose”. Consider what “fit for purpose” now means. An adequate economics now has to be one that helps us understand the difficult decisions that are likely to confront us in the coming years. On a global scale we are going to have to leave fossil fuels in the ground, restore aquifers and water systems, reinvigorate ecosystems, greatly accelerate reforestation, bring a halt to using the oceans as a dumping site for plastics and numerous other chemical pollutants, reduce acidification of the oceans and so on. But fundamentally, on a global scale we are, unless there is some miraculous technological miracle, going to have to do less.
From Lukas Bäuerle and current issue of RWER
Pressing arguments for a paradigm shift in economics – based on an assessment of mainstream economics and its shortcomings – are out there for quite a while now. The emperor has been declared long dead in intellectual terms (Keen, 2001), but it is still firmly alive institutionally. This is the only reason why we still have to talk about it at all. Having said this, it goes without saying that the “intellectual monoculture” (Graupe, 2015) in economics as documented in bibliometric (Glötzl and Aigner, 2019) or network analyses (Ötsch, Pühringer, and Hirte, 2018) is not a matter of intellectual superiority (Fourcade, Ollion and Algan, 2015), but one of institutional power (Maeße et al., 2021). And this is one of the most important points,Read More »
From John Komlos and current issue of RWER
We are at the cusp of a new era. The 21st century did not begin in earnest until 2008, signifying a seismic break with the past in ways far too numerous to mention. To be sure, the Dot-Com bubble could have served as a lesson for the vulnerability of Wall Street and that it desperately needed vigilant oversight, but the economy emerged from that short recession relatively unscathed, and the warning sign was misunderstood. Sure, myriad of astute observers had warned for a very long time that neoclassical economics harbors dangerous elements and is merely an exercise in logic “in which social reality is neglected… This neglect is debilitating…” (Lawson, 1997, p. xii). However, it was not until the embarrassing financial crisis of 2008 that theRead More »
From Richard Parker and current issue of RWER
So then what might a project for a Post-Neoliberal Economics entail? Since I think “neoliberalism” as concept and practice represents one more of an ongoing series of ultimately ad hoc justifications for the hierarchic structuring of human societies, and think that the larger concept of “capitalism” contains already many visibly differentiated stages of its own in that long story of hierarchies, here are several modest ideas I’d propose.
First, to confront what we don’t like about “neoliberalism”, we should start by recognizing what we are facing, which is not just a methodenstreit problem in academic economics.
The World Economic Forum – what a waggish journalist friend, from direct experience, slyly dubbed “neoliberalism’s favorite ski
From Richard Koo in current issue of RWER
When Milton Friedman visited Japan in the 1950s and spoke to economist Kazushi Nagasu, he had strong things to say about the plight of his people: “I am a Jew…I do not think I need to tell you what kind of horrible deaths Jewish people had to face. The real drive behind my argument for free markets is the bloodied cries of Jewish people who perished under Hitler’s and Stalin’s regimes, and their message is that the best way to happiness is to have a mechanism that brings people together where states, races and political systems have no influence.”
Although many would agree with Friedman that the free market is the necessary mechanism, he is wrong on at least three counts. The first is his assumption that markets driven by a
Volume 11, Issue 2 – July 2021download the whole issue
EU taxation capabilities and the way forward towards institutional progress
in Europe: an interview with Jakob KapellerMitja Stefancic
Beyond Economism (Extract from R B Norgaard article)
Economics — a severe case of misplaced idolatry of ‘rigour’ Lars Syll
Austerity and gender in Brazil: insights from the international literatureAna Luíza Matos de Oliveira and Magali N. Alloatti
Each paradigm in economics is a scientific and ideological paradigmPeter Söderbaum
Review of J. Maesse et al. (forthcoming) “Power and Influence of Economists: Contributions to the Social Studies of Economics”Mitja Stefancic
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