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Edward Fullbrook

Articles by Edward Fullbrook

Economics 999 and “the Monday night club problem”

September 16, 2021

From Edward Fullbrook
In 1965 in Berkeley, California the New Left came into existence by finding a solution to what its founders called “the Monday night club problem”, a problem remarkably similar to the one that decade after decade emasculates “heterodox economics”.  In Berkeley there were numerous left-wing political groups, each based on a different set of underlying ideas, texts, and key terms, and that by long tradition met on Monday evenings.  Each of these groups had its own informal hierarchy of members and its own way of describing and addressing political issues.  Each group also provided valuable social support and intellectual enhancement for its members.  But when it came to changing things, of having any real-word effect, they were no less powerless than bridge clubs.

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Market-value in the news

September 6, 2021

From Edward Fullbrook
Over the weekend I read two articles (1, 2) in The Guardian about market-value.  One concerned the painter Bansky, the other a truffle hunter in Croatia.
I’ve been fan of Bansky for twenty years, beginning when he was a local graffiti artist in my part of town.  A couple of years ago one of his paintings, Girl With Balloon, was auctioned at Sotheby’s in London for £1.1m. 

As soon as the auctioneer’s hammer fell, Bansky’s canvass “passed through a secret shredder hidden in its large Victorian-style frame, leaving the bottom half in tatters and only a solitary red balloon left on a white background in the frame.”  Here is the one-minute video.
That shredded painting has been retitled “Love is in the Bin” and will be auctioned again at Sotheby’s in October when

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Steve Keen vs. Nordhaus – regarding humankind’s greatest ever crisis

February 16, 2021

From Edward Fullbrook
Steve Keen’s new paper “The appallingly bad neoclassical economics of climate change,” would benefit humankind if it were widely read by economists.¹  There are two ways you can obtain it:
Go here at Taylor & Francis and pay £35
Go here and download it for free.
Here is its conclusion:
Conclusion: drastically underestimating economic damages from global warming
Were climate change an effectively trivial area of public policy, then the appallingly bad work done by Neoclassical economists on climate change would not matter greatly. It could be treated, like the intentional Sokal hoax (Sokal, 2008), as merely a salutary tale about the foibles of the Academy.
But the impact of climate change upon the economy, human society, and the viability of the Earth’s biosphere

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The Inequality Crisis: The three options

October 7, 2020

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The everyday operations of our economies produce the goods and services that keep us alive and enable us to enjoy life. But that is not the only way that those operations effect our lives; they also effect societies and ecosystems. The Inequality Crisis, which threatens our societies, and the Climate Crisis, which threatens both our societies and our species, are also, no less than production, brought about directly by the everyday operations of our economies.
But for two hundred years the economics profession has in the main excluded from its study of economies two of their three categories of primary effects. And given the profession’s influence, this exclusion of societal and ecological effects has promoted the intellectual invisibility of

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More on what’s missing

August 19, 2020

From Peter Radford
I suspect economic theorists are not alone in shunting to the side issues or phenomena that might upset the applecart.  But they appear to do it with a determination that other disciplines mind find somewhat alarming.  This is why I relentlessly and repeatedly mention Cause and his 1937 question about the existence of the firm.  It isn’t because I imagine that theories of the firm began in 1937, or that they are somehow restricted to a peculiar Anglo-Saxon view — Coase would have been an ideal advocate of such a view having spent his career on both sides of the Atlantic — but because he typifies the dilemma he raised.  He cannot quite accept the enormous ramifications of his question, and so he wanders off and tries to invent a reason for firms to exist that can be

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Isolation Waltz

April 6, 2020

From The Guardian
Move over Mozart, here comes Stelios Kerasidis. A seven-year-old Greek prodigy has penned an “isolation waltz” inspired by the pandemic.
The hypnotic, fugue-like melody has picked up more than 43,000 hits on YouTube since its launch last week.
“Hi guys! I’m Stelios. Let’s be just a teeny bit more patient and we will soon be out swimming in the sea,” he beams, perched on his piano stool, feet barely touching the floor. “I’m dedicating to you a piece of my own.”
The work, his third composition, was written especially “for people who suffer and those who isolate because of Covid-19,” he adds.
[embedded content]

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In half a century what have we done with that knowledge?

