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Peter Radford

Peter Radford

Peter Radford is publisher of The Radford Free Press, worked as an analyst for banks over fifteen years and has degrees from the London School of Economics and Harvard Business School.

Articles by Peter Radford

Friedman’s bad turn

September 14, 2020

From Peter Radford
Today is quite an anniversary.  It is fifty years since Milton Friedman’s article on the responsibilities of corporate management appeared in the New York Times.  Whilst it was not the only argument in favor of the shift towards a narrow focus on shareholder value, it was certainly one of the more persuasive and influential.  I have long held that Friedman’s reputation was ill-deserved because of his overt ideological bias and thus lack of any pretenses to scientific thought, but I realize he is well respected and protected by his peers.  His academic peers keep pointing us to his many “contributions” and accomplishments in order to prevent too dramatic a revision of his stature.  I prefer to reflect on the enormous impact his relentless pursuit of libertarian

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Pandemic Musings

September 9, 2020

From Peter Radford and WEA Commentaries
I have been digging around a fair bit lately trying to understand the role of economics in the extent of the inequality being laid bare by the pandemic — more on that later.  A few interesting nuggets worthy of a quick note popped out along the way.
Thomas Phillipon opens chapter one of his recent book this way:
“The big debates in economics are about growth and inequality.  As economists, we seek to understand how and why countries grow and how they divide income among their citizens.  In other words, we are concerned with two fundamental issues.  The first is how to make the pie as large as possible.  The second is how to divide the pie.”
Presumably his approach ignores the ugly dismissal of inequality by the likes of Lucas who said it was of

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The missing middle?

August 11, 2020

From Peter Radford
A couple of things before we get started:  when I say that economics is not history, I mean exactly that.  Geology is not history either.  That is not the same as saying that economics ought pay no heed to history.  Let’s not get confused over that.  Economics is its own discipline with rules and territory that its exponents determine.  That might frustrate or annoy some of us who would like to think of it more broadly, but it’s up to us to find doors to open to help in that broadening.
Fortunately there are plenty of such doors because the current core of economics is rather narrow with respect to the full range of interesting topics or phenomena that appear to be economic.  In its endeavor to become a more formal activity economics has ceded swathes of territory to

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Damn facts

July 31, 2020

From Peter Radford
It seems appropriate to mention increasing returns today.  After all, this is the day on which several of our modern titans of industry are appearing before Congress to respond to the concerns raised by the gargantuan size that their respective businesses have grown to become.  The CEOs of Apple, Amazon, Google, and Facebook are all under the gun to defend the enormous clout that each wields in the modern marketplace.  Today is the culmination of a long investigation by Congress into the problems, or perceived problems, that these four companies represent.  Whatever the outcome the simple fact that the four are being clustered into one band of rogues taints them with an aura of indecency we normally associate with the pharmaceutical, banking, or tobacco industries.

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Ontology, framing, and all that jazz

July 22, 2020

From Peter Radford
The collection of papers edited by Uskali Mäki and published in 2001 under the title: “The Economic World View, Studies in the Ontology of Economics” seems to be quite pertinent given the reaction to my recent comments on complexity.  It is a wonderfully rich source of thought about what, exactly, economics is, which is something that seems to confound a great number of people.  Quite often I get the sense that some critics are upset with economics because it isn’t physics, or chemistry, or, more controversially, biology.  No it isn’t.  Nor are they economics.  Hopefully we all agree on that.  Nor is it history or any other thing.  It is economics.  Which is something that has coalesced around certain ideas over the last couple of hundred years.  Quite what it is,

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More Complexity

July 14, 2020

From Peter Radford
Economists have been talking about complexity for a very long time.  This may surprise many of you given the state of mainstream economics, but it is true.  A good place to discover a preliminary history of complexity in economics would be the short volume edited by David Colander published in 2000.  The papers it contains were all presented at a History of Economics Society Conference in 1998.  Colander provides a good introduction and tries to put complexity into the context of economics since its inception.  There are times when, in my opinion, he errs a little too much in favor of the older methodologies as if he finds it difficult to shed old habits himself.  Nonetheless the papers in the volume cover a wide and interesting territory, including the similarities

