A culture on the edge of failure

from Ken Zimmerman

Most cultures in human history have failed. The consequences of cultural collapse are almost always catastrophic. Culture defines our existence and makes us who we are. Without culture we have no past and no future.

As all the products of the people of a society–material and non-material, culture is a complement to society, interacting people living in the same territory who share a common culture. Impossible to have one without the other (unless you want to call archaeological remains and historical records “culture” or “society”). People in society create culture; culture shapes the way people interact and understand the world around them. Culture determines what we know–the sum of all the angles in a triangle; what a screw driver is used for; how to use a computer to find out where Peloponnesians are… Culture also determines what we don’t know–how to catch a fish by hand; how to build a dugout canoe and navigate the South Seas without chart or compass. Culture determines what we want to be–lawyer; dairy farmer; computer programmer; doctor; shaman; pearl diver. Culture does this by providing the only options people can or will see at a time and place in history. In simple terms, culture makes human lives possible. When a culture no longer does this, when it impedes the continued being of a society, then the culture has failed. A culture such as Dr. Goodwin describes is on the edge of failure. Based on past cultural failures, this is not good news. Uncertainty, fear, and degradation generally follow. Is there any way to stop this?  https://rwer.wordpress.com/2019/06/21/necessary-changes-in-economic-theory/

Economics is an ideology

from Ikonoclast

Economics is not a science and it cannot be a science. It is an ideology. The policy applications of an ideology may be “science-informed”, or not, as the cases might be, but the discipline itself, economics of any ideological persuasion, is not a science.

Economics properly considered is really political economy. The term “political economy” carries two connotations: one meaning “national economy” and the other literally meaning economics is always political. The attempt to hive off economics from political economy and pretend that economics is not political but somehow an objective discipline has been a grotesque failure academically, socially and we see now environmentally. In turn, a political economy theory, an ideology if you will, always returns and must return to moral philosophy to argue its legitimacy, be those arguments good or bad according to the tenets adopted for judgement.

D-Econ: Diversifying and decolonising economics

Our Mission

“Just wander into any economics or finance conference and the anecdotal evidence is overwhelming — women and minorities are few and far between.”

– Business Insider, September 13th, 2017

We are a network of economists that aim to promote inclusiveness in economics, both in terms of academic content and in its institutional structures. We are working to promote an economics field free of discrimination, including sexism, racism, and discrimination based on approach and geography. This involves promoting inclusive practices at sites that determine what legitimate knowledge is, such as conferences, workshops, journals, editorial boards, boards of economics organisations, syllabi, economics departments, and classrooms.
We take a holistic approach, as our mission involves three related, yet distinct, goals. These are:

Necessary changes in economic theory

from Neva Goodwin

Ecology teaches that everything is connected to everything else. Economics teaches that the market is a – some say the – great connector. Its specialty is to connect demand (what people want) to supply (what people produce), via prices.

There are, of course, known problems in the use of prices as a society’s key connector. For one thing, those with more money have more of what is sometimes called “effective demand”; they can send louder, more effective signals to suppliers to produce the goods and services they want. Those with very little money can hardly get their needs and wants noticed. Aside from this translation of unequal purchasing power into unequal impact, the other most notable problem with markets as connectors is the presence of externalities, when something that matters simply is not picked up in market signals.

Ecologists sometimes complain that economists dismiss such important issues as “just” externalities – implying that these issues are regarded as unworthy of consideration. Good economists do not do this:

A fine line – descriptive or normative science?

from Joachim H. Spangenberg and Lia Polotzek  

Next to the inability to describe long-term developments and to take into account the structural uncertainty of complex systems, there is a more fundamental problem regarding current economic modelling manifesting itself in IAM/DSGE models. It consists of the fact that economic models are presented as being purely descriptive, while they actually carry quite some normative baggage. This becomes particularly relevant as the function of economics in society changed from depicting and explaining the reality of the economic system to serving as a tool to facilitate political decision making processes.

