Author Archive

Krugman on Piketty

April 15, 2014 11 comments

from Edward Fullbrook

Now Paul Krugman has gotten into the Piketty act.  The just published issue of the New York Review of Books features a long  review essay by Krugman (it’s open-access) on Capital in the Twenty-First Century.   Here is how it begins.

Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque—defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work. In particular, he and a few colleagues (notably Anthony Atkinson at Oxford and Emmanuel Saez at Berkeley) have pioneered statistical techniques that make it possible to track the concentration of income and wealth deep into the past—back to the early twentieth century for America and Britain, and all the way to the late eighteenth century for France.

Read more…

“Meritocratic Extremism”

April 14, 2014 2 comments

from Edward Fullbrook

Merijn is ahead of me as I have only just ordered Thomas Piketty’s Capital in the Twenty-First Century. The book is receiving masses of favorable media attention in the West, including from The New Yorker, the Financial Times, the Economist and The Observer where yesterday Piketty and his book occupied the cover of the newspaper’s review section. This attention is surprising given the book’s central message (one often expressed on this blog), that capitalism has now failed the world and that inequality is now accelerating at a very dangerous pace and that the rule of the ultra-rich over the everyone else is a form of gangsterism. The Observer’s feature writer went to the École d’économie de Paris to interview Piketty, and here are a couple of quotes.

Read more…

“The American Dream and the Boston Economics Party”

from Edward Fullbrook

An invitation to speak at next year’s ASSA annual conference in Boston has reminded me of attending the same event in Boston twenty years ago and of a short article I wrote about it (“No Reality, Please. We’re Economists”, The Times Higher Education Supplement, March 25, 1994). The observations I made then seem no less pertinent today.  Here is a draft of that article.

The American Dream and the Boston Economics Party

Edward Fullbrook
January 1994

When at this year’s American Economic Association meetings a speaker used the word conscience, embarrassment fluttered through the hall.  “The c-word” is taboo among economists. Its effect on our notion of “rational­ity”, which admits only isolated self-interest, is like a lighted match in a gas tank.

The unfortunate speaker (he was later publicly admonished for his impropri­ety) was one of 7200 economists from over 50 countries gathered in Boston for a three-day bash of reading and listening to learned papers.  Astonishingly, this global event for “the queen of the social sciences”, addressed scarcely a word to the world’s mounting economic ills. Read more…

“Methodological Mistakes and Econometric Consequences”

February 17, 2014 8 comments

From Edward Fullbrook

Asad Zaman has just published an illuminating paper related both to Bryant Chen and Judea Pearl’s recent RWER paper “Regression and causation: a critical examination of econometrics textbooks” and to topics frequently discussed on this blog.  Titled “Methodological Mistakes and Econometric Consequences”, Zaman’s paper appears in the current issue of the International Econometric Review.   Here is an open-access link to the paper and below is its introduction.


The rise and fall of logical positivism is the most spectacular philosophical story of the twentieth century. Rising to prominence in the second quarter of the twentieth century, it swept away all contenders, and became widely accepted throughout the academia. Logical positivism provided a particular understanding of the nature of knowledge, as well as that of science and of scientific methodology. The foundations of the social sciences were re-formulated in the light of this new understanding of what science is. Later on, it became clear that the central tenets of the positivist philosophy were wrong. Logical positivism had a “spectacular crash,” and there was some dispute about who had “killed” logical positivism1. As a logical consequence, it became necessary to re-examine the foundations of the social science, and to find new bases on which to re-construct them. This has occurred to differing degrees in different disciplines. One of the most recalcitrant has been economics. As discussed in Zaman (2011), the foundations of economics continue to be based on erroneous logical positivist ideas, and hence require radical revisions.  Read more…

Categories: econometrics

85 people versus 3.5 billion people – the OXFAM report

January 21, 2014 9 comments

from Edward Fullbrook

In the run-up to the annual Davos get-together of the world’s hyper-rich and their most-favoured agents, OXFAM has issued a report titled “Working For The Few”.  Commenting on it, today’s Guardian notes that

. . . if they fancied a change of scene then the richest 85 people on the globe – who between them control as much wealth as the poorest half of the global population put together – could squeeze onto a single double-decker.

