Author Archive

Steve Keen vs. Nordhaus – regarding humankind’s greatest ever crisis

February 16, 2021 7 comments

from Edward Fullbrook

Steve Keen’s new paper “The appallingly bad neoclassical economics of climate change,” would benefit humankind if it were widely read by economists.¹  There are two ways you can obtain it:

  1. Go here at Taylor & Francis and pay £35
  2. Go here and download it for free.

Here is its conclusion:

Conclusion: drastically underestimating economic damages from global warming

Were climate change an effectively trivial area of public policy, then the appallingly bad work done by Neoclassical economists on climate change would not matter greatly. It could be treated, like the intentional Sokal hoax (Sokal, 2008), as merely a salutary tale about the foibles of the Academy.

But the impact of climate change upon the economy, human society, and the viability of the Earth’s biosphere in general, are matters of the greatest importance. That work this bad has been done, and been taken seriously, is therefore not merely an intellectual travesty like the Sokal hoax. If climate change does lead to the catastrophic outcomes that some scientists now openly contemplate (Kulp & Strauss, 2019; Lenton et al., 2019; Lynas, 2020; Moses, 2020; Raymond et al., 2020; Wang et al., 2019; Xu et al., 2020; Yumashev et al., 2019), then these Neoclassical economists will be complicit in causing the greatest crisis, not merely in the history of capitalism, but potentially in the history of life on Earth.

1. More than once Keen distances his usage of “climate change” from greenwash usage, as when he writes: “these Neoclassical economists are on a par with United States President, Donald Trump, in their appreciation of what climate change entails. . . . . They are equating the climate to the weather.”

The Inequality Crisis: The three options

October 7, 2020 8 comments

Amazon  US  UK  DE  FR  ES  IT  JP  CA

The Inequality Crisis

The everyday operations of our economies produce the goods and services that keep us alive and enable us to enjoy life. But that is not the only way that those operations effect our lives; they also effect societies and ecosystems. The Inequality Crisis, which threatens our societies, and the Climate Crisis, which threatens both our societies and our species, are also, no less than production, brought about directly by the everyday operations of our economies.

But for two hundred years the economics profession has in the main excluded from its study of economies two of their three categories of primary effects. And given the profession’s influence, this exclusion of societal and ecological effects has promoted the intellectual invisibility of these two categories, thereby helping to bring about the two crises. Read more…

Le Bolero en #confinement

April 12, 2020 6 comments

Isolation Waltz

from The Guardian

Move over Mozart, here comes Stelios Kerasidis. A seven-year-old Greek prodigy has penned an “isolation waltz” inspired by the pandemic.

The hypnotic, fugue-like melody has picked up more than 43,000 hits on YouTube since its launch last week.

“Hi guys! I’m Stelios. Let’s be just a teeny bit more patient and we will soon be out swimming in the sea,” he beams, perched on his piano stool, feet barely touching the floor. “I’m dedicating to you a piece of my own.”

The work, his third composition, was written especially “for people who suffer and those who isolate because of Covid-19,” he adds.

In half a century what have we done with that knowledge?

January 16, 2020 7 comments

from Edward Fullbrook

A version of this graph appeared in yesterday’s Guardian.  I have a vivid memory from almost exactly half a century ago that relates to it.  It was February 1970 and snowing.  It was rural Wisconsin in the States and I was riding in a car with a woman who was the mother of six and a well-known peace activist but with no connection to science or environmentalism.  We were coming from Frank Lloyd Wright’s estate Taliesin where I lived, and as we neared Madison and got caught in a traffic jam, my friend said, “That man in the car in front of us is one of the scientists who says we are increasing the Earth’s temperature.”

As the decades passed, my friend’s words became a milestone for me because they mark a point when the fact that the world’s economy was heating up the Earth had already become common everyday conversational knowledge.  But now look again at that graph.  What have we done with that knowledge?

2019 was “one of the strongest in the history of financial markets.” What does that mean?

January 8, 2020 9 comments

from Edward Fullbrook

Here is a passage from an article that appeared last week in The Guardian.

With one day of trading to go, 2019 is on course to be one of the strongest in the history of financial markets after shares around the world racked up record after record in another barnstorming year.

On Wall Street the Dow Jones industrial average has gone up almost 25% having reached record highs day after day, while the broader S&P500 is up 30% and the tech-heavy Nasdaq has grown 40% in value. The FTSE100 in London is close to its record high, as is the Dax30 in Germany. In the Asia Pacific, the Nikkei is up 15% while Australia’s ASX200 is still close to its highest ever point (reached in November).

But none of these countries, with the exception of the US, are in particularly good shape. Instead their stock markets are being sustained by ultra-low borrowing costs led by the US Federal Reserve.