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Complex ideas

July 9, 2020

From Peter Radford
The economy as a sea of information, constantly churning, far from equilibrium, with computation its key activity.  It is complex.  It is inscrutable to any method that fails to accommodate its multitude of layers, interconnections, feedback loops, and constant dynamism.  Since reading Ilya Prigogine ages ago I have never understood how anyone could not view the economy through such a lens.  The interplay between creative forces needed to sustain life and the constant dissipation or disordering that inevitably follows upon such creativity is, to me, the central theme being played out in an economy.
Given this, attempts to contain analysis within a neat box simply defy reality.  The instances of an economy that are unstable and out of equilibrium far outnumber,

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Carter on Keynes

June 27, 2020

From Peter Radford
The biography of Keynes by Zachary Carter ends on a decidedly wimpy note.  The concluding chapter is devoted to the financial crisis of 2008 and the subsequent half-hearted sort-0f-Keynesian policy response.  Whilst Carter seems fine with his condemnation of neoliberal policies and is clear about the abject failure of the notion that financial markets act in either a self-correcting or a rational manner, he then goes on to ask why Keynesianism has proven to be so politically weak:
“But pointing the finger at neoliberalism raises uncomfortable questions for Keynes and his defenders.  Why has Keynesianism proven to be so politically weak, even among ostensibly liberal political parties and nations?  The Keynesian bargain of peace, equality, and prosperity ought to

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Racism in America

June 6, 2020

From Peter Radford
I don’t often comment on politics here, but I want to record my thoughts as I watch the extraordinary convulsions running through America at the moment.
First: racism is a basic fact of American life.  It has been apparent to me since I moved here.  White America simply doesn’t want to be forced to engage with it, so it ignores all the plentiful evidence that it exists.  It is too painful and too difficult to deal with, no matter how sympathetic people are, so they want to avoid the topic.  They prefer, instead, to pretend that it is an historic artifact and not a current one.  Worse, when outrage hits the streets, as it has recently, a good proportion of the white population gets upset: they believe that there has been sufficient effort made to heal the breach, and

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More words that matter: capital and labor – Part one

June 4, 2020

From Peter Radford
I was having a conversation this morning in which I argued the word “capitalism” has no meaning.  Or, perhaps, it has too many meanings.  It is a fraught one as well.  People get vexed in its presence.  I ought also have said the same thing about the word “labor”. Both words are relics of the early years of industrialization when they meant more to those throwing them around back then.  In our contemporary economy they mean rather less.  To me they reference things quite different from what they are in typical economic thinking, they are place-holder words for a power relationship that exists in a modern economy between employer and employee.  That relationship is better described in a corporate context, in which case the notorious “capitalist” slides from view to be

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Two definitions

June 1, 2020

From Peter Radford

It is always interesting to read what people say in response to what you write.  It is also always educational.  I enjoy the learning.
I recently wrote a short piece meant to be a little on the light side pondering the odd comparison of the use of the word essential in our vernacular understanding of it, and the way in which standard economic theory suggests we compute our various levels of worth.  I quoted J.B. Clark with respect to this latter point.  I made the point that Clark’s method is still the most well-worn within economic theory.
And then I was criticized for not reading enough economics to understand that there is no such thing as “economic theory”; there are, I was admonished, a large number of such theories, and that we are all entitled to pick and

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Two definitions

May 29, 2020

From Peter Radford
Are economists so befuddled by the elegance of their machinery that
words have lost all meaning?
Two definitions, one for ‘essential’ and the other for the way in which, according to economics, people are rewarded for their work.
In recent weeks we have become accustomed to calling someone an ‘essential worker’.  These are our most important people.  They are, if the dictionary doesn’t lie, indispensable.  They are extremely important.  They are key, crucial, vital, and needed.  They sound pretty darned special to me.  They must be doing things that, were they not doing them, would bring the economy to a screeching halt.
My goodness, they must be paid a lot.  Surely anyone who is a vital cog in the machinery is paid commensurately with that importance.
Not really.