January 16, 2020

From Edward Fullbrook

A version of this graph appeared in yesterday’s Guardian.  I have a vivid memory from almost exactly half a century ago that relates to it.  It was February 1970 and snowing.  It was rural Wisconsin in the States and I was riding in a car with a woman who was the mother of six and a well-known peace activist but with no connection to science or environmentalism.  We were coming from Frank Lloyd Wright’s estate Taliesin where I lived, and as we neared Madison and got caught in a traffic jam, my friend said, “That man in the car in front of us is one of the scientists who says we are increasing the Earth’s temperature.”
As the decades passed, my friend’s words became a milestone for me because they mark a point when the fact that the world’s economy was heating up

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2019 was “one of the strongest in the history of financial markets.” What does that mean?

January 8, 2020

From Edward Fullbrook
Here is a passage from an article that appeared last week in The Guardian.
With one day of trading to go, 2019 is on course to be one of the strongest in the history of financial markets after shares around the world racked up record after record in another barnstorming year.
On Wall Street the Dow Jones industrial average has gone up almost 25% having reached record highs day after day, while the broader S&P500 is up 30% and the tech-heavy Nasdaq has grown 40% in value. The FTSE100 in London is close to its record high, as is the Dax30 in Germany. In the Asia Pacific, the Nikkei is up 15% while Australia’s ASX200 is still close to its highest ever point (reached in November).
But none of these countries, with the exception of the US, are in particularly good

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Economic internetization

January 29, 2019

From Constantine Passaris and the current issue of RWER
I have coined the word internetization for the purpose of circumventing the drawbacks of the concept of globalization. These drawbacks commence with the fact that globalization is not a new concept. The international outreach between nations has taken place since time immemorial. Furthermore, globalization does not reflect the contemporary digital empowerment of civil society and the electronic facility for modern financial transactions.
In effect, internetization denotes a combination of two contemporary features. These are global outreach and electronic connectivity. There is no denying that internetization has had a significant impact on the new global economy and the scope and substance of economic governance. The electronic

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“The economics profession is facing a mounting crisis of sexual harassment, discrimination and bullying”

January 11, 2019

From yesterday’s New York Times

The economics profession is facing a mounting crisis of sexual harassment, discrimination and bullying that women in the field say has pushed many of them to the sidelines — or out of the field entirely.
Those issues took center stage at the American Economic Association’s annual meeting, the largest gathering of the profession, last weekend in Atlanta. Spurred by substantiated allegations of harassment against one of the most prominent young economists in the country, top women in the field shared stories of their own struggles with discrimination. Graduate students and junior professors demanded immediate steps by the A.E.A. to help victims of harassment and discipline economists who violate the group’s newly adopted code of conduct.

Janet L.

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“I never learned maths, so I had to think”

August 17, 2018

From Lars Syll
Professors may find themselves ill-prepared for the macro classroom. To become academics they had to answer erudite questions posed by more senior members of the discipline. To become good teachers of introductory macro, they have to give clear answers to muddled students. That requires an intuitive feel for the subject. It is not enough to crank through the equations.
Indeed, Mr Rowe attributes part of his success as a teacher to his shortcomings as a mathematician. He quotes Joan Robinson, another clear expositor of macroeconomics: “I never learned maths, so I had to think.” Because the answers did not leap out at him from the equations, he had to dwell on the economic behaviour underneath the algebra.
Macroeconomics is difficult to teach partly because its theorists

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The Great Gatsby Curve

July 6, 2018

From The Atlantic
Economists represent this concept with a number they call “intergenerational earnings elasticity,” or IGE, which measures how much of a child’s deviation from average income can be accounted for by the parents’ income. An IGE of zero means that there’s no relationship at all between parents’ income and that of their offspring. An IGE of one says that the destiny of a child is to end up right where she came into the world.