The OXFAM report emphasizes how democracies round the world are increasingly under threat due their subversion by the ultra-rich. Here is a key passage from the report.  Read more…

Tony Lawson has changed our conversation

November 26, 2013 10 comments

from Edward Fullbrook

The case for Lawson’s significance that I argued five years ago and appears below seems to me even truer today.

Tony Lawson has become a major figure of intellectual controversy on the back of juxtaposing two relatively simple and seemingly innocuous ideas.  In two books and over fifty papers he has argued:

  1. that success in science depends on finding and using methods, including modes of reasoning, appropriate to the nature of the phenomena being studied, and
  2. that there are important differences between the nature of the objects of study of natural sciences and those of social science.

Taken together, these two ideas lead to the conclusion that the methods found to be successful in natural sciences are generally not the ones that should be used in social science.

By relentlessly focusing on this pair of ideas, Lawson has in a short space of time changed one of economics’ key conversations.  His chapter, “A Realist Theory for Economics”, published in Roger Backhouse’s 1994 landmark collection New Directions in Economics Methodology, stands out like someone standing alone at a party.  As recently as then the ideas of three thinkers, none of them economists, none social scientists and all of them dead, dominated economics’ literature on methodology.  The index of Backhouse’s wonderful book powerfully illustrates this.  It lists 47 pages that refer to Thomas Kuhn, 69 to Karl Popper and 73 to Imre Lakatos.  Twelve of the book’s sixteen chapters (excluding Lawson’s) refer to one or more of the three and eight, as well as the back cover, to all three.  Lawson does not refer to any of them.  More significant, Lawson’s key reference point is ontology, a word that, except in the Introduction when Backhouse is introducing his collection’s odd man out, appears in none of the other chapters.  Notably, when Lawson first uses “ontology” he feels it necessary, despite his highly specialized audience, to explain what the word means: “enquiry into the nature of being, of what exists, including the nature of the objects of study.” [Lawson 1994, p. 257]

Thirteen years later and anyone in economics who knows anything about methodology knows what “ontology” means.  Read more…

“Don’t ask an economist.”

November 25, 2013 5 comments

from Edward Fullbrook

Last year at a cocktail party at an IDEAs’s conference in India I was introduced to the recently retired editor of a leading Indian newspaper.  When he asked me what newspapers I read regularly and I answered the Guardian and the Observer, he replied that his favourite columnist in the whole world wrote for those papers.  I said so also does mine.  Inevitably we warmed to each other when our number-ones turned out to be the same: .

What is especially odd about this – the editor’s background was also economics – is that Naughton’s one and only topic is IT.  But I have finally found a way to justify plugging him on this economics blog.  Here is his column from yesterday’s Observer.

What’s Twitter’s real value? Don’t ask an economist

A national economy is an unimaginably complex system. And yet we compress all its complexity into a single measure, and then focus obsessively on that. If you want a metaphor for this, think of King Kong spending most of his time staring at a pinhead, worrying about whether it is moving or not.  That pinhead is GDP or, to give it its full moniker, gross domestic product. Read more…

“New York Times” mocks Bernanke and lauds Keen

Yesterday in the New York Times‘ “Business Day” section there appeared a long article titled “The Time Bernanke Got It Wrong“.   It compares Ben Bernanke’s level of professional competence at understanding financialized economies to Steve Keen’s.  Here is an excerpt.

One economist who would have expected that development was Hyman Minsky. In 1995, the year before Minsky died, Steve Keen, an Australian economist, used his ideas to set forth a possibility that now seems prescient. It was published in The Journal of Post Keynesian Economics.

He suggested that lending standards would be gradually reduced, and asset prices would rise, as confidence grew that “the future is assured, and therefore that most investments will succeed.” Eventually, the income-earning ability of an asset would seem less important than the expected capital gains. Buyers would pay high prices and finance their purchases with ever-rising amounts of debt.

When something went wrong, an immediate need for liquidity would cause financiers to try to sell assets immediately. “The asset market becomes flooded,” Mr. Keen wrote, “and the euphoria becomes a panic, the boom becomes a slump.” Minsky argued that could end without disaster, if inflation bailed everyone out. But if it happened in a period of low inflation, it could feed upon itself and lead to depression.