Through the rise of the rational choice paradigm and economics’ development into a science of choice, it has become vague whether its approach to decisions is more of a descriptive or of a normative character. Usually, in neoclassical economics, expected utility theory is claimed to be used as a purely descriptive theory. Yet this claim is false as the idea of rational choice in conjunction with utilitarian assumptions is inherently tied to a specific concept of welfare and its normative assumptions (Muthoo, 1999). These circumstances have made it almost impossible for economists to draw a precise line between a descriptive and a normative approach, although few are aware of this challenge. This is dangerous as it disguises the outcomes of economic models as purely rational, whereas in fact they contain a plethora of underlying normative assumptions representing a specific world view (Spangenberg, 2016).

Two stories: household income in the US and the UK

https://ourworldindata.org/incomes-across-the-distribution

Human work

from Ken Zimmerman

Human work/employment/work relations are complex. In terms of muscular or nervous effort there is no distinction between agreeable and irksome activities, or between those undertaken for pleasure and those undertaken for pay. In many instances severe physical labor, combined with hardship and exposure are undertaken for pleasure by tourists, who even hire and pay guides, for example mountain climbing. Similarly, athletic sports, though often arduous are both professions and undertaken for recreation. A multitude of occupations ordinarily pursued for gain (compensation)–woodworking, gardening, painting, acting—are also pursued by many persons for the satisfaction involved with performing them. However, the greater part of the activity which humans pursue in attaining a living does not give pleasure. The chief reason seems to be that activity, in order to be effective toward attaining a living, must be steady, unvaried, and long-continued; and it must be, in an important sense, not free. The characteristic of most activities that are sources of pleasure in themselves is the element of freshness or novelty, and the absence of compulsion.

A portion of humans may find pleasurable the work they are obliged to perform. But research indicates that most work today is performed for the compensation it brings, and for no other reason.

Atmospheric CO2 concentration year 1 to 2018

The richest 1% alone emit more carbon than the poorest half of the planet.

. . .  everything indicates more and more clearly that the resolution of the climate challenge can not be achieved without a powerful movement of compression of social inequalities, at all levels. With the current scale of inequalities, the march towards energetic sobriety will remain wishful thinking. Firstly because carbon emissions are highly concentrated among the richest. Globally, the richest 10% are responsible for almost half of the emissions, and the richest 1% alone emit more carbon than the poorest half of the planet. The drastic reduction of the purchasing power of the richest would therefore as such have a substantial impact on the reduction of emissions at the global level.

Moreover, it is hard to see how the middle and lower classes of rich and emerging countries would accept to change their way of life (which is nevertheless indispensable) if they are not given proof that the better-off are put to use. 

Thomas Piketty

new issue of Economic Thought

Economic Thought:
History, Philosophy and Methodology
Vol. 8, No. 1 
download issue in full

Judging Heterodox Economics: A Response
to Hodgson’s Criticisms
Lynne Chester

The Meaning and Future of Heterodox Economics:
A Response to Lynne Chester
Geoffrey M. Hodgson

Was Smith A Moral Subjectivist?
Kevin Quinn

Addressing the Malaise in Neoclassical Economics:
A Call for Partial Models
Ron Wallace

Commentary on ‘Addressing the Malaise in Neoclassical
Economics: A Call for Partial Models’
David Orrell

Two ways to approach sustainability

from Ken Zimmerman

Ecosocialists aren’t even a political party, much less a political force in most of the western world. And certainly not in the top polluting nations in the world – China, Russia, India, and the USA. These four nations along with the EU hold the future of humans safely living on planet earth, of perhaps not living at all on that planet.

There are two ways to approach changing this situation – from people’s direct-action groups to local and then national governments. This is going on in the EU right now. Secondly, by seizing national governments and moving eco-ethical-justice policies outward from the national government. There is an effort to do this in the US during the 2020 elections. This approach involves an intermediate education process to bring churches, educational institutions, local governments, business, manufacturing, and finance into the work of redesigning all these areas in terms of eco-ethics-justice. I can’t see an advantage of one over the other. The path chosen would reflect the existing cultural situation in each nation and region. Mass changes in laws will be required, as will the assurance of effective and consistent enforcement procedures and personnel. Whichever route is chosen, a means must be worked out early in the process to make these changes cross- and multi-cultural, so they are implemented smoothly and consistently across the entire world.