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There are no markets without governance and government and regulations.

June 28, 2018

From James Galbraith and RWER #84
. . . there are no markets without governance and government and regulations. More precisely: just as Adam Smith pointed out that the division of labor depends on the extent of the market, so the extent of the market depends on the reach of the state – on its capacity to provide security, a framework of law and justice, and to regulate effectively in the public interest. Without each of these, many if not most modern markets could not exist in their actual form.
Examples are legion. How well would cars function in cities without streetlights and stop signs? Would passengers fly in commercial aircraft in the absence of air-traffic control? Would homemakers buy and eat fresh raw vegetables if they did not have reasonable confidence of non-contamination

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Economies, carbon dioxide and the atmosphere

May 6, 2018

In April the concentration of carbon dioxide in the atmosphere exceeded an average of 410 parts per million (ppm). Before the Industrial Revolution, carbon dioxide levels did not exceed 300ppm in the last 800,000 years.  (Scripps Institution of Oceanography)

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Citigroup Plutonomy Reports update

May 4, 2018

From Edward Fullbrook 
“Plutonomy” is the word that Wall Street and City bankers use in private to designate the political economy in which they operate and in which today we all live.  They go to great trouble to keep us 99% ignorant of their perceptions of today’s economic and political realities, and which their “plutonomy” concept reveals.
In November 2010, I put up the post Citigroup attempts to disappear its Plutonomy Report #2 which was viewed over 40,000 times. It included links to Citigroup’s Plutonomy Reports 1 and 2, but Citigroup soon succeeded in having those links blocked.
In January 2011 I put up the post New links for secret Citigroup Plutonomy Reports.  But in June 2011, Citigroup succeeded in also closing down those links.  Here is an account of how they did it,

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Syll’s top 20 books compared to RWER’s top 10 and its poll’s top 40 vote receivers

March 18, 2018

In May of 2016 the Real-World Economics Review conducted a poll titled “Top 10 Economics Books of the Last 100 Years”  Voting was open to the journal’s 26,000 subscribers, and over 3,000 of them voted, each having up to ten votes and with 17,270 votes in total cast. The results were published two weeks later and linked on over 2,000 Facebook pages.  It is interesting to compare those results to Lars Syll’s personal list of “Top 20 heterodox economics books” published here earlier today.
Although the RWER subscribers list was not limited to “heterodox” economics books, eight of Syll’s top 20 appear in the RWER subscribers’ Top Ten.
Pasted below are the 40 books in the RWER poll that received the most votes.  Notably, Syll’s list contains only one book published in this millennium and

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Bribe offers for academics

February 23, 2018

From Edward Fullbrook
Norbert Häring’s story about misleading academic research reminds me of another story.
Big-money offering bribes to academics is, I suspect, more common than people, including academics, realize.  I first encountered the practice when I was an undergraduate.  My university’s most popular course, “Insurance”, was taught by an economics professor whose students affectionately called Doc Elliot.  He taught not only how the insurance industry purported to work, but also how it really worked, and he frequently accepted off-campus speaking engagements.
Doc Elliot may be the only person who has ever lived who could talk insurance and make people laugh.  Certainly, he was the funniest person I’d ever known; and, despite our 35-year age gap, we became friends of a sort.

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Why does it cost so much to read heterodox economics?

