Neoliberal Economics is DEAD

Pointing the way towards a new economic paradigm;

http://america.aljazeera.com/opinions/2015/3/the-time-for-a-new-economics-is-at-hand.html

The time for a new economics is at hand

The crises we now face illustrate the limits of neoclassical orthodoxy

March 8, 2015 3:00AM ETby Julie Matthaei @JulieMatthaeiIn early January I passed out a leaflet to my colleagues at the annual meeting of the American Economic Association in Boston, which brought together more than 11,000 economists and social scientists. The leaflet pointed out the profession’s failure to predict the 2008 financial crisis and challenged economics professors to incorporate new ideas into their teachings. As a self-proclaimed Marxist-feminist-anti-racist-ecological economist and economics professor, I was glad to take this opportunity to protest the lack of pluralism in the profession as well as the weaknesses of mainstream neoclassical economic theory, especially in the currently dominant free-market form.The leafleting was part of an action organized by the kick-it-over campaign ofAdbusters, the anti-consumerist Canadian nonprofit headed by Kalle Lasn, whose call to “occupy Wall Street” sparked the movement that swept the U.S. in the fall of 2011. Just as Occupy Wall Street aimed at exposing the failures of the financial industry, the kick-it-over campaign aims to expose the failures of the economics profession. The recent rise of Rethinking Economics and the International Student Initiative for Pluralism in Economics, with groups in more than 20 countries, is part of this heartening trend.One of the biggest weaknesses of U.S. economists and economics these days is the inability to think creatively. Almost all introductory economics classes taught in the United States — and core theory courses for economics majors and Ph.D. students — teach a school of economic theory that historians of economic thought callneoclassical economics (opposed to the earlier, classical economics of Adam Smith, David Ricardo and Karl Marx). Neoclassical economists take the capitalist market economy as a given and focus on its allocation of scarce resources among competing individuals. They build models based on assumptions of narrowly self-interested, materialistic utility maximization by consumers and profit maximization by firms. Sharing this foundation, their liberal and conservative camps disagree about the type and extent of government intervention required to respond to market failures. Neoclassical economics provides a wealth of insights into capitalist market economies. The problem is that it represents itself as economics, per se.The important insights of other forms of economics — which tend to be more historical, critical and visionary — are thereby banished. For example, radical and Marxist economics, which focus on the class inequality and power, bring crucial warnings about economic injustice and the corruption of political power by the wealthy and large corporations as well as visions of possible superior economic systems. And feminist economics, by foregrounding gender difference and inequality, elucidates the problems resulting from the nonpayment of reproductive labor and the banishment of feminine caring values from the goals of capitalist firms. These and other heterodoxspecialties exist in professional associations and journals, but they are almost never mentioned, let alone represented, in core economics classes at the undergraduate or graduate level. Students who question the narrowness of neoclassical assumptions and models are told to think like an economist — i.e., a neoclassical economist — or else. This narrowness of perspective is reproduced when students who were taught only neoclassical economics become professors who teach only it.

The rise of neoliberalism

The hegemony of neoclassical economics and the relative power of its left (interventionist) and right (free market) wings have varied with the political economic climate of the country and the world. In the U.S. by the late 1960s, popular and student activist movements for civil rights, labor, feminism and environmentalism had reconnected to and revitalized the Marxist theories that had been suppressed during the McCarthy era. Students like me were drawn to economics because of their concern with the pressing economic problems of poverty, inequality, racism, gender inequality and environmental destruction and found that heterodox theoretical frameworks — which foregrounded power, class inequality and the role of economic institutions and culture in reproducing them — were more amenable to the kind of critical analysis they were looking for.In this way, the radical social movements of the 1960s were able to gain a foothold in the economics profession. They revived and transformed theoretical traditions more critical of capitalism than neoclassicism. They formed an active left wing of the profession and engaged in healthy dialogue and alliances with left-leaning, Keynesian neoclassical economists who were convinced of the necessity of government spending to counteract unemployment and of other forms of market interventions such as anti-poverty programs, environmental regulation and anti-trust laws. Economists played a key role in creating the climate within which President Richard Nixon proposed the Environmental Protection Agency to Congress in 1970 and President Jimmy Carter signed the Full Employment and Balanced Growth Act in 1978.

