Real-World Economics Review

from Ken Zimmerman Inequality in human societies has always existed. When it become extreme (that point varies by society and historical circumstances) the society either collapses completely (e.g., revolution, war, failure of basic services, famine) or undergoes changes in its basic framework. Ancient Rome, for example, nearly collapsed when corruption in government and economics (particularly appalling poverty) combined with refusal of its citizens (particularly the wealthy) to put...

from Asad Zaman Global experience shows that market economies create massive inequalities, enriching the top one per cent, while leaving the bottom of the population far behind. One key to prosperity is to provide productive jobs for all who would like to participate in the production process. Unfortu­nately, contemporary macroeconomics, which was blind to the possibility of the global financial crisis, is not equipped with the ideas and tools required to create full employment....

from Dean Baker Moore said it would take the form of “the biggest sell-off in the stock market in American history.” Since stock is overwhelmingly held by the wealthy, if the market plunges, it means that wealthy will have relatively less wealth. It is important to remember that the stock market in principle represents the value of future after-tax corporate profits. This means that any measure that should increase after-tax profits, such as the Republicans’ corporate tax cut, should lead...

from Dave Taylor . . . most heterodox critics of the mainstream are thinking “macro” – of the economy as a whole – whereas most mainstream economists are still thinking “micro”, assuming what is true of all is true of any, and confusedly suggesting the many different things true of any and at different times are always true of all. Consider the analogy of ships in an exogenously choppy sea. The equilibrists are right, the waves will even out; and the rationalists are right: the navigators...

from Lars Syll A couple of years ago yours truly had an interesting discussion — on the Real-World Economics Review Blog — with Paul Davidson on ergodicity and the differences between Knight and Keynes re uncertainty. It all started with me commenting on Davidson’s article Is economics a science? Should economics be rigorous? : LPS: Davidson’s article is a nice piece – but ergodicity is a difficult concept that many students of economics have problems with understanding. To understand...

from Ken Zimmerman  “The propositions of economic theory are derived by logical reasoning from these assumptions in exactly the same way as the theorems of geometry are derived from the axioms upon which the system is built.” Which without fail ends with the conclusion you set out, “A theory as an internally consistent system is valid if the conclusions follow logically from its premises, and the fact that neither the premises nor the conclusions correspond to reality may show that the...

from Lars Syll Operations Research does not incorporate the arts and humanities largely because of its distorted belief that doing so would reduce its objectivity, a misconception it shares with much of science. The meaning of objectivity is less clear than that of optimality. Nevertheless, most scientists believe it is a good thing. They also believe that objectivity in research requires the exclusion of any ethical-moral values held by the researchers. We need not argue the desirability...

from Dean Baker U.S. trade policy is truly fascinating. Probably more than in any other area of public policy, trade agreements are structured by corporate interests behind closed doors. Then when a deal is produced, the establishment media and economists insist that we have to support the deal behind the important principle of “free trade.” The opponents are treated as knuckle-dragging Neanderthals who just can’t understand how the economy works. We got another episode in this...

from Rob Reno Mathematics is to science what a hammer is to a carpenter. It is a man-made tool (a language invented as needed) with an uncanny power to accurately measure physical reality. But it is not the only tool in a scientists toolbox, albeit an essential one and indispensable for creating an intersubjective verifiable intelligent discussion of the material aspects of the cosmos. But it is not necessarily a part of the higher realization of truth. The recognition of emergent...

from Lars Syll Not exactly the story that Mankiw et consortes tell you. But Heiner Flassbeck did.