“A revolt against the orthodoxy has been smouldering for years and now seems to have gone critical.”

from today’s Guardian and Seumas Milne

Orthodox economists have failed their own market test

Students are demanding alternatives to a free-market dogma with a disastrous record. That’s something we all need

From any rational point of view, orthodox economics is in serious trouble. Its champions not only failed to foresee the greatest crash for 80 years, but insisted such crises were a thing of the past. More than that, some of its leading lights played a key role in designing the disastrous financial derivatives that helped trigger the meltdown in the first place.

Plenty were paid propagandists for the banks and hedge funds that tipped us off their speculative cliff. Acclaimed figures in a discipline that claims to be scientific hailed a “great moderation” of market volatility in the runup to an explosion of unprecedented volatility. Others, such as the Nobel prizewinner Robert Lucas, insisted that economics had solved the “central problem of depression prevention”.

Any other profession that had proved so spectacularly wrong and caused such devastation would surely be in disgrace. You might even imagine the free-market economists who dominate our universities and advise governments and banks would be rethinking their theories and considering alternatives.

After all, the large majority of economists who predicted the crisis rejected the dominant neoclassical thinking: from Dean Baker and Steve Keen to Ann Pettifor, Paul Krugman and David Harvey. Whether . . . .     continue reading here

Keen, New Economic Thinking and “The Deluded Discipline of Economics”

The Institute for New Economic Thinking has announced that it has given Steve Keen, winner of the Revere Award, a grant of $125,000 to turn his money-based model of the macro-economy – which draws on the theories of  Hyman Minsky and John Maynard Keynes – into a computer program for students and economists.