Ethical criteria which hold the sustainability of life at their core

from Fernando García-Quero and Fernando López Castellano

Overconfidence in the magical thinking of technification, economic growth, the free market, and neoliberal globalization has led many to forget that the state is the main policy architect and actor when facing a crisis. Successful responses to Covid-19 have shown, once again, the central role of states in organizing political measures that foster and maintain the welfare of their populations, through actions to guarantee quarantine, social distancing, mobility restrictions, as well as extraordinary support to manage losses related to the economic downturn.

The role adopted by the states and politics in countries’ performances when tackling COVID-19 is very different from the perspectives that dominate the current agenda of development.

The Collapse of the India’s creative Industries

from Jayati Ghosh

There is no doubt that creative industries, along with care activities, are going to emerge as some of the most significant economic sectors of the future. Broadly speaking, the creative industries consist of advertising, architecture, arts and crafts, design, fashion, film, video, photography, music, performing arts, publishing, research & development, software, computer games, electronic publishing, and TV/radio.

A 2019 report from by UNCTAD (Creative Economy Outlook 2019, Geneva: UNCTAD) notes how these activities are valuable in both cultural and commercial terms. Obviously, they improve human and social well-being, and as expressions of the human imagination, bring joy, meaning and fulfilment to lives. In their finest forms, they can spread important social and cultural values that encourage social cohesion and lift human spirits.

But in addition, they are also crucial for inclusive economic development, not least because of their very large employment potential. Unlike many other sectors, technological changes can affect creative industries positively, creating new jobs and not necessarily reducing existing jobs much. Since the contemporary creative economy thrives at the intersection of culture, technology, business and innovation (think of the 3D animation now flourishing in Hungary and Indonesia as well as in India, or outdoor arts parks like Imhotim in Brazil) it can be a potent source of future innovation as well. These activities are increasingly well-suited to small and medium-sized enterprises, especially when barriers to entry are lowered. And cross-border trade in creative goods and services is buoyant, and remained so even during the pandemic.

In economics value-neutrality is an illusion

from Peter Söderbaum

I am a professor emeritus with many years of experience of the functioning of university departments of economics and other social science disciplines, such as business management. As has already been made clear I consider the close-to-monopoly position of neoclassical theory at university departments of economics as a major problem in relation to aspirations of sustainable development. The two “facts” that (a) values are necessarily involved in research and education and (b) those employed at university departments of economics live in democratic societies – means that economics (in democratic societies) cannot be reduced to a centre of propaganda for those values that are built into the neoclassical paradigm. A degree of pluralism in education and research becomes the natural response. Value-neutrality is an illusion and there are many reasons to listen to the voices of students and other actors, politicians included, who understand that the present monopoly is dysfunctional for society at large. Professors of economics have no right to exclude competing theoretical perspectives connected with other ideological orientations, such as sustainable development.

Economics Textbooks

from Steve Keen

Thomas Kuhn once famously described textbooks as the vehicle by which students learn how to do “normal science” in an academic discipline. Economic textbooks clearly fulfil this function, but the pity is that what passes for “normal” in economics barely deserves the appellation “science”.

Most introductory economics textbooks present a sanitised, uncritical rendition of conventional economic theory, and the courses in which these textbooks are used do little to counter this mendacious presentation. Students might learn, for example, that “externalities” reduce the efficiency of the market mechanism. However, they will not learn that the “proof” that markets are efficient is itself flawed.

Since this textbook rendition of economics is also profoundly boring, the majority of those exposed to introductory course in economics do no more than this, and instead go on to careers in accountancy, finance or management  –  in which, nonetheless, many continue to harbour the simplistic notions they were taught many years earlier.

The minority which continues on to further academic training is taught the complicated techniques of economic analysis, with little to no discussion of whether these techniques are actually intellectually valid. The enormous critical literature is simply left out of advanced courses, while glaring logical shortcomings are glossed over with specious assumptions. However, most students accept these assumptions because their training leaves them both insufficiently literate and insufficiently numerate.

Crypto-crash: graph

Source: Forbes

Weekend read – MMT, post-Keynesians and currency hierarchy: Notes towards a synthesis

from Luiz Alberto Vieira and current issue of RWER

Introduction

The current moment seems favorable to debate and potential reconsideration of theoretical systems, a situation derived both of developments in the analysis of public financing and the nature of money, but also, largely, due to the particular political and social circumstances observed in many countries. US hegemony is in crisis, as its industrial might decreases and is put in question by China’s development. The Asian country is now responsible for a large part of the world’s industrial output, boasting a complex and innovative economy. Another point worth noticing is former president Trump’s challenge of the basic principles of American politics and society, a situation the US shares with other countries.

