Critique of Mainstream Economics – Page 4

What is missing in the 鈥�33 Theses for an Economics Reformation鈥�

April 13, 2018May 1, 2018 Erik ReinertLeave a comment

file-20180328-109182-179osyu — Andrew Simms (New Weather Institute), Sally Svenlen (RE student), Larry Elliott (Guardian), Steve Keen (Debunking Economics) and Kate Raworth (Doughnut Economics) symbolically nail the 鈥�33 Theses鈥� to the door of the London School of Economics in December 2017. .

By Erik Reinert (Talinn University of Technology) and (Universitat Oberta de Catalunya)

On the occasion of the 500th anniversary of Martin Luther鈥檚 Reformation, were formulated by Rethinking Economics and the New Weather Institute. The document was symbolically nailed to the door of the London School of Economics In December 2017 and , and was supported by an impressive list of over 60 leading academics and policy experts. The initiative offers a rare and most welcome refreshing message from the House of Economics.

Several elements in the theses are long overdue 鈥� for example, the existence of planetary limits, the superiority of political deliberation over economic logic, the appreciation of the role of uncertainty in economic predictions, the non-independence of facts and values when economic thoughts are formulated, the warning against over-reliance on modelling, econometrics and formal methods. Also important is the indication that both growth and innovation need to be conceived with a desirable end in sight, one which can be associated with material and spiritual progress 鈥� rather than with misery, inequity and inequality. It is finally all important that in the teaching of economics itself the history and philosophy of economics should be taught, together with all economic theories: not just the family tree of mainstream economics.Read More »

Market Forecasting: A Sensitive Practice at the Heart of Neoliberal Capitalism

March 30, 2018March 29, 2018 stefanleinsLeave a comment

This article was originally posted on .

Since the emergence of modern financial markets, financial analysts have played a critical role in producing visions of 鈥渢he economy鈥� and its future development. As experts, they analyze market developments and predict future scenarios that enable other financial market participants to speculate on the rise or fall of stock prices, the success or failure of particular investment products, and the growth or decline of entire national economies.聽The substance of the analysts鈥� valuation and forecasting practices is, however, heavily disputed among economists. In neoclassical economic theory, the assumption that markets are informationally efficient has challenged the legitimacy of the work of financial analysts since the establishment of the efficient market hypothesis as a central paradigm in the mid 1960s. Alternative schools of thoughts 鈥� such as new institutional or behavioral economics 鈥� have criticized this paradigm. However, they have also argued that the degree of uncertainty, which is inherent to financial markets, makes prediction impossible.Read More »

Advancing a Research Agenda of Scarcity, Abundance, and Sufficiency

June 18, 2017June 18, 2017 adeldaoud7 Comments

Sidor fra虋n Daoud, thesis with cover.jpg The marginalist revolution in the late nineteenth century marked the beginning of the end of classical political economy and the birth of what came to be known as neoclassical economics (). All three pioneers of marginal utility theory鈥擟arl Menger (), William Jevons (), L茅on Walras () 鈥攔eferred to scarcity as the starting point for economic analysis. Through the work of these pioneers, especially Menger鈥檚, the centrality of scarcity became a core premise for the advancement of contemporary neoclassical economics (see Hayek 2004:19; Robbins 1998:277). As a result, virtually every neoclassical economic textbook refers to scarcity鈥攅ven though the field of economics is becoming increasingly differentiated.

I have argued in my research that scarcity problems are, and will remain, an important sub-set of problems, but we need to include sufficiency and abundance problems as well (Daoud , , , , , ). Under scarcity, economics will give us insights about how people optimize their behavior to get as much as possible out of their limited resources. Neoclassical economics is mainly interested in what we can call allocation problems under a scarcity assumption. If actor A has a set of resources R, that is scarce in relation to fulfilling a set of wants W. Neoclassical economics tells us that a rational actor will optimize his or her resources in such a way that person can derive as much utility U as possible given the circumstances. These types of problems are central to many social science issues鈥攖hey face governments allocating a limited budget to a myriad of popular demands, they face the individual in deciding if he or she should go to university or take a job. As social scientist, we need to keep analyzing these situations.Read More »

200 Years of Ricardian Trade Theory: How Is This Still A Thing?

April 23, 2017December 29, 2017 Ingrid Harvold Kvangraven9 Comments

On Saturday, April 19th 1817, David Ricardo published The Principles of Political Economy and Taxation, where he laid out the idea of comparative advantage, which since has become the foundation of neoclassical, 鈥榤ainstream鈥� international trade theory. 200 years 鈥� and lots of theoretical and empirical criticism later 鈥� it鈥檚 appropriate to ask, how is this still a thing?[1]

This week we saw lots of praise of Ricardo, by the likes of , , and . Mainstream economists today tend to see the rejection of free trade implicit in Trump and Brexit as populist nonsense by people who don鈥檛 understand the complicated theory of comparative advantage (鈥溾€�, as Paul Krugman once called it in his explanation of why non-economists seem to not understand comparative advantage). However, there are fundamental problems with the assumptions embedded in Ricardo’s theory and there’s little evidence, if any, to back up the Ricardian claim that free trade leads to balanced trade. On this bicentenary, I therefore think it鈥檚 timely to聽revisit some of the fundamental assumptions behind Ricardo鈥檚 theory of comparative advantage, that should have led us to consider alternative trade theories a long time ago. Read More »

What Can We Learn from Alternative Theories of Economic Development?