January 10, 2018

From Edward Fullbrook
The current issue (January 8, 2018) of the Heterodox Economics Newsletter lists the current issues of 16 English language journals, with each linked to the newsletter’s website where there is a link for each article in these new issues.  For each journal, I picked one article to try to read.  Here is what I found. 
Research in the History of Economic Thought and Methodology, 35B
Lucia Morra: Friendship and Intellectual Intercourse Between Sraffa and Wittgenstein: A Timeline
30 days access for £20 = $27.05
Capitalism Nature Socialism, 28 (4)
Rhydian Fôn James & Molly Scott Cato: A Green Post-capitalist Alternative to a System of Accumulation: A Bioregional Economy
24 hours access for GBP 30.00 = $40.57
Erasmus Journal for Philosophy and Economics, 10 (2)

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Neoclassical economics usually reads its models backwards.

November 14, 2017

From Edward Fullbrook
In public, including in the training of economists, Neoclassical economics usually reads its models backwards. This gives the illusion that they show the behaviour of individual economic units determining sets of equilibrium values for markets and for whole economies. It hides the fact that these models have been constructed not by investigating the behaviour of individual agents, but rather by analysing the requirements of achieving a certain macro state, that is, a market or general equilibrium. It is the behaviour found to be logically consistent with these hypothetical macro states that is prescribed for the individual agents, rather than the other way around.[1] This macro-led analysis, this derivation of the micro from a macro assumption, is and always has

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This intellectual cult threatening us all

November 6, 2017

From Edward Fullbrook
Determinism, the idea that everything that happens must happen as it does and could not have happened any other way, and atomism, the idea that the world is made up of entities whose qualities are independent of their relations with other entities, are fundament components of classical mechanics. Atomism is also central to the concept of mind developed in John Locke’s An Essay Concerning Human Understanding, published (1690) three years after Newton’s Principia. Locke’s general conception of the human mind became commonplace among 18th-century philosophers, so when Adam Smith came to write the foundational text for economics, The Wealth of Nations (1776), he had the example not only of Newton’s material atomism, but also of Locke’s extension of it to an altogether

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My evening with Joan Robinson and the Tractatus

October 25, 2017

From Edward Fullbrook
The General Theory of Employment, Interest and Money was the first book I ever read with pleasure.  I was 22.
From age five to sixteen the school system had me classified as borderline mentally retarded.  My luck changed in my penultimate year of high school when a non-conformist English teacher gave me the chance to pretend I was not mentally deficient.  She also taught me how to write a sentence, after which, inflated with fantasises of normality, I taught myself how to read textbooks and take exams, and soon became academically proficient and for a long time thereafter very neurotic.
As an undergraduate I cut classes as often as I attended them and waited till the night before an exam to open the textbook.  Sometimes I only managed a C but in economics it was

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Suspension of my blog “RussEurope” by OpenEdition

September 30, 2017

From Jacques Sapir
Dear all, and Open Edition have suspended the access to my blog RussEurope. I can’t write anymore on my blog. In a short letter posted to my blog the Open Edition director, Mr Marin Dacos, explains that this measure is a reaction to the fact my last post are no more “academic”. Actually, I posted various kind of paper, from long technical papers to short pieces since the very beginning of my blog. Hence a post dating from September 22nd 2012 giving a good example of the “political” content of some posts of mine (
The accusation of using the blog as a pure political space is false and actually masking the fact that it is impossible to write in economics and political science without getting involved in political

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Piketty et al. and Trumpism

July 21, 2017

From Edward Fullbrook
It seems generally agreed that populism tends to rise up after a prolonged period in which governing elites have blocked from public discussion the declining economic welfare of a significant proportion of the population. These declines take two forms, usually simultaneously and interdependently:
A decline of income and wealth in absolute terms and/or relative to the elites and their agents.
A decline in key characteristics of employment through time (quality, security, real and relative wage levels) creating persistent high level of unemployment.
Though the latter is interdependent with the former, the real level of unemployment can be hidden. Elected elites and their patrons have a strategic interest in holding back public awareness and discussion of both

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The counterintuitive problem

June 14, 2017

From Edward Fullbrook
Scientific education entails taming the authority of one’s intuition.  Responsible citizenship in a democracy may entail it as well.
Keynes argued that markets often create inaccurate expectations of economic reality which people then act upon thereby changing reality.   This reflexivity that Keynes identified as central to capitalist markets is the opposite of the basic process described by traditional economic theory, both in Keynes’ day and in our own, whereby it is assumed that market expectations are determined by market reality rather than one of that reality’s determinants.
For most people Keynes’ theory of market expectations, like his theory of aggregate demand, is counterintuitive, and therefore difficult to elucidate and popularize sufficiently to

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Why a global disaster that could easily have been prevented took place.

