Home > corruption, revere award, The Economics Profession > “A revolt against the orthodoxy has been smouldering for years and now seems to have gone critical.”

“A revolt against the orthodoxy has been smouldering for years and now seems to have gone critical.”

from today’s Guardian and

Orthodox economists have failed their own market test

Students are demanding alternatives to a free-market dogma with a disastrous record. That’s something we all need

From any rational point of view, orthodox economics is in serious trouble. Its champions not only failed to foresee the greatest crash for 80 years, but insisted such crises were a thing of the past. More than that, some of its leading lights played a key role in designing the disastrous financial derivatives that helped trigger the meltdown in the first place.

Plenty were paid propagandists for the banks and hedge funds that tipped us off their speculative cliff. Acclaimed figures in a discipline that claims to be scientific hailed a “great moderation” of market volatility in the runup to an explosion of unprecedented volatility. Others, such as the Nobel prizewinner Robert Lucas, insisted that economics had solved the “central problem of depression prevention”.

Any other profession that had proved so spectacularly wrong and caused such devastation would surely be in disgrace. You might even imagine the free-market economists who dominate our universities and advise governments and banks would be rethinking their theories and considering alternatives.

After all, the large majority of economists who predicted the crisis rejected the dominant neoclassical thinking: from Dean Baker and Steve Keen to Ann Pettifor, Paul Krugman and David Harvey. Whether . . . .     continue reading here

  1. Peter Radford
    November 21, 2013 at 6:14 pm

    It gets tiring, doesn’t it? I suppose the good thing is that articles like this are begetting more frequently published in outlets beyond those of the economics profession. That is change. But until the economics profession sorts itself out none of these criticisms count.

    Then we get to the thorny question of what to with “orthodoxy” and what would replace it. At that point all the reformist zeal is dissipated in meaningless dialog and, ultimately, in inactivity.

    Each year another legion of ill-educated students is let loose on the economy believing they know some economics. We let them down each and every year.

    When will it stop?

  2. Herb Wiseman
    November 21, 2013 at 6:45 pm

    I started to think about Blackjack systems. If I use a system to beat the house I will be detected and ejected. (there could be a rap son in this!) The classical economists thought that they had figured out the house and how to beat it. They still hope to do so. It reveals a mentality that is dysfunctional.

  3. Podargus
    November 21, 2013 at 7:10 pm

    How about MMT as an alternative? Or is that too unorthodox for you?

  4. paul davidson
    November 21, 2013 at 10:23 pm

    I have argued for Post Keynesian economic theory in my macrotext POST KEYNESIA MACROECONOMICS, 2nd Edition–where some pieces of MMT fit –but some are still to classical to be compatible with Keynes’s General Theory.

    I have also written a “trade book” entitle THE KEYNES OLUTION:THE PATH TO GLOBAL ECONOMIC PROSPERTY [Macmillan/Palgrave] which has gotten excellent reviews for its non classical — but realistic — analysis of (1) the financial crisis of 2007-2008 , (2) the problem of outsourcing and its Keynes Bretton Woods solution, etc. This book got very good reviews by Bloomberg News, The New York Times Business Section, and the Economist. Not surprisingly no mainstream professional journal has seen fit to review it. Maybe because they cannot find a mainstream economist who can punch holes in my analysis?

  5. BC
    November 22, 2013 at 12:05 am

    The Long Wave demographic and debt factors, net energy effects, and the nature of capitalist imperial trade regimes are virtually unknown, ignored, or denied by the overwhelming majority of economists of every stripe and persuasion, rendering all schools of thought akin to karmic reactions to the unacknowledged or unrecognized underlying structurally deterministic forces of thermodynamics, exponential mathematics, and their cumulative constraints on human population growth, desire, and resource consumption per capita.

    Moreover, despite thirteen years’ worth of irrefutable empirical evidence that the US and EU have been following the trend rates of Japan’s real GDP per capita, core CPI, debt/GDP, and interest rate regime since 1990 (with a ten-year lag for the US and EU), only today does Summers suggest that the world “might” be facing a period of protracted stagnation! He’s thirteen bloody bleeping years late in rocognizing it, which suggests that he doesn’t know why it’s occurring, and certainly is similarly clueless about what to do about it, if anything can be done short of forgiving half of private debt to wages and total debt to GDP.

    And now we have the private bankster-owned central banks printing trillions of dollars’ worth of fiat digital debt-money credits to TBTE banksters’ balance sheets so they can lever effectively 100:1 (with the Fed levered 54:1) via their offshore shadow banking system and using exchange-sponsored HFT to incessantly jam equity index futures in a desperate (self-serving, vain) attempt to produce a dubious “wealth effect”, encouraging MASSIVE speculative asset bubbles around the world that are increasingly diverging from underlying economic fundamentals.

    Not only are establishment economists clueless, misguided, and misinformed (wittingly or otherwise), what they are encouraging or permitting their bankster masters to do is certifiably and criminally insane.

    If you think that QEternity and ZIRP have “saved the world” and Bernanke, Yellen, et al., are geniuses, then you don’t realize that the Fed, ECB, BOE, and BOJ have created an even LARGER global financial asset bubble than existed in 2000 and 2007, levered to an even larger ratio to bank capital, real wages after tax and debt service, and private GDP.

    Tragic.

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