Home > Uncategorized > Powers that construct and obstruct transformations in economics

Powers that construct and obstruct transformations in economics

from Deniz Kellecioglu and the current issue of the RWER

The academic field of economics has been under an intensified pressure after the Global Financial Crisis (GFC), which began in September 2007 (cf. Backhouse 2010). This pressure involved demands to refine, reform, or completely overhaul the field. The latter group viewed the GFC as another dismal outcome of a dominant economics that is significantly supportive of financial interests, while being hostile to states, peoples, and the environment; unless they functioned in the interest of the prevailing economic and power structures (cf. Dowd 2004, Chang 2014). More than a decade later, dominant economics has not changed much; whether in its theory, education, methodology, or policy (cf. Aigner et al 2018).

This economics ascended over the 1970s, achieving complete dominance in the Global West by the early-1980s, and almost anywhere else by the early-1990s. Its dominance is closely related to the emergence of a new kind of capitalism and power system, often referred to as ‘neoliberalism.’ After all, as concluded by Wolff and Resnick (2012: 311): “over the last one hundred and forty years or so, capitalism not only oscillated among its different forms, but economic theory focused on understanding capitalism also oscillated among alternative kinds of reasoning. Moreover, these two different kinds of oscillations are interconnected.” This paper examines such oscillations from the vantage point of economic theories, focusing on the transitional period of the 1970s. The objective with this ‘political economy of economics’ is to distil lessons to utilise in emancipatory efforts to transform economics today.

Although this history has been extensively reviewed, few studies are directly concerned with transformations in economics. This critical literature exhibits one common conclusion, however: external powers have significantly influenced the character of mainstream economics (cf. Chang 2014, Näring and Douglas 2012, Skidelsky 2013, Dowd 2004). However, this conclusion is often observational, suggestive, and part of a presumptive diagnosis – rarely proven in a systematic manner. This is surprising considering the importance of the issue and the weight of the allegations.  read more

  1. James Beckman
    October 26, 2018 at 5:48 pm

    Since I teach business economics & consult for global corporations here in Europe, I note a common response that the financial boys couldn’t keep things going with their fancy bundling of bad loans, and the government spenders were later busy bailing out failing business, both in Europe & America, that we are left with an observed economics of business cycles. That is not cynicism, but the observations of PhD’s in systems theory & MBA’s–lots of them.

  2. November 3, 2018 at 9:13 am

    As a historian, I’m sceptical about conspiracy theories because the world is far too complicated to be managed by a few billionaires drinking scotch behind some closed doors. But I do think that the voters are correct in sensing that they’re really losing power. And in reaction, they give the system an angry kick. ~Yuval Noah Harari

    Harari is correct, on both counts. To coin a phrase, billionaires don’t run the world, but they do run most the economists and politicians in the world. To coin another phrase, what billionaires want, billionaires get. These are over simplifications, of course. But not about the important things. As in the time chronicled by such authors as Charles Dickens, the rich and particularly the ultra-rich have found the kind of world that meets their needs, if sometimes only by accident and as a group intend to keep it in place. Neoliberal economics is just one part of that world. Other major aspects include, destruction of unions, removing regulations, downsizing governments, and removing discussion of the “public good.” The overall goal is to ensure that whatever forms societies may take, that each form meets their needs first, and the needs of others in society so long as these don’t interfere with the main goal. The biggest disagreement among these ultra-rich is whether this requires a whip and iron control, or if it can be done via soft propaganda such as news media, movies, music, etc. The ultra-rich as Harari points out cannot manage every fad, fashion, theory, craze, and good Samaritan predilection people will invent. But with the politicians and economists doing the heavy lifting they can explain each of these with a model that protects both the wealth and power of the ultra-rich. We’re often so grateful we elect many of these ultra-rich to high office.

  3. November 8, 2018 at 2:40 pm

    It would be great if you actually read the paper, or at least significant parts of it, before making comments. The two comments above are almost completely irrelevant to the contents of the paper. Please do not discourage serious readers by out-of-context comment.

    • November 10, 2018 at 11:03 am

      Deniz, my comment is clear, I hope. I disagree with the criteria you list. They may be interesting in parlor discussions, but they won’t help solve the current crises. Many of the criterion you cite are now employed in the fight against the rise of fascism and Nazism, often in concert with neoliberal economics. They’ve not even slowed down that massive world-wide shift.

  4. Craig
    November 11, 2018 at 2:44 am

    If an economic theory or political system wants to survive and thrive they must form a satisfactory contract that obviously benefits both sets of agents, namely the individual and commercial enterprise.

    1) Insuring everyone’s economic security for life with a $1000/mo universal dividend,

    2) that is doubled by a 50% discount/rebate policy at the point of retail sale and

    3) the latter policy also doubles both everyone’s earned purchasing power and

    4) the potential actually available business revenue of every enterprise….

    would seem to fit that bill rather nicely. Of course the kickers are that

    5) the 50% discount/rebate policy taking effect at the terminal summing point for all costs (including the costs of capital goods and profits) and so total price for every consumer item in the economy eliminates any possibility of inflation (garden variety inflation is restrained by competition and potential loss of market share and hyper-inflations require specific disastrous conditions to occur) …because the end of the entire economic process is consumption and that means you own it and no commercial agent can enforce additional costs upon the individual. You get to eat it, wear it, drive it around, etc. etc. etc. and

    6) the new paradigm of Direct and Reciprocal Monetary Gifting effectively breaks up Finance’s monopoly paradigm of Debt and Loan Only…which is the deepest, most underlying and largely unperceived problem in economics.

    So I’d suggest we start there and then, because the world is not an altogether rational place, come up with regulations and sanctions aligned with the concept behind even Gifting…just for the sake of logic, pragmatism and philosophical continuity.

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