April 18, 2017

From Edward Fullbrook
Steve Keen has a new book out: Can we avoid another financial crisis?  Keen, as you probably know, was one of those economists – Nouriel Roubini, Dean Baker, Ann Pettifor, Michael Hudson, Wynne Godley and others – who warned well in advance that the Global Financial Crash was coming if preventive measures were not taken.  How did these economists clearly see the crash coming when neoclassical economists did not, not even the day before it happened?  Keen’s new book reminds me that a few years ago in an interview I offered an explanation when answering the following question.

The first distinction you draw is that the old paradigm (OPE) is anti-pluralist (as in classical physics), while the new paradigm (NPE) is pluralist (as in modern physics). Can you give me a concrete example or two that illustrates what this means?
Of the ten points that I listed to distinguish between OPE and NPE, the most important is the first: monism versus pluralism.  Why?  Because it is this choice that sets down the general framework under which the pursuit of knowledge is conducted.  And this choice, in terms of its effect on the advancement of knowledge and thereby human welfare, is, as I will illustrate, absolutely enormous.
There is a famous quote from Albert Einstein that points to the reason why for the advancement of science this choice is so critical.

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Fake pluralism

January 11, 2017

As a means of fending off criticism of its autism, of further concealing its ideological role (see below), of diverting calls for pluralism and, perhaps most of all, just as a pastime, economics’ Neoclassical mainstream plays a game of relaxing the assumptions. It loosens one or two assumptions around the edges of the theory and then does a bit of analysis. This is no better than when viewing David to lean to the left or to the right or kneel or stand tiptoed as a means of seeing another side of Michelangelo’s masterpiece. Yet the whole mainstream project is now so infected with this methodological dilettantism that it seems necessary to spell out the difference between fake and real pluralism.  
Even more than with a word, the meaning of a concept is it use. The meaning of a word depends upon the referent of the sentence, which as Wittgenstein noted is a “state of affairs” (Tractatus Logico-Philosophicus 2.01, 2.001, 2.02); likewise the meaning of a concept depends on the framework in which it appears. For example, take something so simple and straightforward as the concept of economic growth defined in terms of Gross National Product.

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Shaky Assumptions

July 19, 2016

All models by necessity distort reality in one way or another.  A sculptor, when modelling in stone or clay, does not try to clone Nature; he highlights some things, ignores others, idealizes or abstracts some more, to achieve an effect. Likewise a scientist must necessarily pick and choose among various aspects of reality to incorporate into a model.  An economist makes assumptions about how markets work, how businesses operate, how people make financial decisions.  Any one of these assumptions, considered alone, is absurd.  There is a rich vein of jokes about economists and their assumptions.  Take the old one about the engineer, the physicist, and the economist. They find themselves shipwrecked on a desert island with nothing to eat but a can of beans.  How to get at them?  The engineer proposes breaking the can open with a rock.  The physicist suggests heating the can in the sun, until it bursts.  The economist’s approach: “First, assume we have a can opener. . . .”
The assumptions of orthodox financial theory are at least as absurd, if viewed in isolation.  Consider a few:
1) Assumption: People are rational and aim only to get rich.  . . . . 
2) Assumption: All investors are alike.  . . . . 
3) Assumption: Price change is practically continuous.  . . . . 
4) Assumption: Price changes follow a Brownian motion.
Benoit B.

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