The 1980s saw what can only be described as a counterreaction, both in the political economy and in academia. Building on the earlier work of conservative, Chicago School economists such as Milton Friedman and funding by conservative think tanks such as the American Enterprise Institute, new theories and fields expounding the ineffectiveness of government regulation rose to prominence and came to be known by heterodox economists and other outsiders as neoliberalism or free market fundamentalism. Prescribing deregulation, the weakening of the social safety net, free trade, privatization and tax cuts for the wealthy, they quickly gained political ascendancy, thanks to President Ronald Reagan and British Prime Minister Margaret Thatcher. Neoliberalism has maintained the upper hand in policymaking ever since, contributing directly to the 2008 financial crisis through its disastrous undoing of post-Depression financial reforms and to the prevalence of budget-cutting austerity programs in the U.S. and Europe.As neoliberalism gained ascendency, the center of gravity of mainstream, neoclassical economics moved to the right. Meanwhile, discrimination against Marxists and other critics has increased. We are ignored, ridiculed and told we’re not economists. There are very few job openings for us, mostly at liberal arts colleges rather than at universities with Ph.D. programs. This is the climate within which an interesting and sobering new form of McCarthyism occurred last spring. Six hundred liberal economists, including seven Nobel laureates, were red-baited by the Employment Policy Institute, ashady think tank funded by the restaurant industry, in a full-page New York Timesadvertisement because the letter they sent to President Barack Obama supporting increases in the minimum wage was also signed by eight radical/Marxist economists (including me).

A New Economics

But now, finally, economic change is afoot. With capitalism beset by multiple interconnected crises, the hegemony of neoliberalism appears to have peaked. The looming climate crisis and the power of the petroleum industry to corrupt governments and prevent a shift to a sustainable, carbon-free path reveal the oligarchic nature of unregulated free market capitalism. The intractable problem of poverty amid ill-gotten, empowered wealth, which sparked Occupy Wall Street, continues to draw attention, undermining neoclassical claims of the efficiency of labor markets. Last spring Pope Francis spoke forcefully for the “[rejection] of the absolute autonomy of markets and financial speculation” and for structural solutions to poverty and inequality. In January the Dalai Lamaproclaimed that because of Marx’s focus on the alleviating the gap between the rich and the poor, “as far as social-economic theory is concerned, I am still a Marxist.” January also saw the widespread public outcry against the crippling austerity programs usher the leftist Syriza party, with Marxist Finance Minister Yanis Varoufakis, into power in Greece. The Spanish anti-austerity Podemos party looks as though it will follow in Syriza’s footsteps.Change is also bubbling in the profession. One sign is the attention given to French economist Thomas Piketty’s best-seller “Capital in the 21st Century” at the American Economics Association meeting, including a webcast session in which Harvard conservative economist Greg Mankiw commented and Piketty responded. While Piketty is not a Marxist, he focuses on the unequal distribution of wealth (i.e., class) and chides mainstream economists for their “childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences,” as he puts it in his book. Another sign of change is that three of the 10 most influential economists, asranked by The Economist, are vocal critics of neoclassical economics, neoliberal capitalism or both: Paul Krugman (No. 2), Thomas Piketty (No. 5) and Joseph Stiglitz (No. 9).It is time for the economics profession in the U.S. to open itself to the new thinking that the current systemic economic crisis requires. We don’t need to start from scratch. There is a wealth of Marxist and heterodox ideas, Piketty’s among them, that can be drawn on to create healthy dialogue about the blind spots of neoclassical theory and about the failings of the capitalist system in its current form. Varoufakis has put forward a “radical pan-European green New Deal,” which includes “centralized funding for large-scale green energy research projects with decentralized assistance to small cooperatives that create local, sustainable development in cities and rural areas.” A growing body of solidarity economy research identifies, evaluates and advocates for existing economic practices and institutions animated by postcapitalist values — social responsibility, cooperation, equity in all dimensions, community and sustainability. Cooperatives of all types figure prominently as well as social entrepreneurship, the sharing economy, the commons and economic human rights.The time for a new economics is at hand. The field must seek out and welcome a diversity of views and engender substantive debate about economic theory and the solutions to the crises we are facing. It’s not a moment too soon

Let's try to keep the penis references to a minimum this time.

Neoliberal Economics has been used as a tool of the ultra rich to control and even coerce those without economic power, leading to greater gaps between rich and poor.

It's time for a new, more egalitarian approach- it worked during the forties, fifties and sixties and led to the middle class of the United States being the economic driver of an era of prosperity never seen before.

Why should we turn our back on that?!