What happened to the public economy in economics?

from June Sekera

More than a century ago, the effective operation of the public economy was a significant, active concern of economists. With the insurgence of market-centrism and rational choice economics, however, government was devalued, its role circumscribed and seen from a perspective of “market failure.” As Backhouse (2005) has shown, the transformation in economic thinking in the latter half of the 20^th century led to a “radical shift” in worldview regarding the role of the state. The very idea of a valid, valuable public non-market has almost disappeared from sight.

In 18^th and 19^th century Germany, Kameralwissenschaft (“Cameralism”) represented a form of public economics. Backhouse (2002, p. 166), describes this school as the era’s “science of economic administration,” which had three components: public finance, economics, and public policy. The “Historical School” of economics emerged in later 19^th century Germany and viewed government positively as a system for promoting social well-being (Bogart, 1939; Shionoya, 2005). It stopped short, however, of explaining the operational or production aspects of the system. During the late 19^th and early 20^th centuries, economists wrestled with the question of how the “public economy” operates.

Disruption in the world of trade

from C. P. Chandrasekhar and Jayati Ghosh

World trade is in deceleration mode. After having recovered smartly from 2.3 and 1.6 per cent in 2015 and 2016 to 4.6 per cent in 2017, the growth in the volume of world merchandise trade slowed to 3.0 per cent in 2018, WTO estimates show (Chart 1).  

The deceleration has been greater in recent quarters. Quarter-on-quarter growth rates, as estimated by the Netherlands Centraal Planbureau (CPB) indicate that trade growth fell from 1.1 per cent in the third quarter of 2018 to -0.6 per cent in the fourth quarter and -0.3 per cent in the first quarter of 2019 (Chart 2).

The prognosis is not positive either. The WTO’s World Trade Outlook Indicator (WTOI) released in May 2019, for example, stood well below its baseline value of 100 at 96.3, which is its weakest level since 2010. That signals that world trade growth has fallen in the first half of 2019. Moreover, according to the WTO: “The outlook for trade can worsen further if heightened trade tensions are not resolved or if macroeconomic policy fails to adjust to changing circumstances.”

Do we need environmental ethics?

from Malgorzata Dereniowska

Environmental ethics is a field of applied ethics concerned with the ethical dimension of human relationship towards nature. The term environmental ethics covers a variety of approaches that can be roughly divided into two camps: anthropocentrism and non-anthropocentrism. Anthropocentrism refers to a human-centered approach to environmental problems that protects nature for humans. Radical anthropocentrism is often equated with the view that only human beings have intrinsic value, and sees nature as having only instrumental value. Non-anthropocentrism encompasses a variety of approaches connected by the belief that nonhuman entities also have value that is not reducible to anthropocentric interests. It often questions the propriety of human interests and preferences as a sufficient basis for environmental decision-making (Routley 1973). Environmental ethics is inherently pluralistic, representing a wide variety of socio-environmental values and beliefs. Its overarching goal is to prompt change in collective practices and individual behaviours.

Environmental ethics developed as a separate field of enquiry and action in response to the fact that ecological crisis is driven by human activities (Attfield 2017). Even though it is difficult to predict the scope and speed of environmental change—such as biodiversity loss, pollution, and climate change—the scientific community rests on consensus that contemporary environmental problems are humanly induced (see Gardiner 2010 in relation to climate change). This recognition led to problematising the human-environment relationship in ethical terms, and looking at environmental problems as moral ones. read more

Maximum wellbeing within ecological limits

from Max Koch

Herman Daly’s “steady-state economy” (Daly, 1974) is the most cited case of an economic system that functions within ecological boundaries. It is a model of an economy that does not grow in the sense that it keeps the level of throughput (extraction of raw materials from nature and their return to nature as waste) as low as possible and ideally within the regenerative and assimilative capacities of the ecosystem. However, the original concept of a steady-state economy was not developed at the global level. Yet environmental threats such as climate change are global issues, because for the atmosphere it does not matter from which part of the globe greenhouse gases are emitted. Accordingly, the ecological footprint and the associated matter and energy throughput of the whole planet would need to shrink if the world’s mode of production and consumption were to respect ecological limits. However, due to massive differences in economic development and unprecedented socio-economic global inequality (Piketty, 2014) such a re-embedding of the world’s production and consumption patterns would imply different challenges for different regions and nations. Recent comparative research demonstrates that not only nations’ social inclusion, wellbeing and democracy scores largely increase with GDP per capita but also their ecological footprints and carbon emissions. According to Fritz and Koch (2016), who divided 138 countries into five clusters of economic development measured as GDP/capita (“poor”, “developing”, “emerging”, “rich” and “overdeveloped” countries), it is only the poorest group of countries that could currently be seen as environmentally sustainable.