This latest round of rate cutting has turned many of the assumptions about economics on their head to create a bad-news-is-good-news paradigm for markets.

Martin Farrer, The Guardian

Do these huge increases in the market-values of stocks mean that the riches of the world, including assets and income, have increased hugely in 2019?  That depends on what kind of metrical structure market-value has. Read more…

Growth and Growth

September 4, 2019 3 comments

Gross World Product

Graph of gross world product (GWP) historic, for the past two thousand years

Read more…

“The economics profession is facing a mounting crisis of sexual harassment, discrimination and bullying”

January 11, 2019 4 comments

from yesterday’s New York Times

The economics profession is facing a mounting crisis of sexual harassment, discrimination and bullying that women in the field say has pushed many of them to the sidelines — or out of the field entirely.

Those issues took center stage at the American Economic Association’s annual meeting, the largest gathering of the profession, last weekend in Atlanta. Spurred by substantiated allegations of harassment against one of the most prominent young economists in the country, top women in the field shared stories of their own struggles with discrimination. Graduate students and junior professors demanded immediate steps by the A.E.A. to help victims of harassment and discipline economists who violate the group’s newly adopted code of conduct.

Read more…

The Great Gatsby Curve

from The Atlantic

Economists represent this concept with a number they call “intergenerational earnings elasticity,” or IGE, which measures how much of a child’s deviation from average income can be accounted for by the parents’ income. An IGE of zero means that there’s no relationship at all between parents’ income and that of their offspring. An IGE of one says that the destiny of a child is to end up right where she came into the world.

Economies, carbon dioxide and the atmosphere

In April the concentration of carbon dioxide in the atmosphere exceeded an average of 410 parts per million (ppm). Before the Industrial Revolution, carbon dioxide levels did not exceed 300ppm in the last 800,000 years.  (Scripps Institution of Oceanography)

Citigroup Plutonomy Reports update

from Edward Fullbrook 

“Plutonomy” is the word that Wall Street and City bankers use in private to designate the political economy in which they operate and in which today we all live.  They go to great trouble to keep us 99% ignorant of their perceptions of today’s economic and political realities, and which their “plutonomy” concept reveals.

In November 2010, I put up the post Citigroup attempts to disappear its Plutonomy Report #2 which was viewed over 40,000 times. It included links to Citigroup’s Plutonomy Reports 1 and 2, but Citigroup soon succeeded in having those links blocked.

In January 2011 I put up the post New links for secret Citigroup Plutonomy Reports.  But in June 2011, Citigroup succeeded in also closing down those links.  Here is an account of how they did it, including some excerpts from the reports.

But recently someone sent me this link:
It is not exactly a good read, but nonetheless very interesting.  It estimates that already in 2006 in the US the richest 5% possessed greater net worth than the bottom 95% combined.

I was also sent this:

After a little digging, I was able to find .jpeg images of all the pages of Parts 1 and 2 of the report. While they are not high-quality images, they are legible enough to download and read.

As of today (4/23/18),  the images can be found at this link:

I am told that there also exists Plutonomy Report #3, but I have yet to access it

Syll’s top 20 books compared to RWER’s top 10 and its poll’s top 40 vote receivers

March 18, 2018 5 comments

In May of 2016 the Real-World Economics Review conducted a poll titled “Top 10 Economics Books of the Last 100 Years”  Voting was open to the journal’s 26,000 subscribers, and over 3,000 of them voted, each having up to ten votes and with 17,270 votes in total cast. The results were published two weeks later and linked on over 2,000 Facebook pages.  It is interesting to compare those results to Lars Syll’s personal list of “Top 20 heterodox economics books” published here earlier today.

Although the RWER subscribers list was not limited to “heterodox” economics books, eight of Syll’s top 20 appear in the RWER subscribers’ Top Ten.

Pasted below are the 40 books in the RWER poll that received the most votes.  Notably, Syll’s list contains only one book published in this millennium and the RWER’s top 20 only three.

The 40 books that received the most votes in the RWER poll for the
Top 10 Economics Books of the Last 100 Years 

  1. John Maynard Keynes, General Theory of Employment, Interest and Money (1936)   1,597
  2. Karl Polanyi, The great transformation (1944)            1,027
  3. Joseph A. Schumpeter, Capitalism, Socialism & Democracy (1942)       927
  4. John Kenneth Galbraith, The Affluent Society (1958)  780
  5. Hyman Minsky, Stabilizing an Unstable Economy (1986)         731
  6. Thomas Piketty, Capital in the Twenty-First Century (2014)       687
  7. Joan Robinson, The Accumulation of Capital (1956)       583
  8. Michal Kalecki, Selected Essays on the Dynamics of the Capitalist Economy (1971)    582
  9. Amartya Sen, Collective Choice and Social Welfare (1970)     580
  10. Piero Sraffa, Production of Commodities by Means of Commodities (1960)       500

Read more…

Bribe offers for academics

February 23, 2018 5 comments

from Edward Fullbrook

Norbert Häring’s story about misleading academic research reminds me of another story.