Trump’s defeat in the last elections was only made possible due to unity of the Democratic Party around Joe Biden, thus overcoming the divide between “establishment” Dems and the self-proclaimed socialists, a minority which nonetheless gets 20% of voter’s preference. Since any victory by the party will require such unity, Democrats’ long held liberal economic policies are likely to be altered. Biden´s economic plan is a result of the new power balance in the party, in the sense that it embraces some of the left’s agenda, in a context heavily influenced by the ideas of Modern Monetary Theory (MMT).

The threat of a pharma-dictatorship

This is an extract from Norbert Häring‘s International Health Regulations: A big step toward a health dictatorship is imminent 12 May 2022 

What the U.S. has in mind here is an authorization for the WHO to immediately take the reins out of the hands of national governments in the event of an actual or alleged health risk from a pathogen and to be able to determine the assessment of the situation and the countermeasures. The US and their allies in this, the EU and Switzerland, are home to most of the major global pharmaceutical companies, To be sure, governments would retain the right to say no. However, this right is greatly devalued by the fact that they can then immediately be pilloried worldwide, either by the WHO or by a single, powerful government, such as that of the USA.

Should it come to the point that the informal sanctions would be augmented by formal sanctions against non-cooperative governments – which is almost to be expected – the governments of all countries, except the strongest, will hardly be able to defend themselves against having foreign teams of experts sent into their country to determine what has to happen.

This dis-empowerment of governments is made all the more dangerous by the fact that the WHO Director-General is allowed to decide on his own authority, based on extremely vague and elastic criteria, when a health emergency of international relevance is declared.

Moreover, the intention, often and clearly expressed by powerful players such as Johns Hopkins University and Bill Gates, to make standard mass testing of all people against all possible known and as yet unknown pathogens the norm, must be taken into the picture. It will then, with the appropriate will, be no problem at all to declare a potential health emergency. With intensive search, new pathogens will often be found that could become dangerous, but by no means have to.

But who could have an interest in declaring health emergencies and initiating – possibly unnecessary – countermeasures?

The magnitude of the required reductions

from Ted Trainer and current issue of RWER

It is not commonly understood how large the reductions would have to be to enable a society that is globally sustainable and just. The World Wildlife Foundation’s Footprint measure (2018) estimates the average Australian per capita use of productive land at 6–8 ha. Thus, if the 9–10 billion people expected to be on earth by 2050 were to live as Australians do now, up to 80 billion ha of productive land would be needed. But there are only about 12 billion ha of productive land on the planet. If one third of it is set aside for nature then each Australian would be living in a way that would require about 10 times as much productive land as all people could ever have. Some other measures taking into account factors such as materials consumption (Wiedmann et al., 2015) indicate higher multiples.

To this must be added the implications of growth. If the Australian GDP rises by 3% pa and by 2050 all 9–10 billion people rise to the “living standards” Australians would then have, each year the global economy would be producing and consuming about 18 times as much as it does now. Yet the present amounts are unsustainable; the WWF estimates that the global footprint is now 70% higher than the planet could sustain. This indicates that the 2050 global resource and ecological impact would be in the region of 30 times a sustainable level. (For a detailed derivation of these multiples see Trainer 2021a.)

The common assumption that technical advance can solve the resource and ecological problems without impacting on affluent living standards and economic growth has now been contradicted by a large amount of evidence. Many studies show that despite constant effort to improve productivity and efficiency the growth of GDP continues to be accompanied by growth in resource use.

read more 

COVID-19 has shown that capitalism is not enough

from Fernando García-Quero and Fernando López Castellano and current issue of RWER

Constructing the capitalist world-economy was only made possible through the use of racism and sexism as tools for the hierarchization and categorization of the population (Mbembe, 2000; Wallerstein, 2000). The history of capitalism is also the history of the open veins of the South and massive exploitation of natural resources (Galeano, 1972; Herrero, 2013). Its logic of accumulation entails irreconcilable contradictions and growing inequalities between centers and peripheries (Prebisch, 1949). In the field of Development Economics, the structural adjustment policies promoted by the Washington Consensus are a contemporary example (López Castellano, 2009), as are the Troika impositions which, in 2011, led to severe social cuts in countries like Spain or Greece (López Castellano and García-Quero, 2019). The dilemma of how best to balance public health, care for nature, and economic growth has been highlighted again as a result of the COVID-19. The suspension of work has led to a drastic reduction in environmental pollution, while putting the most vulnerable groups at greater risk. It has also shown how, despite their precariousness and low social recognition, various jobs linked to care and jobs with little monetary value are fundamental to sustaining and reproducing life. The challenge, therefore, is how to build a system with a production model that is compatible with human life and care for nature.