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Pandemic musings

April 22, 2020

From Peter Radford
I have been digging around a fair bit lately trying to understand the role of economics in the extent of the inequality being laid bare by the pandemic — more on that later.  A few interesting nuggets worthy of a quick note popped out along the way.
Thomas Phillipon opens chapter one of his recent book this way:
“The big debates in economics are about growth and inequality.  As economists, we seek to understand how and why countries grow and how they divide income among their citizens.  In other words, we are concerned with two fundamental issues.  The first is how to make the pie as large as possible.  The second is how to divide the pie.”
Presumably his approach ignores the ugly dismissal of inequality by the likes of Lucas who said it was of no enduring interest.

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Here we go

March 30, 2020

From Peter Radford
We all thought that this morning’s announcement of the new claims for jobless insurance would be shocking.  The usual scuttle in the financial markets had been that we might see numbers well over 2,000,000, but the actual number soared even beyond that.  At 3,283,000 it is difficult to articulate what this means.  To put it in some sort of perspective, the previous week had seen 282,000 new claims, and the previous all-time record high of 695,000 had been set back in the recession of 1982.
So to say we are in unprecedented territory is something of an understatement.
And yet:
Even as Congress struggles to come to grips with its responsibility there are rumblings of dissent.  The $2 trillion bailout package voted through the Senate yesterday includes a strong addition

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Our “Scheidel Moment”?

March 25, 2020

From Peter Radford
We are all familiar with what a “Minsky Moment” is.  Or we should be given the disaster of the Great Recession.  Whilst it’s true that economics has bumbled along pretty much unaltered since this dark years of just over a decade ago, and, yes, I am aware of the rumblings around the discipline’s edges, others have taken a bash at looking at facts.
One of those people is Walter Scheidel who has given us a much needed historical context for our discussion about inequality.  In a nutshell his extensive study of the history of inequality suggests that elites will always, and everywhere, succeed in rigging society for their own gain.  Whether they bother to hide their efforts behind socially acceptable or ideologically logical drapes is of no consequence: elites will find

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Political Economy?

January 24, 2020

From Peter Radford
“American economics harbors fierce political debates over theory, methodology, and policy.  In practice and in comparative perspective, however, the main trend over the course of the twentieth century has been the standardization of training as well as a homogenization of evaluation criteria that has marginalized nonorthodox approaches.  After institutionalism was dethroned by the rise of mathematical economics and more politically challenging forms of intellectual heresy (such as Marxism) were relegated to peripheral institutions and sometimes to other disciplines, American economists installed themselves confidently within the neoclassical paradigm.  It is within this paradigm that the major intellectual debates have taken place. … In other words, the dominant

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A quick note: utopian or real?

May 4, 2019

From Peter Radford
Just a brief follow-on to my recent comments on the role of economics and its relationship with power and/or politics.
I pulled out my old copy of Polanyi’s “The Great Transformation” to refresh my memory of his position on the topic.  Recall that he talked about the way in which economic activity is embedded within the larger social and political fabric.  Mainstream economists must shudder at such a thought.  Isn’t economics superior and more “scientific” than politics?
In any case, in his introduction to the edition I have, Joe Stiglitz made a very useful comment that is worth repeating.  His words are:
“… the very utopianism of market liberalism is a source of its extraordinary intellectual resilience … its theorists can always claim that any failures were not the

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Inequality conundrums

May 1, 2019

From Peter Radford
What am I supposed to make of the Scheidel book?
Having waded through it I emerge with a grim pessimism — certainly more than when I started.
The basic thesis, as I mentioned a couple of weeks ago, is that periods of relatively greater equality are rare in history and that they ebb away soon after the re-establishment of elite control over the distribution of national resources.  Worse, the relative equality that is then undone was only the result of some disastrous episode such as a war, plague, state failure, or revolution.
Scheidel is relentless in his delivery of historical facts and examples.  He allows us no escape.  We are left with a feeling of hopelessness and a fear that all we can do is to mitigate, but never stall, an inevitable tide.  Humanity, it