Big-money offering bribes to academics is, I suspect, more common than people, including academics, realize.  I first encountered the practice when I was an undergraduate.  My university’s most popular course, “Insurance”, was taught by an economics professor whose students affectionately called Doc Elliot.  He taught not only how the insurance industry purported to work, but also how it really worked, and he frequently accepted off-campus speaking engagements.

Doc Elliot may be the only person who has ever lived who could talk insurance and make people laugh.  Certainly, he was the funniest person I’d ever known; and, despite our 35-year age gap, we became friends of a sort.  One day I was sitting with him in his office when, handing me a business letter, he said, “Here, this is what a bribe offer looks like.”

The letter was from a national association of insurance companies.  It praised his eminence as a world authority on insurance and said they would like to be able to occasionally call on him for advice.  For this they would pay him $80,000 a year.  At the time the university’s highest professor’s salary was $10,000, and so far as I know there was no money in this professor’s family.

“In the world we live in,” explained Doc Elliot, “refraining from telling the truth is often worth lots more than telling it.  I get between-the-lines offers like this all the time.  But I think this one deserves to go up on my bulletin board.”

Why does it cost so much to read heterodox economics?

January 10, 2018 3 comments

from Edward Fullbrook

The current issue (January 8, 2018) of the Heterodox Economics Newsletter lists the current issues of 16 English language journals, with each linked to the newsletter’s website where there is a link for each article in these new issues.  For each journal, I picked one article to try to read.  Here is what I found.  Read more…

Neoclassical economics usually reads its models backwards.

November 14, 2017 3 comments

from Edward Fullbrook

In public, including in the training of economists, Neoclassical economics usually reads its models backwards. This gives the illusion that they show the behaviour of individual economic units determining sets of equilibrium values for markets and for whole economies. It hides the fact that these models have been constructed not by investigating the behaviour of individual agents, but rather by analysing the requirements of achieving a certain macro state, that is, a market or general equilibrium. It is the behaviour found to be logically consistent with these hypothetical macro states that is prescribed for the individual agents, rather than the other way around.[1] This macro-led analysis, this derivation of the micro from a macro assumption, is and always has been the standard analytical procedure of theory construction for the Neoclassical narrative. Sometimes, for pedagogical reasons, authors call attention to how the “individualist” rabbit really gets into the Neoclassical hat. For example, consider the following passage from a once widely used introduction to economics.

 “For the purpose of our theory, we want the preference ranking to have certain properties, which give it a particular, useful structure. We build these properties up by making a number of assumptions, first about the preference-indifference relation itself, and then about some aspects of the preference ranking to which it gives rise” (emphasis added) (Gravell and Rees 1981, p. 56).

Read more…

This intellectual cult threatening us all

November 6, 2017 21 comments

from Edward Fullbrook

Determinism, the idea that everything that happens must happen as it does and could not have happened any other way, and atomism, the idea that the world is made up of entities whose qualities are independent of their relations with other entities, are fundament components of classical mechanics. Atomism is also central to the concept of mind developed in John Locke’s An Essay Concerning Human Understanding, published (1690) three years after Newton’s Principia. Locke’s general conception of the human mind became commonplace among 18th-century philosophers, so when Adam Smith came to write the foundational text for economics, The Wealth of Nations (1776), he had the example not only of Newton’s material atomism, but also of Locke’s extension of it to an altogether different area of inquiry. If atomism could form the basis of a theory of ideas, then why not apply it as well to a theory of human beings?

Of course Smith did not limit his vision of economic reality to what could be seen through the metaphysical lens of classical mechanics. But a century later the founders of Neoclassical economics did exactly that and even boasted that they were doing so. Their justification of course – and it was a plausible one at the time – was the enormous success that exclusive devotion to this approach had yielded in physics. In time, especially from the 1960s onwards, undivided allegiance to this determinist-atomistic narrative became, with few exceptions, a basic requirement for making a career in economics.  Read more…

My evening with Joan Robinson and the Tractatus

October 25, 2017 10 comments

from Edward Fullbrook

The General Theory of Employment, Interest and Money was the first book I ever read with pleasure.  I was 22.

