Real-World Economics Review

from Lars Syll The defeat and suppression of the classical perspective — with its evolutionary, institutionalist, and developmental descendants — cleared the way for a dogmatic economics that exalted self-regulating competitive markets … As we have seen, this perspective soon ran into serious — but temporary — difficulties with the Great Depression, mass unemployment, and the rise of Keynes, whose theory is revived in Harvard University economist Stephen A. Marglin’s Raising Keynes …...

from Radhika Desai and Michael Hudson  As a new Cold War against China began, it was clear that the pandemic was altering the international balance of power fundamentally. For former US Treasury Secretary, Lawrence Summers, it was likely a “hinge of history”: “[i]f the 21st century turns out to be an Asian century as the 20th was an American one, the pandemic may well be remembered as the turning point”. It would erase 9/11 and 2008 from memory and rank alongside “the 1914 assassination...

from Lars Syll One of the limitations with economics is the restricted possibility to perform experiments, forcing it to mainly rely on observational studies for knowledge of real-world economies. But still — the idea of performing laboratory experiments holds a firm grip of our wish to discover (causal) relationships between economic ‘variables.’If we only could isolate and manipulate variables in controlled environments, we would probably find ourselves in a situation where we with...

from Shimshon Bichler and Jonathan Nitzan This note contextualizes the ongoing U.S. policy shift toward greater ‘regulation’ of large corporations. Cory Doctorow (2021) and Blair Fix (2021) are optimistic about this shift. We doubt it. The Limits of Power Large U.S.-based corporations are extremely powerful, but the growth of their power has decelerated considerably. Figure 1, updated from our ‘Corporate Power and the Future of U.S. Capitalism’ (Bichler and Nitzan 2021), shows the...

from Peter Radford My summer of research is almost over.  The season here in Vermont is changing and the view from our window will soon be dominated by the brilliant autumnal colors our region is famous for.  All is both regular and well. Sort of. Perhaps there’s something in the water down there in New York.  There are rumblings of life in economics.  The long sclerosis inhibiting the emergence of theories that explain rather than re-invent reality might just be close to loosening its...

from Blair Fix I recently had a lively Twitter debate with Jonathan Nitzan, Shimshon Bichler and Cory Doctorow1 about the future of big corporations in the United States. The debate was prompted by Doctorow’s piece ‘End of the line for Reaganomics’, which I reposted on capitalaspower.com. Doctorow argues that we may be witnessing a sea change in the way governments treat big corporations. Since the Reagan era, the US government has taken most of the teeth out of antitrust enforcement. The...

from Dean Baker The Democrats have proposed paying for part of President Biden’s Build Back Better plan with $500 billion in savings on what the government will pay prescription drug companies through Medicare and other public programs over the next decade. The country currently pays the pharmaceutical industry over $500 billion annually for its products. If we look at spending over the next decade, and like the news media, ignore that it’s over ten years, we would say that we will give...

from Lars Syll Ninety years ago Keynes could congratulate Great Britain on finally having got rid of the biggest ”barbarous relic” of his time — the gold standard. He lamented that advocates of the ancient standard do not observe how remote it now is from the spirit and the requirement of the age … [T]he long age of Commodity Money has at last passed away before the age of Representative Money. Gold has ceased to be a coin, a hoard, a tangible claim to wealth … It has become a much more...

from Andri Stahel  and RWER current issue  What does modern economics have in common with medieval theology? At a first glimpse, very little. After all, economics presents itself as a science, based on the same mathematical principles and ideals of objectivity and empiricism on which mechanical physics is grounded and which, as is known, replaced medieval theological description of reality. Moreover, they apply to different subjects: heavenly, spiritual matters for theology, earthly...

from Dean Baker Paul Krugman’s column this morning raises the issue of whether China is on the edge of seeing a real estate bubble burst, in the same way that Japan saw its real estate and stock bubble burst in 1990. Krugman points out that this did lead to slower growth for Japan, but it was not an economic catastrophe, as it still saw rises in GDP, relative to its working age population, that were comparable to the U.S. (I would add that one reason why Japan did not see more GDP growth...