“The chaotic dynamics explored in this paper,” Mr. Keen concluded, “should warn us against accepting a period of relative tranquillity in a capitalist economy as anything other than a lull before the storm.”

When I talked to Mr. Keen this week, Read more…

The system behind Doctor X

from Edward Fullbrook

Frederic S. Lee, Xuan Pham, and Gyun Gu have published a paper in  the Cambridge Journal of Economics that connects well with the recent post Doctor X, “pure shit” and the Royal Society’s motto.  Regrettably the paper is behind a paywall, but below is a long press release for the new paper.

UK economics is becoming increasingly homogenised, and runs the risk of becoming “a purely quaint academic subject with no connection to the real world,” according to the authors of a new paper published in the Cambridge Journal of Economics today (Monday 8 July). Crucially, this homogenisation may mean that significant economic events that don’t conform to mainstream economic ideas may be missed.  Read more…

issue no. 64 of real-world economics review

Issue no. 64, 2 July 2013

You can download the whole issue as a pdf document by clicking  here  

In this issue: 

Is it a bubble?          download pdf           2     

          Steve Keen — A bubble so big we can’t even see it         download pdf          3

          Dean Baker – Are the bubbles back?          download pdf          11      

          Ann Pettifor – The next crisis          download pdf          15

          Michael Hudson – From the bubble economy to  . . . . .           download pdf          21

Rethinking economics using complexity theory          23
Dirk Helbing and Alan Kirman          download pdf

The fate of Keynesian faith in Joseph’s countercyclical moral          52
Douglas Grote              download pdf

A constructive critique of the Levy sectoral financial balance approach          59
Brett Fiebiger                download pdf

Capturing causality in economics and the limits of statistical inference          81
Lars Syll           download pdf

Money as gold versus money as water          90
Thomas Colignatus         download pdf

Constant returns to scale: Can the competitive economy exist          102
M. Shahid Alam             download pdf

Reassessing the basis of corporate business performance          110
Robert Locke                download pdf

Capitalism and the destruction of life on Earth          125
Richard Smith                           download pdf

Past contributors, submissions and etc.          152

Doctor X, “pure shit” and the Royal Society’s motto

from Edward Fullbrook

Recently at a large party I found myself sitting next to a very likable young middle-aged academic tenured at an elite British university, whom henceforth I will refer to as Doctor X and whose field is closely associated with this blog.

Doctor X was unfamiliar with both the Real-World Economics Review and the World Economics Association.  But when I described the purposes of the latter, in particular the fostering of a professional ethos that prioritized the advancement of knowledge rather than the preservation of orthodoxies and the promotion of vested interests, there was an instantaneous recognition of a central relevance to his/her intellectual and career situation.

“Every year I publish papers in the top journals and they’re pure shit.”  Doctor X, who by now had had a glass or two, felt bad about this, not least because “students these days are so idealistic and eager to learn; they’re really wonderful.”  Furthermore Doctor X could and would like “to write serious papers but what would be the point?”

I then listened to an explanation of Doctor X’s predicament that went roughly like this. Read more…

Categories: Uncategorized

Students rethinking economics

Students at the London School of Economics have organized for this coming a weekend a rather large 3-day conference on Rethinking Economics.   I am posting below the conference agenda, not with the illusion that this event is within easy geographical reach of most of this blog’s readership, but rather as an example of the sort of initiative that economics students around the world can take and increasingly are taking.

Rethinking Economics: London
Fri 28th June – Sun 30th June, London School of Economics
a conference to demystify, diversify and reinvigorate economics for imaginative citizens, students, academics, and professionals, including those with no previous training in economics to launch a collaborative network of economic rethinkers

Book workshops now to avoid disappointment:!tickets/c1tbo

To be opened by Read more…

The Real Dow

June 13, 2013 1 comment

from Edward Fullbrook

Plot of Real DJIA, 1924-present, et al., ca. 36 KB

You will find more real stuff here:

Categories: The Economy

Will USA living standards ever again be as high as they were in the last century?

from Edward Fullbrook

Median household income in the USA is now 8.4 per cent less than it was at the close of the 20th century.

