Real-World Economics Review

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...

from Peter Radford Kolmogorov, I think, hit the nail on the head when he said: “At each given moment there is only a fine layer between the ‘trivial’ and the impossible.  Mathematical discoveries are made in this layer.” He might just as well have said that life itself is discovered in this layer.  But let’s not get ahead of ourselves. A few days ago I tried to point our way towards an acceptance of a certain humility.  I used a couple of quotes, one from Durer and one from Soros, to...

from Lars Syll We have already shown that deficit spending increases our collective savings. But what happens if Uncle Sam borrows when he runs a deficit? Is that wht eats up savings and forces interest rates higher? The answer is no. The financial crowding-out story asks us to imagine that there’s a fixed supply of savings from which anyone can attempt to borrow … MMT rejects the loanable funds story, which is rooted in the idea that borrowing is limited by access to scarce financial...

from Yoshinori Shiozawa (originally a comment) At around the same time that Fred Lee and Lars Syll visited the University of California and talked long on Sraffa with Axel Leijonhufvud, a paper by Avi J Cohen appeared in Eastern Economic Journal: “The Laws of Returns under Competitive Conditions”: Progress in Microeconomics since Sraffa (1926)? (Vol. 9, No. 3, 1983, pp. 213-220). It was a short paper that counts only eight pages, but a decisive criticism of economics of perfect...

from Peter Radford I know, this is one of those more philosophical moments.  In my case prompted by my continued meditation on the deleterious effects of a belief in utopias.  Such beliefs seem always to end up with authoritarian consequences.  People can all too easily get swept up by the illusion of having solved life’s great mysteries.  It’s been going on for ages.  It appears to be a commonly held human attribute.  We need, apparently, to think we understand things that are,...

from Ikonoclast  (originally a comment) The whole idea that economics and the economy exist as a self contained discipline and a self-contained system respectively is absurd. First, there is a natural system, the biosphere, which contains economics activity and upon which economic activity is dependent. Second, there is politics and force (power) which condition economic activity. In relation to the second, Chomsky writes of: “…American Liberalism, reiterated… in the Clinton doctrine,...

from Lars Syll Many economists respond to criticism by saying that ‘all models are wrong’ … But the observation that ‘all models are wrong’ requires qualification by the second part of George Box’s famous aphorism — ‘but some are useful’ … The relevant  criticism of models in macroeconomics and finance is not that they are ‘wrong’ but that they have not proved useful in macroeconomics and have proved misleading in finance. When we provide such a critique, we often hear another mantra to...

from Dean Baker The explosion of inequality over the past four decades is appropriately a major focus of the political agenda for progressives. Unfortunately, policy prescriptions usually turn to various taxes directed at the wealthy and very wealthy. While making our tax structure more progressive is important, most of the increase in inequality comes from greater inequality in before-tax income, not from reductions in taxes paid by the rich. And, if we’re serious about reversing that...

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from Lars Syll Clearly, it is possible to interpret the ‘presuppositions’ of a theoretical system … not as hypotheses, but simply as limitations to the area of application of the system in question. Since a relationship to reality is usually ensured by the language used in economic statements, in this case the impression is generated that a content-laden statement about reality is being made, although the system is fully immunized and thus without content. In my view that is often a...