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Notes on: power matters

April 12, 2019

From Peter Radford
Let’s start with a different approach:
Reality suggests there are many ways in which resources are allocated within an economy, not just one.  Economics, as it now exists in its mainstream or standard form, has withered to study just one: that which takes place in markets — where markets are strictly defined in such a way as to guarantee outcomes compatible with a certain ideological perspective.  As we have discussed before this trajectory for the discipline was deemed essential for the mainstream to construct a logical defense against the mid-1800s criticism of early industrial capitalism.  It continues to act as a defense against more contemporary critiques as well.  In so doing it adopted a hostile and denigrating stance to alternatives.  “Markets good, all

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Certain decisions

March 24, 2019

From Peter Radford
One of the books I keep close by on the shelf is Paul Glimcher’s “Decisions, Uncertainty, and the Brain: The Science of Neuroeconomics”.  It dates back to 2004 and is one of those books that provides a glimpse of what a dialog between economic theory and psychology might produce.  More to the point it explores the issues surrounding economic decision making at a deep biological level.  It thus adds substantially to the behavioral explanation of economic activity.
Apart from making me think about the practical problems of decision making, one of the additional benefits I had from reading the book was that it introduced me to David Marr whose work was instrumental in the development of neuroscience. a few decades back.
Here’s a very long quote taken from Marr’s book

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Krueger

March 20, 2019

From Peter Radford
I want to note, with sadness, the death of Alan Krueger who was one of those economists undaunted by the existence of the real world and all its complexity, and had the courage to present conclusions based on empirical work rather than on pure theory.
Others will write more cogently than I can about his impact on the profession, so I will simply note that his work, with David Card, on debunking the notion that a rise in the minimum wage will always cause higher unemployment ended the anti-social grip of textbook economics on a very key issue for tens of millions of his fellow citizens.  And ended that grip on a positive note.
So much did that research roil the ideologically pristine waters of mainstream economics that no less a character than Nobel prize winner James

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Uncertain

March 17, 2019

From Peter Radford
I am not quite sure what to make of the phrase “radical uncertainty”.  It pops up in most discussions of Keynes as being a critical, if not the critical, point of departure of his thinking from the silliness we know as classical economics.
Is radical uncertainty a redundant statement?  If something is uncertain, what is it that can make it radically so?  Surely the whole point of uncertainty is that we have no idea just how radical that lack of knowledge may be.  Worse, how do we identify uncertainty?  Isn’t it simply a concept that describes our inherent lack of knowledge?
In any case, it is precisely because of uncertainty that I find Keynes so appealing.  Whether or not he dealt with it correctly is another matter, but at least he was sensible enough to eschew the

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Anti-social economics

March 6, 2019

From Peter Radford
Some jumbled thoughts prompted by my recent reading of Robert Skidelsky’s book, “Money and Government”
Just how anti-social is economics?
I don’t think the question is difficult to answer: economics in its modern mainstream form is, at its heart, designed to undermine democratic government.  It is, therefore, profoundly anti-social.
The genesis of this antipathy towards democracy is all the way back in the beginning moments of economics as an intellectual discipline when its earliest proponents had a very specific objective, which was to build an argument for the elimination of politics from the social space we now refer to as the “market”.  This effort to de-politicize commerce was driven by the perceived need to rid it of the constant interference of whimsical and

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The times are changing – tax style

February 15, 2019

From Peter Radford
The following is part of a correspondence I had recently with a friend here in Vermont:
The purpose of increasing taxes on the wealthy is twofold: one is to raise revenue; the other is to prevent growing concentration of wealth.  I think the second of the two is the more important.  The American system of opportunity and so on was founded on society being more equal than it is [not equal, but more equal].  As wealth gets entrenched further each decade inequality erodes that system and would eventually replace it with an “old world” class system.  So taxes on wealth are a buttress for democracy as much as a source of revenue. 
As for the funding for the various social and infrastructure being bandied about at the moment: I see no reason for us not to augment the