read more

A world economy in disarray

from C. P. Chandrasekhar

When the world’s financial leaders met mid-April at Washington for the annual spring meetings of the International Monetary Fund and the World Bank, the mood was one of gloom. The world economy is in disarray, with world leaders clueless as to where it is headed or what can be done to prevent a possible collapse. In the April 2022 edition of its World Economic Outlook, the IMF has slashed its 2022 GDP growth forecast of six months ago by 1.3 percentage points to 3.6 per cent, and projects growth to remain below that level for the next two years. Inflation that had emerged as a problem in 2021 has been accelerating over the past three months, and expectations that the price spike would be transitory seem wholly misplaced. And supply levels and price trends are signalling imminent crises in global energy and food markets, with frightful humanitarian implications for vulnerable nations and populations.

Four factors have combined to intensify global economic uncertainty.

Things to consider when reading Mankiw 9th ed. Chapter 1: Ten Principles of Economics

from Rod Hill and the WEA Textbook Commentaries Project

1. The definition of economics.

Mankiw begins by defining economics: “Economics is the study of how society manages its scarce resources. In most societies, resources are allocated … through the combined choices of millions of households and firms. Economists therefore study how people make decisions” about working, spending, saving and investing their savings. Economists “examine how the many buyers and sellers of a good together determine the price at which the good is sold at the quantity that is sold.” (p.1)

With this definition, the ‘economic problem’ becomes how to allocate scarce resources efficiently, i.e. putting them to their most valuable uses. This definition also sketches out the framework developed throughout the book: individual households and firms interacting in markets are the basic units of analysis. Government is put in the background in a supporting role.

This definition of economics is stated as fact, apparently not involving any value judgements. In fact, normative choices, that is choices involving values and moral judgements, are inescapable even in deciding how to define economics.

Emily Northrop points out that the assertion that resources are scarce is based on the idea that not everyone’s wants can be met given our limited resources. This is true, but (she writes) “to say that this inability is our fundamental economic problem is a normative choice.” Implicitly, it treats all desires equally, such as “one person’s desire to obtain a subsistence diet with another person’s desire for precious jewellery” (2000, p. 54). No distinction is made between basic needs and wants which arise because of what others have (e.g. ‘keeping up with the Joneses’). Defined in this way, the economic problem can never be solved because resources will always be scarce.

WEA Commentaries – volume 12, issue 1

download the whole issue

What Caused Russia to Invade Ukraine?
David Lane

Economic Implications of MOOCs in Higher Education: An Indian perspective
Binay Kumar Pathak

An interview with Andrea Terzi on the current situation in the euro zone and Italy in particular
Mitja Stefancic

Rethinking economics: an interview with Sam de Muijnck and Joris Tieleman
Mitja Stefancic

Please click here to support the World Economics Association

Weekend read – Making thoughts unthinkable – the soft power of economic theory

from Asad Zaman and WEA Pedagogy Blog

The 1932 science fiction novel Brave New World portrays a dystopian future where history is rewritten and words are redefined in order to make undesirable ideas “unthinkable.”^{footnote 1} The book is often associated with George Orwell’s 1984, where those who do anything undesired by those in power are made into an “unperson,” with all evidence of their history destroyed. When anyone speaks the unthinkable, they are simply defined out of existence.

More generally, in Brave New World, the populace is controlled by inundating them with false pleasure. In 1984, they’re inundated with needless pain^{footnote 2}. Outside of fiction, here in the real world, both techniques are used. Examples of the former include endless escapism via streaming episodic video series, and modest privilege such as a decent home, car, and health coverage. Examples of the latter are to viciously crush, jail, or kill those already deeply oppressed.

Unthinkable thoughts are utilized by those in power to reduce the chances of actual dissent, by making the mere expression of dissent much more difficult. They do this by reshaping our language such that the ideas and concepts required to express dissent are no longer available.

This essay explores the concept of unthinkable thoughts and the power struggles lying beneath them, at all levels of society. It illuminates how those in power can coerce the rest of us into doing what’s desired without having to resort to direct force, starting with a simple example from a parent-child relationship. It ultimately demonstrates how mainstream economic theory (the macroeconomics of those already on top) is a primary tool of soft power, with two detailed examples of its “unthinkable thoughts.” It ends by imagining how one might come to terms with a lifetime of this kind of deception.

