Saturday, December 2, 2017

June Sekera — Denial of the public non-market system, and the consequences

Public non-market production makes up a quarter to a half or more of all economic activity among advanced democratic nation-states. Yet the public economy’s ability to function on behalf of the populace as a whole is seriously imperiled in many western democracies, and particularly jeopardized in the United States. The surging influence of mainstream economics has been a prime factor in the degradation of the public domain over the last several decades – a phenomenon that James Galbraith (2008) has called “the collapse of the public governing capacity.”
Market advocates, exploiting neoclassical economic theory, have foisted market axioms and precepts onto government, intent on transforming public goods production in imitation of an idealized and idolized market model.
The ravaging of government in the interests of ideology and private profit has proceeded largely unhampered because we have no adequate theory to explain the nature and dynamics of the non-market public economy, no intellectual infrastructure to explain how its purposes and processes differ crucially from those of the market, and no effective explanatory model that shows why such differences matter substantially for democratic governance and the well-being of the populace....
The post is short and to the point.

However, I think the last sentence may be an exaggeration.

MMT does address this issue in terms of public purpose, and it is not original in doing so. John Kenneth Galbraith's career as public policy economists was all about addressing this and at one time he was listened to, and he played a policy making role in government, too. Many Post Keynesians also focused on this.

The problems are, first, the assumptions both substantive and procedural (methodological) of conventional economists, and secondly, the dominance of this approach in academic economics and also policy making circles.

Real-World Economics Review Blog
Denial of the public non-market system, and the consequences
Excerpted from June Sekera, “Missing from the mainstream: the biophysical basis of production and the public economy”, real-world economics review, issue no. 81, 30 September 2017, pp. 27-41, 


Ralph Musgrave said...

I agree that the "last sentence is an exaggeration". I.e. strikes me there is a very simple “theory to explain the nature and dynamics of the non-market public economy”: it’s called democracy.

That is, the people want the right to vote at election time for their wishes to override market forces: e.g. most people want state provided free education for kids.

Andrew Anderson said...

Those who support government subsidies* for private credit/debt creation are enemies of public sector spending. In my experience, that includes ALL MMT and Positive Money advocates, to at least some extent.

"Ya can't cheat an honest man" only works with the honest and I see none of those wrt fiat and credit creation advocacy.

*e.g. Government provided/backed insurance of private liabilities, including privately CREATED liabilities; exclusive access to inherently risk-free central bank checking accounts for the banks instead of to all citizens, non-negative yields on inherently risk-free sovereign debt, etc.