The ecosocialist path to 1.5°C sustainability

from Richard Smith

We ecosocialists have a practical answer. We accept the science that to prevent runaway global warming “greenhouse emission must be reduced by 45 percent from 2010 levels by 2030, and by 100 percent by 2050.” We agree with the IPCC that this will require “deep emissions reductions in all sectors.” We agree that it will require “far-reaching transitions in energy, land, infrastructure, and manufacturing,” that it will require “systems transitions” (indeed, more than they imagine). And we understand that this must all be done at “unprecedented speed and scale.” “We understand that we desperately need to “do what the science demands before it’s too late”.

But we also understand that imposing drastic cuts in fossil fuel production has to translate into industrial shutdowns and retrenchments across the economy. There is just no way around this. We reject the carbon-tax-to-collapse scenario. Instead, we propose a strategy of rationally planned, democratically managed, wind-down and phase-out of fossil fuels and a coordinated transition to renewable energy that avoids economic collapse and guarantees reemployment for the affected workers. Our strategy for the United States is based on a four-point:  

The wonderful world of free market drugs

from Dean Baker

I write about the possibility of producing drugs without patent monopolies frequently for several reasons. First, drugs can be essential for people’s health or even life. It should not be a struggle for people to pay for them. Second, there is a huge amount of money at stake, way more than in almost any other realm of public policy. Third, it is such a great example where government intervention, in the form of patents and related monopolies, creates the problem. This is not a story where we need the government to correct an inequity created by the market, we need the government to stop intervening in a way that creates tremendous inequities and inefficiencies.

I find that people (I mean people engaged in public policy work, not random people grabbed off the bus) have a hard time even understanding what the market for prescription drugs looks like in the absence of patent and related monopolies,[1] so I thought I would devote a blogpost to describing my view of such a world.

The void in neoclassical orthodoxy

from Julie A. Nelson

Since the 1990s, I and some other feminist economists have been pointing out that the mainstream discipline of economics has a profoundly masculinist bias. That is, aspects of human nature, experience, and behavior that fit a culturally “macho” mold have been emphasized and elevated, while those that are culturally associated with a lesser-valued femininity have been ignored.

The neoclassical orthodoxy focuses on markets and perhaps the public sphere, but categorizes families and unpaid work as “non-economic”. The discipline adheres to exaggerated notions of (strictly logical) reason, while neglecting emotion and embodiment. It sees the economy in terms of autonomous agents, while glossing over all connection, dependency, and interdependency. It elevates self-interest, considering an interest in the well-being of others to be an anomalous and largely unnecessary trait. It defines objective “rigor” in terms of detachment and abstraction, treating normative or moral concerns as overly subjective, and assuming they can be safely denied or excluded. It elevates mathematical proof and fine-tuned econometric methods while downplaying detailed, concrete observation and good, verbal narratives.

How many people are going to buy a second-hand Tesla that needs a $44,000 battery?

from Richard Smith

If the bulk of CO₂ emissions from cars are produced before the car leaves the showroom then, obviously, the best way to suppress vehicle emissions is to produce as few cars as we need and make them last as long as possible. But of course that runs directly counter to the needs of the capitalist auto industry which must seek to maximize sales by driving repetitive consumption, the faster the cycle the higher the profits. Ever since the 1920s, the auto industry has been based on designed-in and advertising-driven obsolescence as the industry ritually pushed “new” but trivially different models each year. Detroit’s Holy Grail was to get you to trade in your “old” car every year. They used to focus on style – grills and tailfins – and of course they’ve always pushed the biggest “fully loaded” models like the ponderous Cadillac Escalades and Lincoln Navigator barges one sees all over my home town New York City – “big car big profit, small car, small profit”. Today they’ve ramped up the technology larding their cars with high-tech features and gadgets:

The world’s most unequal countries