Written by Jeff Epstein, host of Activist #MMT, the podcast. Copy-edited by Ben Szioli. With thanks to Jonathan Wilson of pmpecon.com for valuable feedback, and Asad Zaman for guidance. This essay was originally published at activistmmt.org.

Using soft power to avoid hard power (parent-child)

Panic about petrol prices

from C. P. Chandrasekhar and Jayati Ghosh

The latest IPCC report makes it clear: the planet is now dangerously close to a tipping point and reliance on fossil fuels has to be drastically curtailed and even fully eliminated soon, to avoid catastrophic climate changes. Obviously, this urgent call fell on deaf ears where it matters. It didn’t take long, or even very much, for world leaders—especially those who should really know better and have the means to do otherwise—to renege on their very recent pledges to reduce reliance on fossil fuels.

The latest excuse for avoiding the most basic inconvenient truths is the outcome of the Russian war on Ukraine. All it took was an increase in global oil prices and the (much faster) increase in retail oil and gas prices within the US for President Biden to release some of the US government’s strategic oil reserves, and even revive the possibility of importing from previous bete noires Venezuela and Iran. Now, the US administration will once again allow oil and gas leasing on federal land, thereby opening up more drilling for fossil fuels.

In Europe, which was extremely dependent on Russian natural gas and is now desperately seeking to diversify from it, the declarations are about shifting to renewable energy. But in practice, every country in the European Union has been left to choose its own path. Most have chosen to diversify their sources of fossil fuels, while some push for reviving and relying more on nuclear energy.

Political expediency clearly defines the knee-jerk response to higher oil prices, even though it runs completely counter not just to the promises made just a few months ago at the COP-26 in Glasgow, but also to the dire warnings issued by scientists. But is this knee-jerk policy response, especially in the rich countries, justified in comparative terms by the actual fuel prices prevailing in different countries?

Ecological Damage Index – a failure index

from Jorge Buzaglo and Leo Buzaglo Olofsgård and current RWER issue

Ecological Damage Index

The ecological dimension of the extended failure index includes only one indicator. There are of course many other sources of ecological damage, but climate warming is by far the most dangerous and urgent.

1. GHG per capita emissions: That is, the annual greenhouse gas emissions of the average individual in the country. The personal GHG footprint reflects the country’s average individual damage to the atmosphere. (Source: WIR22).

The United States, Australia, and Canada are in a special category of very high (per capita) GHG emitters. The lowest emitters are low-income countries.

next the Exclusion Index

or read more now about failure indexes here

Socio-Economic Dysfunction index – a failure index

from Jorge Buzaglo and Leo Buzaglo Olofsgård and current RWER issue

The extensive failure index defines six dimensions of economic and social malaise: socio-economic dysfunction, ecological damage, exclusion, distress, militarism, and alienation. Each of these dimensions is composed of a number of indicators of particular flaws. The (re-indexed) average of the indicators makes the index of the dimension. The (re-indexed) average of the indices for the six dimensions mentioned makes the extensive failure index.

Socio-economic Dysfunction Index

Our extensive list of “the outstanding faults of the economic society in which we live” includes the following components of socio-economic dysfunction.

The U.S. billionaires profiting the most from the pandemic

While Russian billionaires have been the focus of attention due to the ongoing fighting in Ukraine and the ensuing sanctions against Russian individuals and entities, their counterparts in the United States have accumulated an additional $1.7 trillion of net worth since the start of the pandemic two years ago. This marks an increase of 57 percent compared to March 2020 data from Forbes aggregated by U.S.-based organization Americans For Tax Fairness (ATF). As our chart shows, four of the six biggest earners are Big Tech CEOs.
Florian Zandt

Per capita CO2 emissions by country

Ethical criteria which hold the sustainability of life at their core

from Fernando García-Quero and Fernando López Castellano and RWER current issue

Overconfidence in the magical thinking of technification, economic growth, the free market, and neoliberal globalization has led many to forget that the state is the main policy architect and actor when facing a crisis. Successful responses to Covid-19 have shown, once again, the central role of states in organizing political measures that foster and maintain the welfare of their populations, through actions to guarantee quarantine, social distancing, mobility restrictions, as well as extraordinary support to manage losses related to the economic downturn.

The role adopted by the states and politics in countries’ performances when tackling COVID-19 is very different from the perspectives that dominate the current agenda of development. SDGs and RCTs, while containing some valid points, abound in efficiency criteria and reduce the fight against poverty and climate change to mere products of the rational or irrational choice of individuals. These discourses divert attention from thoroughly addressing these challenges, and obscure the fact that the key to avoiding poverty is transforming productive structures and achieving an endogenous technological capacity to improve real wages.

Countries where the 1% have the largest share of wealth