Real-World Economics Review

from Katharine Farrell    If economics is indeed concerned with how humankind goes about sustaining its own life, day to day, then representing that complexity must be built into the ontology of economic models.  Adjustments to variables, parameters and reference data can all contribute to improving models, but they do not necessarily address the ontological limitation that, in the original liberal theory “representation, [read that of Jevons and Walras] the economic process neither...

from James Galbraith Economics is a policy discipline. It is engaged with the problems, large and small, of social organization and the general good. As such it co-evolves with circumstances. It is historically contingent. The application of economic ideas to specific problems under specific circumstances may succeed or fail, and in the latter case, people with different ideas normally rise to prominence. Capitalism is an economic system whose characteristics and problems have preoccupied...

from Peter Radford Brian Arthur tells us that technology most often advances in the form of domain shifts.  In his narrative technologies cluster in related groups he calls domains.  So individual technologies might advance through a tweak here or there, but the economy advances through a shift from one cluster of technologies to another. I like this idea.  Especially when we then broaden the topic to use technology as a background against which we view a particular slice of history....

This graph shows how in the USA the share of total net worth held by the 50th to 90th wealth percentiles has decline drastically in the last two decades. https://www.trustnodes.com/2021/07/11/americas-middle-class-drastically-shrinks

from Lars Syll Few volumes in contemporary economics have been more lauded, and have summarised a zeitgeist, as much as Abhijit Banerjee and Esther Duflo’s Poor Economics … The implicit premise of the book is that interventions that work in one place can be expected to work in another. This presumes not only that the results of such “micro” interventions are substantially independent of the “macro” context, but also that a focus on such interventions, as opposed to those which reshape...

from Dean Baker The development of the new variant, which was first discovered in South Africa, can be attributed to our failure to open-source our vaccines and freely transfer technology, contrary to claims from the pharmaceutical industry and its political allies. Their big talking point is that South Africa currently has more vaccines than it can effectively use at the moment. This claim ignores two important points. The first is that we really don’t know where this strain originated....

from Asad Zaman A previous post Quotes Critical of Economics collected assorted quotes which are useful in writing up different kinds of critiques of economics. In addition, I collected quotes from Romer’s Trouble With Macro which are sharply critical of economics. In terms of the “Loyalty, Voice, Exit” paradigm, I look for “Exit” quotes, which suggest that we need to throw out the entire discipline and rebuild on new foundations; for a proposed alternative, see “Uloom-ul-Umran: An...

from Lukas Bäuerle and PNLE The most powerful and at the same time dangerous aspect of neoliberal thought is its conception of economic reality as governed by a separate sphere of absolute truths. In aligning with a long-standing tradition of perennial philosophies (lat. perennis: constant, lasting), neoliberalism has set out to reconfigure our world according to an image that was dead from the very outset. The myth neoliberalism is operating on philosophically is the idea of a world...

from Gerald Holtham (originally a comment) Radford’s points are true but the microfoundations movement in macroeconomics is guilty of greater intellectual crimes than merely attempted reductionism. It is not as if the foundations are built on extensive empirical study of the decision-making elements in an economy. We have a representative consumer who behaves according to the axioms of rational choice under conditions of certainty equivalence. Similarly there is a representative firm...

from Lars Syll Anyone who accepts the Neoclassical definition of ‘rational’ has, to some significant degree, lost touch with reality. So, I was expecting an ‘irrational’ reaction from this young zealot to my talk … He tried to engage me in further debate after the session, and shouted ‘But we have to make some simplifying assumptions!’ at me as I left the seminar room. My riposte, cast over my receding shoulder, was ‘Mate, you have to learn the difference between a simplifying assumption...