Hmmm. You're no finshabby. Nowhere near disconnected enough.

ttystikk said:

Let's try to keep the penis references to a minimum this time.

Neoliberal Economics has been used as a tool of the ultra rich to control and even coerce those without economic power, leading to greater gaps between rich and poor.

It's time for a new, more egalitarian approach- it worked during the forties, fifties and sixties and led to the middle class of the United States being the economic driver of an era of prosperity never seen before.

Why should we turn our back on that?!

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Really I agree. The whole system at the moment seems completely arse backwards. I have no solution sadly. I just try and stay as far out of 'real' economics as possible, and not get swept away by it all. Never borrow from banks, is my rule number one.
If I can find an alternative to the norm, I take it. My own micro-economy.

Wish me luck.

Eso es demasiado tiempo para leer oh mi get fuera de aquí finshaggy.

It really is very difficult to have a sensible discussion in here, isn't it?

Now I'm fuckin' terrified! I guess I grew a fairly decent approximation of a Sativa, just look at that paranoia go!
--------------------------------

Julie Ann Matthaei
Professor of Economics

Marxist-feminist-anti-racist-ecological economist, specializing in women, gender, feminism, and work, and involved in research about and promotion of the emerging solidarity economy.


Interests - Personal
I am the proud parent of a daughter, Ella, who is in college, and have been married to Germai Medhanie, an Eritrean immigrant, since 2007. We live, with our three cats, in Cambridge, in Cornerstone Cohousing -- an intentional community run by consensus that has individual units as well as a shared kitchen and dining room, children’s space, exercise room, workshop, compost system, meeting rooms, and frequent community meetings. My family participates actively in the Cambridge Time Trade Circle. I speak English, Spanish, and French, and enjoy cooking and eating healthy, organic food; walking and biking; communing with nature; travel; and political activism. I am inspired by and involved in the Occupy movement.

I am a member of the Union for Radical Political Economists, Marxist-Feminist I, and the International Association for Feminist Economists, and have presented papers at and participated in many of their conferences. I have been active in organizing blocks of sessions on economic alternatives and the solidarity economy, and presenting research on this topic, at the two U.S. Social Forums (Atlanta 2007, Detroit 2010), and at the World Social Forum (Belem 2009). I am a co-founder and board member of the U.S. Solidarity Economy Network (SEN), as well as the convenor of its Research and Policy Working Group.

Growant: 11386769 said:

It really is very difficult to have a sensible discussion in here, isn't it?

Click to expand...

Yup someone always fucks it up but really no one wants to read all of that.

Iloveskywalkerog said:

Yup someone always fucks it up but really no one wants to read all of that.

Click to expand...

Not true. I thought it was pretty interesting actually.

I'll tell you what no one wants to read...incoherent spam from some 18 year kid with a shit attitude.

Iloveskywalkerog said:

Yup someone always fucks it up but really no one wants to read all of that.

Click to expand...

Gosh, no wonder people are so fucking shallow anymore...

Seriously? Not only can't you be bothered to take five minutes to read something- but you talk shit about the very idea??

If you are a tl;dr type that's fine- but find somewhere else to brag about it. I'm not impressed.

curious2garden said:

Now I'm fuckin' terrified! I guess I grew a fairly decent approximation of a Sativa, just look at that paranoia go!
--------------------------------

Julie Ann Matthaei
Professor of Economics

Marxist-feminist-anti-racist-ecological economist, specializing in women, gender, feminism, and work, and involved in research about and promotion of the emerging solidarity economy.


Interests - Personal
I am the proud parent of a daughter, Ella, who is in college, and have been married to Germai Medhanie, an Eritrean immigrant, since 2007. We live, with our three cats, in Cambridge, in Cornerstone Cohousing -- an intentional community run by consensus that has individual units as well as a shared kitchen and dining room, children’s space, exercise room, workshop, compost system, meeting rooms, and frequent community meetings. My family participates actively in the Cambridge Time Trade Circle. I speak English, Spanish, and French, and enjoy cooking and eating healthy, organic food; walking and biking; communing with nature; travel; and political activism. I am inspired by and involved in the Occupy movement.

I am a member of the Union for Radical Political Economists, Marxist-Feminist I, and the International Association for Feminist Economists, and have presented papers at and participated in many of their conferences. I have been active in organizing blocks of sessions on economic alternatives and the solidarity economy, and presenting research on this topic, at the two U.S. Social Forums (Atlanta 2007, Detroit 2010), and at the World Social Forum (Belem 2009). I am a co-founder and board member of the U.S. Solidarity Economy Network (SEN), as well as the convenor of its Research and Policy Working Group.

