A primer on economics!

26 September - A primer on economics! 


What is truly surprising is that neo-Keynesian economics - standard teaching of economics from the end of WWII for two or three decades - was replaced, even in leading US universities, with what is basically classical economics derived (none too accurately) from Adam Smith: slogans - "free market", "invisible hand", "self-correcting" etc. etc. In other words basically a return to pre-1929 theory. 


Neo-Keynesians had long pointed out the many quite obvious flaws in classical market theory: just one example - that many producers inevitably require years to adjust to changes in supply and demand: one example, the years it takes to increase coffee production, and the social hardship caused by the near- impossibility of avoiding glut. This occurs not only in agricultural production but in manufacturing - look at the current excess capacity for car production in Europe. There are masses of other ways in which traditional markets do not work, or work badly. 


More important, neo-Keynesian economics stresses two points a) that capitalism requires binding rules and effective enforcement or the crooks get the upper hand. But neo-classical economics, with its worship of "the market", "small government" etc., insists on de-regulation with the results we now suffer. b) neo-Keynesian economics points out that, while private enterprise does some things best, not-for-profit public organisations can do many things better. This is decried as "socialism" in today's absurdly ideological world of "left and right", "progressive and conservative", "religious and atheist". 


Then there is the "political correctness" demanded by self-appointed "neo-moralists" which has prevented genuine reformers from working together. In the US you have the "red state/blue state division" where in "red states" those against "political correctness" find themselves voting for the huge cooperations and G W Bush bellicose confrontation with its Amerika Uber Alles neo-conservativism. And in the blue states family lovers and main-line Christians find themselves voting for the whole "progressive" agenda. 


If we are to start to resolve our economic future after the disaster of deregulated capitalism brought on us not only by corporate and banking greed and their lobbyists, but by post-Keynesian neo-classical market economists, we must go
for what works, not these depasse ideologies: pragmatism must be the "non-ideology" of the future.