Home > rethinking economics > The message: from austerity to prosperity

The message: from austerity to prosperity

from Asad Zaman

Modern history is largely driven by the battle of the rich (top 0.01%) against the masses (bottom 90%). Over the past few decades, the rich have been tremendously successful in having it all their way. A previous blog post on “Deception and Democracy” illustrates by examples their successful conversion of democracy into plutocracy in the USA. As pointed out by Polanyi, unregulated markets create disastrous outcomes for the majority. Therefore, in a democratic environment, theories which misrepresent facts and justify massive inequalities are essential pillars of support for the plutocrats. Spreading these theories via media and educational channels helps create an environment where people support policies which go against their common interests.

As many posts on austerity on the RWER blog have shown, austerity has only caused massive damages to the European Union (just search for “austerity” on the blog). Theories which support austerity as a policy are disseminated by premier educational institutions and provide a crucial pillar of support for enforcing such policies. Equally, educating the public about the flaws of such policies and providing a viable alternative is an essential element of a counter-attack. Ellen Brown has performed a tremendous service with her books “From Austerity to Prosperity: The Public Bank Solution” and also “Web of Debt: The Shocking Truth about our Monetary System and how we can break free.”  I have tried to pick up certain key insights from these books and summarized them as a solution to development problems in Islamic economies in my paper: “On the Nature of Modern Money.” However this paper is lengthy and complex, and meant for a professional audience. My newspaper article “Keynes vs. IMF” presents a brief and oversimplified version of some of the key ideas the public needs to learn, in order to be able to overcome the illusion that austerity is good for them.

An important point here is that the real world economists need to take their case to the public, which is victimized by the neoclassical economists. Talking among ourselves is not helpful except in terms of discovering the strongest arguments and best lines of attack. There is absolutely no point in trying to get published in leading journals, or trying to change minds of professional economists – they have the most to lose. Our natural audience are those who have the most to gain by listening to our message. This means that we need to make much greater efforts to convey our message to the general public. This involves participating more on popular forums like conventional blogs, writing book reviews for good books, providing critiques and alternatives for bad ones, writing for newspapers etc. It also involves making the efforts required to translate and present our theories and models in ways attractive and comprehensible to a general audience.


  1. April 25, 2015 at 7:44 am

    Also I think Wren Lewis has done a good job in highlighting the disasters of austerity through his blog.

  2. larrykaz
    April 25, 2015 at 8:45 am

    Letter in Toronto Star, Canada’s largest daily circulation paper:

    Re: Balanced-budget law a meaningless gimmick, April 18

    The issue is not whether balanced-budget laws ever work but whether targeting a balanced budget at the national level makes any sense.

    The federal budget is a tool to manage the economy, and good management requires counter-cyclical fiscal policy to keep the economy on an even keel. When inflation threatens, the government must tax more and spend less. And when the economy is depressed, the opposite.

    Those critics who argue that the government should tax more and then spend the amount collected miss the essential point. Increased taxation may indeed be justified as a means of reducing inequality, but these government revenues are unlikely to provide the quantum of aggregate demand necessary to drive the economy to full employment.

    Note that after the financial crisis of 2008, even the Conservatives felt it necessary to increase spending by billions of dollars without new taxation, and then bragged about how thousands of jobs were created as a result.

    Yet Canada currently still has 1.3 million unemployed. We know that long-term unemployment leads to increased rates of family breakdown, increased crime rates, increased alcohol and substance abuse, increased suicide rates, increased incidence of mental and physical problems, and lost opportunities for skill development and work experience among the young.

    In the 1970s, the Local Initiatives Program created jobs and community benefits that were funded by the federal government and delivered through local non-profit organizations and citizen groups. Projects covered such areas as arts and culture, recreation, tourism, research, help to the aged, education for the young, and protection of the environment.

    If a similar but enlarged program were offered today, the benefits would far outweigh the costs. Those currently without work or income could become engaged in productive activities providing services to other Canadians.

    In comparison, a balanced budget will choke purchasing power and sabotage economic recovery.

  3. April 25, 2015 at 4:30 pm

    Spiritual progressive Michael Lerner (Tikkun Magazine) makes the point that MLK’s essential message was not “I have a complaint…” but “I have a dream”. The Federal Reserve’s QE actions directed trillions toward the banks, created from thin air, yet could have directed sufficient monies, if inclined, toward full employment and basic income for all (one aspect of MLK’s dream). Regressive taxation schedules – including massive, literally industrial-size tax evasion through offshore accounts by the world’s well-known corporations and wealthiest families, facilitated by the “Big Four” acconting firms and the world’s most powerful bank/law corporations – have resulted in current record levels of wealth inequality. One family of Americans, Walton, posseses as much wealth as 42% of Americans, nearly one half of the population, yet somehow the Walton’s “dream” and tax evasion on the grandest scale imaginable are rarely acknowledged/described by politicians (perhaps Bernie Sanders the sole exception) as related to the phenomenon’s real “nightmarish” economic consequences.

    Success in the colossal, organized effort suggested in the writing does not come without personal risk. JFK, MLK, RFK and too many others are clear reminders of what can happen to people whose dreams of creating a better world come too close to manifesting as reality. May the Creator/God protect all good people on Earth.

  4. April 27, 2015 at 3:09 am

    thanks to aadilganae for the reference and to larrykaz for the activism. My own article explaining the fallacy of austgerity was published in the Express Tirbune in Pakistan. It takes a different approach — see Keynes versus IMF at

  5. Philip
    April 27, 2015 at 9:26 pm

    “Over the past few decades, the rich have been tremendously successful in having it all their way.”

    I think you need a frame of reference here… the “masses” have been making significant strides over the past 400 years or so and while there has been an obvious change in the dynamic recently in no way have we regressed to robber barons and serfdom.

    I think it would be significantly more accurate to say something more along the lines that the “rich” have successfully managed to co-op certain parts of technological and social process to further entrench themselves, which takes into account the fact that we’re not necessarily going backwards but more plateauing when taking into account the huge gains made in recent history.

    • Macrocompassion
      April 28, 2015 at 2:48 pm

      Does that mean that the 10% rich will eventually shrink until it is only 1% before finally reaching only one person! Where and how can the limit be set?

      • April 28, 2015 at 7:27 pm

        The minimum wage in America is less than $8/hour – by law. By law – maximum wealth of $1 billion is possible. IImagine the response generated by multi-billionaires opposed.

  6. Hepion
    April 29, 2015 at 10:39 pm

    Class warfare by the rich or ethnic hate arising from our instincts in multicultural nations?

    If there are two competing explanations and only other is politically correct you can guess which one prevails, which itself is cause for this development in the first place as know nothing politicians build increasingly multicultural nations.

    Sad to say but I think Europe will go the way of the US over time if we allow uncontrollable multiculturalism to proceed. It may take 100 years but we will get there.

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