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Is this you, or did you copy n paste the C.V. of the author?

If this is your C.V., what are you doing on a pot forum?

That's not a derisive question, either- someone of such accomplishment would be doing it for very good reasons and I'd like to know what they are.

Growan said:

Really I agree. The whole system at the moment seems completely arse backwards. I have no solution sadly. I just try and stay as far out of 'real' economics as possible, and not get swept away by it all. Never borrow from banks, is my rule number one.
If I can find an alternative to the norm, I take it. My own micro-economy.

Wish me luck.

Click to expand...

Our system is skewed so heavily towards monied interests, be they individual, corporate or governmental in nature (and those lines are more blurred every day themselves) that the needs of the vast majority ACTUALLY DOING THE WORK are ignored to the point of being the butt of jokes.

Outsourcing; what has it done FOR our country and economy, besides enrich the few at the cost of impoverishing millions? In what scheme of economic theory does it make sense to DESTROY YOUR OWN CUSTOMER BASE?! If that isn't a classic example of shitting where you eat I don't know what is.

The solution, according to those same megacorps, is merely to expand overseas...

I think that's criminal.

I was thinking about the weed situation in Ireland yesterday.
As far as I can tell, most commercial operations are run by groups from abroad, China, Bulgaria etc. So the money made leaves the country.
By making it illegal to produce, a smoker's money is far more likely to leave the economy untaxed and find it's way to the home country if the organisation behind the grow. And that amount of money is huge. At e50 for 2.8g street prices..... Ouch.

That's gotta be as bad as outsourcing. But then Ireland let's companies like Google use them as a base of operations and then don't tax their profits. It's all a bloody mess.

Damn, you've made me think all numbery in my head. I'm going back to watching 'Pip Ahoy!' with the little one.

Iloveskywalkerog said:

Yup someone always fucks it up but really no one wants to read all of that.

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Hey wait a minute. This reply was a lot longer the first time you posted it.

It's the shortened version people had an objection to, but they misunderstood that you weren't talking about anyone else's post but your own edited one, isn't that right?

This is the place for the long form, brother. If we can't discuss the issues here, there's no hope.

Agreed re. the creeping totalitarian state- the average American knows something is wrong, but doesn't think they can be part of the solution- having bought the canard of, 'what can just one person do?'.

First, we get our concerns out. That's what this thread is FOR!

Second, we plan a course of action to galvanize and mobilize our fellow citizens.

Third, we propose appropriate legislation to fix the problem(s) and insist our elected officials pass it, AS WRITTEN, NOT WATERED DOWN. If they won't, we replace them with representatives who will.

Theory is simple, practice less so- but that doesn't make it any less worth doing.

ttystikk said:

Our system is skewed so heavily towards monied interests, be they individual, corporate or governmental in nature (and those lines are more blurred every day themselves) that the needs of the vast majority ACTUALLY DOING THE WORK are ignored to the point of being the butt of jokes.

Outsourcing; what has it done FOR our country and economy, besides enrich the few at the cost of impoverishing millions? In what scheme of economic theory does it make sense to DESTROY YOUR OWN CUSTOMER BASE?! If that isn't a classic example of shitting where you eat I don't know what is.

The solution, according to those same megacorps, is merely to expand overseas...

I think that's criminal.

Click to expand...

The reason america is headed where it's headed which is a totalitarian country is because we let it get to that point we are constantly blinded and distracted by the government with things such as who will be the next american idol or when will I have that new job when will.I eat my next meal, how will I be rich, me me me me me, selfishness.

More and more taxpayers money is being wasted a lot of it is kept by one single entity, The value of a dollar bill has decreased by
95% since the 90's it will keep






decreasing til one day the U.S. Dollar bill we all love will become
worthless causing anyways this somehow causes a lot more
power to be put into one entitys hands enslaving Americans that much more.

Don't you see there doing this on purpose no one is trying to do anything about that there's also other evidence right in front of your eyes and people do not realize it the police are going to get more and more brutal police brutality is the sign of everyday life in the near future.

