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RWER issue 56: Victor Beker

March 11, 2011 1 comment

On the economic crisis and the crisis of economics

Victor A. Beker*   [Universidad de Belgrano and Universidad de Buenos Aires, Argentina]

 “So in summary, Your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.”

Letter to the Queen of England by the British Academy. July 2009 Read more…

RWER issue 56: Pavlina Tcherneva

March 11, 2011 Leave a comment

Fiscal policy effectiveness: Lessons from the Great Recession

Pavlina R. Tcherneva   [Levy Economics Institute of Bard College, USA]

 Abstract

This paper reconsiders fiscal policy effectiveness in light of the recent economic crisis. It examines the fiscal policy approach advocated by the economics profession today and the specific policy actions undertaken by the Bush and Obama administrations. Read more…

RWER issue 56: Richard Smith

March 11, 2011 10 comments

Green capitalism: the god that failed

Richard Smith   [Institute for Policy Research & Development, London]

Abstract

In rejecting the antigrowth approach of the first wave of environmentalists in the 1970s, pro-growth “green capitalism” theorists of the 1980s-90s like Paul Hawken, Lester Brown, and Francis Cairncross argued that green technology, green taxes, eco-conscious shopping and the like could “align” profitseeking with environmental goals, even “invert many fundamentals” of business practice such that “restoring the environment and making money become one and the same process.” This strategy has clearly failed. Read more…

Call for Papers: a planned special issue/section of “Real World Economics Review”

March 2, 2011 3 comments

from Bruce Edmonds

Call for contributions on the Social Complexity of Informal Value Exchange: A special issue or section of an issue of “Real World Economics Review
Whilst traditionally Economics focuses on markets where the mechanisms of price and economic rationality might dominate, we call for contributions that consider a wider class of social phenomena.  Read more…

Neoliberals do not know what markets look like

December 27, 2010 3 comments

from Merijn Knibbe

Exchange takes place without any specification of its institutional setting. We have consumers without humanity, firms without organizations,and even exchange without markets.
Ronald Coase

I love markets. I love businesses. My family background: the so called ‘Kleine luyden’, ‘Small people’ who had all kinds of business: farming, small scale real estate, groceries, transport, meat – you name it. I recall going to the vegetable auction, sitting in the back of a truck with my nephews, watching the auctioneer and coming back with loads of radishes, cabbages – you name it. This world has largely vanished.

Read more…

Discussion nuggets #1

December 12, 2010 Leave a comment

Merijn Knibbe – 30 November
I do think that a flexible labor market does not necessarily increase the number of jobs or hours: it’s a bit like ‘musical chairs’. Quite a lot of tension, movement and shifting of chairs – but the tension and the like does not increase or decrease the number of chairs. Other factors however do – just look at the job statistics of the Bureau of Labor Statistics, the OECD or Eurostat. A very alarming statistic is however that the USA at the moment does seem to have something of a ‘Lump of Labor’: the 2010 number of jobs is not Read more…

RWER issue 54: Adam Kessler

September 28, 2010 1 comment

Real-World Economics Review, issue 54
You may read the whole paper here:
http://www.paecon.net/PAEReview/issue54/Kessler54.pdf

Cognitive dissonance, the Global Financial Crisis and

the discipline of economics*

Adam Kessler   [Fairleigh Dickinson University, USA]

 Abstract

The global financial and economic crisis has produced a powerful shock to the worldview of an influential group of economists whom I call believers in laissez faire (BLF). I provide evidence which suggests that the BLF responded to this shock in a manner that can best be described as irrational, ill-considered and clearly erroneous. I consider the social-psychological concept cognitive dissonance as the best explanatory framework for understanding this response. Cognitive dissonance theory predicts that when real-world events “disconfirm” deeply-held beliefs this creates psychological discomfort in persons and they will respond by means of distortion and denial. I test the proposition that the BLF experienced cognitive dissonance through a survey in which I asked two groups of economists what their views were on 10 possible causes of the Great Recession. One group consisted of the signers of the notorious open letter circulated by the Cato Institute opposing President Obama’s stimulus program. (I consider members of this group to be self-proclaimed BLFs.) The second group consisted of a random sample of members of the American Economics Association. Read more…

RWER issue 54: Steve Keen

September 28, 2010 2 comments

Real-World Economics Review, issue 54
You may read the whole paper here:
http://www.paecon.net/PAEReview/issue54/Keen54.pdf

Deleveraging is America’s future

Steve Keen   [University of Western Sydney, Australia]

            The latest Flow of Funds release by the US Federal Reserve shows that the private sector is continuing to delever. However there are nuances in this process that to some extent explain why a recovery appeared feasible for a while.

            The aggregate data is unambiguous: the US economy is delevering in a way that it hasn’t done since the Great Depression, from debt levels that are the highest in its history. The aggregate private debt to GDP ratio is now 267%, versus the peak level of 298% achieved back in February 2009–an absolute fall of 31 points and a percentage fall of 10.3% from the peak. 

You may read the whole paper here:
http://www.paecon.net/PAEReview/issue54/Keen54.pdf

RWER issue 54: Lewis L Smith

September 27, 2010 1 comment

Real-World Economics Review, issue 54
You may read the whole paper here:
http://www.paecon.net/PAEReview/issue54/Smith54.pdf

I regret to report that Lewis L Smith passed away the day before this paper was published. When it came to knowledge and understanding of the economics of oil and gas he was virtually peerless.  His reports on the energy industries have been a feature of this blog.  He will be greatly missed.
                                                                       The editor

The epistemology of economic decision making

Lewis L. Smith    [Energy Affairs Administration, Puerto Rico]

From knowledge to ignorance in four easy steps

To engage in a business, to undertake a project, to provide long-term financing or do anything “for the long haul”, takes one on a mental journey into a land we call “the future”. Initially, when we are contemplating the short run, the terrain looks familiar. But it becomes less and less so, the farther we look ahead and the more and more uncertainty and ignorance displace certainty and probability. This marked deterioration in our ability to anticipate and understand the future as our planning horizon advances, is the chief problem today of what may be called “the epistemology of economic decision making”. Read more…