From age five to sixteen the school system had me classified as borderline mentally retarded.  My luck changed in my penultimate year of high school when a non-conformist English teacher gave me the chance to pretend I was not mentally deficient.  She also taught me how to write a sentence, after which, inflated with fantasises of normality, I taught myself how to read textbooks and take exams, and soon became academically proficient and for a long time thereafter very neurotic.

As an undergraduate I cut classes as often as I attended them and waited till the night before an exam to open the textbook.  Sometimes I only managed a C but in economics it was always an A and that was the only reason I had for becoming an economics graduate student.

Till then mine had been an all-American, all-textbook education.  The textbook genre requires its authors to pretend to know it all and talk down to their readers.  Reading The General Theory, I encountered for the first time an author who was openly struggling to understand what he was writing about.  I too was struggling and so I – and what could have been more preposterous – immediately identified on an existential level with John Maynard Keynes.  It meant that for the first time ever while reading a book my resentments and fears from my educational past receded to the background.  And when they did the most astonishing thing happened.  My brain started giving me an intensity of pleasure that, except for sex, I hadn’t thought possible.  So it was that an intellectual was born.  Read more…

Suspension of my blog “RussEurope” by OpenEdition

September 30, 2017 1 comment

from Jacques Sapir

Dear all, and Open Edition have suspended the access to my blog RussEurope. I can’t write anymore on my blog. In a short letter posted to my blog the Open Edition director, Mr Marin Dacos, explains that this measure is a reaction to the fact my last post are no more “academic”. Actually, I posted various kind of paper, from long technical papers to short pieces since the very beginning of my blog. Hence a post dating from September 22nd 2012 giving a good example of the “political” content of some posts of mine (

The accusation of using the blog as a pure political space is false and actually masking the fact that it is impossible to write in economics and political science without getting involved in political polemics. I had ever respected the Open Edition charter and specifically its chapter 10 defining the rights and obligations of authors.

The fact that Mr Dacos is now, since early July an adviser to a director of the Ministry of Higher Education and Research, in the French government, could explain why this sanction against me has been taken. At the very least there is a conflict of interest between his position of director of Open edition and his new function of Minister’s advisor.

Quite probably of course the very success of my blog, which jumped from 26000 monthly connexions to more than 200 000 monthly connexions could explain why what was thought to be “tolerable” in 2012 is no more by 2017 under Mr Macron’s rule.  Read more…

Piketty et al. and Trumpism

from Edward Fullbrook

It seems generally agreed that populism tends to rise up after a prolonged period in which governing elites have blocked from public discussion the declining economic welfare of a significant proportion of the population. These declines take two forms, usually simultaneously and interdependently:

  1. A decline of income and wealth in absolute terms and/or relative to the elites and their agents.
  2. A decline in key characteristics of employment through time (quality, security, real and relative wage levels) creating persistent high level of unemployment.

Though the latter is interdependent with the former, the real level of unemployment can be hidden. Elected elites and their patrons have a strategic interest in holding back public awareness and discussion of both declines for fear of losing elections and for fear that the upward redistributions of income and wealth will be stopped or even reversed.

Until three years ago the ruling elites in the United States were extremely successful at keeping the severe upward income and wealth redistribution that had been “progressing” since the early 1970s out of public view. GINI coefficients and graphs showing from 1970 onwards median income levels and relative shares of the bottom 90% and bottom 50% were never part of public discussion and but rarely of economics. Instead income discussion focused tightly on GDP and GDP per capita, which with rare exceptions increased year by year.   Read more…

The counterintuitive problem

from Edward Fullbrook

Scientific education entails taming the authority of one’s intuition.  Responsible citizenship in a democracy may entail it as well.

Keynes argued that markets often create inaccurate expectations of economic reality which people then act upon thereby changing reality.   This reflexivity that Keynes identified as central to capitalist markets is the opposite of the basic process described by traditional economic theory, both in Keynes’ day and in our own, whereby it is assumed that market expectations are determined by market reality rather than one of that reality’s determinants.

For most people Keynes’ theory of market expectations, like his theory of aggregate demand, is counterintuitive, and therefore difficult to elucidate and popularize sufficiently to become part of public discussion.   That is why George Soros’s role as a populariser of Keynes’ theory of expectations is potentially significant.  It is my view that in democratic societies the ultimate obstacle to implementing and maintaining laws and policies that will make their economies function reasonably well and fairly is the challenge of intellectually enabling their populations, especially their pundits and politicians, to comprehend the counterintuitive dimensions of economic reality.  Without that comprehension democratic societies will always be highly vulnerable to accepting the advice that follows from economic reasoning that excludes counterintuitive propositions and that serves the interests of tiny but powerful minorities.