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New year, old arguments

January 4, 2019

From Peter Radford
“The universe is made of energy, matter, and information, and while energy and matter are here by default, information needs to find ways to emerge.  This is not always easy”  Cesar Hidalgo, “Why Information Grows — The Evolution of Order, from Atoms to Economies”
Why is it the economics still restricts itself to constructing its narratives around concepts like labor and capital?  Neither are very precise.  Both are amalgams of more fundamental concepts.  And, even in the hands of the very best of economists, no combination of them gives us much confidence that they explain major economic phenomena such as the extraordinary growth seen over the past two hundred years or so.
I regularly lampoon growth theory for its lamentable inability to eliminate its reliance on

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A little knowledge

December 7, 2018

From Peter Radford
A little knowledge goes a long way.  That’s the saying, correct?  Well you’d never know it by looking at economics.  It’s hard to find knowledge anywhere.
Now I’m not being facetious about the gaps in economic theory.  Let’s all give the discipline its due and say that it has done a masterful job of getting as far as it has based on the limitations it bounds itself with.
It’s just that sometimes those limitations are glaring and can stop someone in their tracks if they’re not steeped in the dark arts themselves.
The results of those limitations are often a stunning avoidance of topics that are crucial to understanding a real economy.  Or at least they’re crucial to someone less determined to be so willingly limited.
I know, this is all vague.  Let me explain.
I have

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Elections matter … Right?

November 1, 2018

From Peter Radford

Elections Matter … Right?

Well, only if those being elected have an inkling of what their constituents actually want.  And it seems that, here in America at least, there is a considerable gulf between what those who are elected think are the key issues and what those who do the electing think of as the key issues.  The lack of overlap is distinctly upsetting.
We are constantly being told that the US is a relatively conservative nation.  This is why some of the more obvious social democratic remedies for our economic and social ills are considered as beyond the pale. They won’t fly here, we are told, because Americans won’t go for them.
This is odd when we think about how extremely popular programs like Social Security for retirees and Medicare for the elderly

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Those lumps matter

October 25, 2018

From Peter Radford
I feel bad for anyone who ventures into the social sciences.  Society is, after all, a devilishly complex subject.  Pull on any one string and you can convince yourself that you have understood it only to realize the next day that you missed the entire story.  It’s a maze: enter at your own risk.
Of course the flip side is that you can never be entirely wrong either.  Just about any half-baked idea has a smidgeon of truth hidden within it.
Take a look at mainstream economics.  It’s about as nutty as can be, based as it is upon axiomatic foundations that bring gales of laughter to anyone seriously interested in depicting or comprehending reality.  But we have whole academic departments filled with very clever people who cringe disbelievingly at the ridicule outsiders

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Corporations continued

October 18, 2018

From Peter Radford
The key to understanding corporations is to separate the economics from everything else.  We need to do this because the economics, as expressed in various theories of the firm, are usually entirely idealized and bear no resemblance to reality.  Economists, as usual, love to theorize about things that don’t exist but which they wished did exist.
But that may just be me being dismissively judgmental.
Corporations, far from being products of the free market, are actually franchises of the state.  They are sub-contracted jurisdictions.
To be a corporation is to possess a charter from the state.  That charter brings privileges not available to non-corporations. The most notable privilege is that the corporation is recognized as a distinct legal entity separate from any

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Who “owns” a corporation?

October 11, 2018

From Peter Radford
I have become quite a fan of David Ciepley this summer.  He, amongst many I am sure, is blazing a trail through the morass of corporate law and providing new insights into the role and status of the animal we know as the “corporation”.
Anyone with an interest in the role business plays in the economy needs to understand what Ciepley is saying.
In one talk he gave, at MacGill University, the introductory remarks by his host were illumination in themselves.  The occasion was a presentation and interdisciplinary discussion about the corporation and its role in shaping the social landscape.  The host rattled off the university departments and working groups involved in the discussion in his welcoming remarks.  There was no mention of economics.  The omission tells us all

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