January 29, 2017January 29, 2017 Ingrid Harvold Kvangraven7 Comments

As people across the world are struggling to understand the rise of Trumpism, anti-establishment and anti-free trade movements, (Tallinn University of Technology), (Jawaharlal Nehru University) and (Tallinn University of Technology) have put together an impressive that can help make sense of what’s going on. As the field of Economics has become increasingly narrow since the 1970s, many important scholars and theories have been excluded from the field, and since forgotten. This Handbook presents rich historical accounts and ideas that can help explain economic and social development, and is a much needed attempt to correct for the existing biases in the field of Economics.Read More »

Beyond the Third Moment in Law and Development: New Insights from Legal Political Economy

November 28, 2016March 31, 2018 jmoudud5 Comments

This blog post provides insights from what I have come to call the legal political economy perspective to critique the World Bank and neoclassical economics more generally. At the heart of what has been called the World Bank鈥檚 Third Moment in Law and Development is the claim that government involvement is necessary to eliminate 鈥渕arket failures鈥� and promote both business development and social justice.

In contrast to the mainstream Law and Economics (L & E) approach, which informs the Third Moment, my position, derived from the Critical Legal Studies (CLS) tradition (and its historical ancestor, Legal Realism), is:

Property is fundamentally a bundle of rights and thus property ownership at its core entails coercive power struggles between rivals and between owners and non-owners; coercion at its core.
The interrelatedness of law and power relations (鈥淚f the program of Realists was to lift the veil of legal Form to reveal living essences of power and need, the program of the Critics is to lift the veil of power and need to expose the legal elements in their composition鈥� (, 109)). These power struggles over economic outcomes occur within the context of background laws that determine property, contracts, and torts.
The notion of an economic seesaw in with potential for instability in property and contractual relations.
If the goal is to understand how legal structures shape power struggles then the question becomes how are the laws themselves to be determined? Following the CLS perspective, I would emphasize the role of ideational factors determining the intellectual underpinnings of neoliberal policies鈥攆actors that have consciously been created by the financiers of the L & E tradition.

Rethinking the Law and Economics Paradigm

November 23, 2016November 28, 2016 mohamedobaidy3 Comments

url

鈥�As a step toward that ideal it seems to me that every lawyer ought to seek an understanding of economics. The present divorce between the schools of political economy and law seems to me an evidence of how much progress in philosophical study still remains to be made. In the present state of political economy indeed, we come again upon history on a larger scale, but there we are called on to consider and weight the ends of legislation, the means of attaining them, and the cost.鈥� (Oliver Wendell Holmes; 1897) [1]

The World Bank鈥檚 policy focus shifted in the 1990s from a market-oriented paradigm to other issues such as social justice, poverty reduction and 鈥渕arket failures鈥�, where institutions had to play a greater role [2]. Known as the Post-Washington Consensus or the Third Moment in Law and Development, this new paradigm emphasizes the importance of 鈥済ood governance鈥�, the implementation of property rights for economic growth, and makes the following proposition: well-defined and formalized property rights lead to market efficiency, economic growth and development. Hence, since then the establishment of the 鈥渞ule of law鈥� has become the new goal to reach for developing countries.

However, this Law and Economics paradigm relies on a narrow set of theoretical assumptions and is heavily influenced by neoclassical views of the state, the market and overall competition. But this framework raises some questions: (a) are these assumptions empirically valid, namely is the implementation of property rights a necessary condition for economic growth and development? And (b) are 鈥減erfect competition鈥� and 鈥渕arket failures鈥� reliable concepts one should start from to cope with development 鈥� if by such term we mean a social and economic process that will ultimately increase human well being?Read More »

Africa: Why Western Economists Get It Wrong

September 23, 2016September 23, 2016 grievechelwa2 Comments

2-3-_unpacking_african_numbers_10070552376 Morten Jerven, image via Wikimedia

Development economics as a field of study was formally launched in the 1950s by the Afro-Caribbean economist who, out of necessity, wanted to understand how his own country, Saint Lucia, could transform from an agro-based economy into a modern industrial state (later, in 1979, Lewis was awarded the for this work, the only black person to have won the prize to date). For Lewis, the key to providing a satisfactory answer to the problem of underdevelopment lay in studying those societies as they were and not in comparing them to some mythical ideal. Saint Lucia, like all developing countries, had a lot of underemployed labor in its agricultural sector. The question was how best to marshal this valuable resource into driving industrialization.

Sadly, development economics has moved away from Lewis鈥� pioneering contribution of studying poor countries on their own terms. For example, today鈥檚 development economists explain Tanzania鈥檚 lack of development as stemming from its inability to be more like Sweden. This way of studying development, termed the 鈥渟ubtraction approach鈥�, has led us down a dark alleyway where there is more confusion than elucidation. That, at least, is the charge leveled by economic historian in his book published in 2015, but still circulating and prompting debate in academia and amongst practitioners.

黑料社区