They are demonstrating totalitarian acts and most of you still don't realize it no you just think it's police being mean. You protest and protest even though Barack Obama signed the anti protest bill in 2012 the government says " this is just a small tweak of law " just lying straight to your face and you.listen cause hey government knows best right ? That bill is just a silent attack on the u.s let me share a quote with you

"The best way to take control over a people and control them utterly is to take a little of their freedom at a time, to erode rights by a thousand tiny and almost imperceptible reductions. In this way, the people will not see those rights and freedoms being removed until past the point at which these changes cannot be reversed." - Adolf Hitler





This is what is happening right now

Drones said to be everywhere by 2016 watching us spying on our everyday lives and we are letting it happen Its just because the government knows it's citizens, ran by greed and wealth.

It seriously almost makes me wanna break down and cry that our country that was once land of liberty, and freedom our constitution is being laughed at by the government and jusg basically thrown away new world order is coming.


"People need to understand that the crisis we are experiencing around the world today are created by governments around the world who favor the coming New World Order. They are setting the stage for a global event" - Barack Obama

Iloveskywalkerog said:

The reason america is headed where it's headed which is a totalitarian country is because we let it get to that point we are constantly blinded and distracted by the government with things such as who will be the next american idol or when will I have that new job when will.I eat my next meal, how will I be rich, me me me me me, selfishness.

More and more taxpayers money is being wasted a lot of it is kept by one single entity, The value of a dollar bill has decreased by
95% since the 90's it will keep






decreasing til one day the U.S. Dollar bill we all love will become
worthless causing anyways this somehow causes a lot more
power to be put into one entitys hands enslaving Americans that much more.

Don't you see there doing this on purpose no one is trying to do anything about that there's also other evidence right in front of your eyes and people do not realize it the police are going to get more and more brutal police brutality is the sign of everyday life in the near future.

They are demonstrating totalitarian acts and most of you still don't realize it no you just think it's police being mean. You protest and protest even though Barack Obama signed the anti protest bill in 2012 the government says " this is just a small tweak of law " just lying straight to your face and you.listen cause hey government knows best right ? That bill is just a silent attack on the u.s let me share a quote with you

The best way to take control over a people and control them utterly is to take a little of their freedom at a time, to erode rights by a thousand tiny and almost imperceptible reductions. In this way, the people will not see those rights and freedoms being removed until past the point at which these changes cannot be reversed.

Click to expand...

Nice copy and paste.

Iloveskywalkerog said:

The reason america is headed where it's headed which is a totalitarian country is because we let it get to that point we are constantly blinded and distracted by the government with things such as who will be the next american idol or when will I have that new job when will.I eat my next meal, how will I be rich, me me me me me, selfishness.

More and more taxpayers money is being wasted a lot of it is kept by one single entity, The value of a dollar bill has decreased by
95% since the 90's it will keep






decreasing til one day the U.S. Dollar bill we all love will become
worthless causing anyways this somehow causes a lot more
power to be put into one entitys hands enslaving Americans that much more.

Don't you see there doing this on purpose no one is trying to do anything about that there's also other evidence right in front of your eyes and people do not realize it the police are going to get more and more brutal police brutality is the sign of everyday life in the near future.

They are demonstrating totalitarian acts and most of you still don't realize it no you just think it's police being mean. You protest and protest even though Barack Obama signed the anti protest bill in 2012 the government says " this is just a small tweak of law " just lying straight to your face and you.listen cause hey government knows best right ? That bill is just a silent attack on the u.s let me share a quote with you

"The best way to take control over a people and control them utterly is to take a little of their freedom at a time, to erode rights by a thousand tiny and almost imperceptible reductions. In this way, the people will not see those rights and freedoms being removed until past the point at which these changes cannot be reversed." - Adolf Hitler





This is what is happening right now

Drones said to be everywhere by 2016 watching us spying on our everyday lives and we are letting it happen Its just because the government knows it's citizens, ran by greed and wealth.

It seriously almost makes me wanna break down and cry that our country that was once land of liberty, and freedom our constitution is being laughed at by the government and jusg basically thrown away new world order is coming.

Click to expand...

The only thing I disagree with here is the idea that it's the government doing all this. I believe instead that it's a few extremist ultrarich 'activists' like the Koch brothers;

http://america.aljazeera.com/opinio...suggests-that-the-rich-own-our-democracy.html

THIS is the result of a SCOTUS that's forgotten who is supposed to protect from rapacious monied interests.

daedalux said:

Nice copy and paste.

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This Is exactly what im talking about how about this copy and paste my post on Google see what pops up. the only thing that was copy and paste in here werd the quotes. But this is a prime example of what Americans do when someone speaks against the government " nice copy and paste " you're such a dick