Source: Sentier Research analysis of Labor Department data. Note that vertical axis does not start at zero to better show the change.

Source: Sentier Research analysis of Labor Department data.
More info and graphs are available in a  report from Sentier Research.

Categories: The Economy

Economic Thought: Special Issue on Ethics and Economics

Economic Thought - History, Philosophy, and Methodology
An open access, open peer review journal from the World Economics Association
Vol 2, No.1, 2013 – Special Issue on Ethics and Economics

Download issue in full (PDF)

Ontological   Commitments of Ethics and Economics

Karey Harrison

Abstract Download   PDF
Codes of Ethics   for Economists: A Pluralist View

Sheila C Dow

Abstract Download   PDF
No Ethical Issues   in Economics?

Stuart Birks

Abstract Download   PDF
Professional   Economic Ethics: Why Heterodox Economists Should Care

George   DeMartino

Abstract Download   PDF
And the Real   Butchers, Brewers and Bakers? Towards the Integration of Ethics and Economics

Riccardo   Baldissone

Abstract Download   PDF

Volunteers needed to start WEA national chapters. If interested, email

WEA Young Economists (Facebook Group – 8 days old – 260 members – join today)

WEA online conference: The economics curriculum: towards a radical reformation

The economics curriculum: towards a radical reformation
3d May – 31st May
- a World Economics Association Conference
- with Open Discussion Forum    –

Papers   Read more…

The economics curriculum – WEA online conference announcement

World Economics Association online conference:

The economics curriculum: towards a radical reformation

Due to serious illness by Jack Reardon, the leader, this conference has been postponed and the discussion forum will now take place

3d May to 31st May. 

This postponement gives many of you the opportunity to prepare or finalize papers. We are, in fact rescheduling the deadline for papers and you can upload them when ready and before:

New deadline for papers: 21st April 2013

Call for Papers for the Curriculum conference

Alfred Marshall, in the eighth edition of his Principles of Economics, wrote Read more…

Score card: 16% vs. 288%

January 29, 2013 9 comments

From Edward Fullbrook 

David Ruccio‘s post yesterday on the 34-year (and still continuing) period of radical income redistribution in the United States featured a graph from a new report from the Economic Policy Institute. Below, from the same EPI report, is a table no less shocking than yesterday’s graph.  Read more…

WSJ says “there is something profoundly wrong with the mainstream economics profession’s understanding of how modern economies work.”

January 7, 2013 17 comments

from Edward Fullbrook

Yesterday’s Wall Street Journal included an article ( A Dire Showing From a Dismal Bunch) that echoes arguments central to this blog and the RWER.  Here are sample passages.

Forecasting is by its nature a hit-and-miss affair; economics is not—despite the apparent dogmatic certainty of some of its practitioners—an exact science. But the track record of the profession in recent years—and last year in particular —is dire. Few economists spotted the boom and most hopelessly underestimated the bust. And it’s not as if the profession’s troubles in 2012 were limited to longer-range forecasts; it was getting it wrong virtually in real time with most forecasters forced to slash their projections every few months as each quarter turned out worse than expected.

What the dismal science’s dismal record suggests is that there is something profoundly wrong with the mainstream economics profession’s understanding of how modern economies work. The models on which its forecasts are built are clearly badly flawed.   Read more…

An online journal started in 2000

December 3, 2012 3 comments

from Edward Fullbrook

The current issue of Bloomberg Business Week features an article on Ronald Coase’s plans to launch a new journal.  The article ends as follows.

Coase and Wang are still talking to university publishers about supporting Man and the Economy. The University of Chicago Press considered it but found other publications with the same approach, for example the Real-World Economics Review, an online journal started in 2000 by young French economists. They had originally titled it the “post-autistic economics newsletter.” Papers published this summer by the Review include “Rethinking macroeconomics in light of the U.S. financial crisis” and “Neoclassical economics: A trail of economic destruction since the 1970s.” Even if Coase never launches his journal, he’s already helped inspire a generation of economists. One of the quotes on the home page of the Review reads: “Existing economics is a theoretical system which floats in the air and which bears little relation to what happens in the real world.” The source? Ronald Coase.

I was fascinated to learn that in 2000 I was young French economists.


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