Neoclassical economists often maintain that there is a trade-off between equality and efficiency. That this is a false contention is shown forcefully by research conducted for example by Andrew Berg and Jonathan Ostry.Lars P Syll's Blog
Simon Patten recalled in 1912 that his generation of American economists – most of whom studied in Germany in the 1870s – were taught that John Stuart Mill’s 1848 Principles of Political Economy was the high-water mark of classical thought. However, Mill’s reformist philosophy turned out to be “not a goal but a half-way house” toward the Progressive Era’s reforms. Mill was “a thinker becoming a socialist without seeing what the change really meant,” Patten concluded. “The Nineteenth Century epoch ends not with the theories of Mill but with the more logical systems of Karl Marx and Henry George.[1] But the classical approach to political economy continued to evolve, above all through Thorstein Veblen.
Like Marx and George, Veblen’s ideas threatened what he called the “vested interests.” What made his analysis so disturbing was what he retained from the past. Classical political economy had used the labor theory of value to isolate the elements of price that had no counterpart in necessary costs of production. Economic rent – the excess of price over this “real cost” – is unearned income. It is an overhead charge for access to land, minerals or other natural resources, bank credit or other basic needs that are monopolized.
This concept of unearned income as an unnecessary element of price led Veblen to focus on what now is called financial engineering, speculation and debt leveraging. The perception that a rising proportion of income and wealth is an unearned “free lunch” formed the take-off point for Veblen to put real estate and financial scheming at the center of his analysis, at a time when mainstream economists were dropping these areas of concern.
Veblen’s exclusion from today’s curriculum is part of the reaction against classical political economy’s program of social reform. By the time he began to publish in the 1890s, academic economics was in the throes of a counter-revolution sponsored by large landholders, bankers and monopolists denying that there was any such thing as unearned income.[2] The new post-classical mainstream accepted existing property rights and privileges as a “given.” In contrast to Veblen’s argument that the economy was all about organizing predatory schemes, this approach culminated in Milton Friedman’s Chicago School defense the pro-rentier argument: “There is no such thing as a free lunch.”Read it at Michael Hudson
An international group of economists and social scientists argue in this book that austerity is bad economics, bad arithmetic, and ignores the lessons of history. They are outraged at the narrow range of austerity policies which are bringing so many people around the world to their knees, especially in Europe. ‘Be Outraged’ argues that austerity measures and cutbacks are reducing growth and worsening poverty and that there are alternatives – for Britain, Europe and all countries that currently imagine that government cutbacks are the only way out of debt.
Authors
- Richard Jolly – Research Associate, Institute of Development Studies at University of Sussex Giovanni Andrea Cornia, Professor, Department of Economics, University of Florence
- Diane Elson, Emeritus Professor, Department of Sociology, University of Essex
- Carlos Fortin, Research Associate, Institute of Development Studies at University of Sussex
- Stephany Griffith-Jones, Professor, Financial Market Director, Initiative For Policy Dialogue, Columbia University
- Gerry Helleiner, Professor Emeritus, Department o Economics, University of Toronto
- Rolph van der Hoeven, Professor, Employment and Development Economics, ISS, Erasmus University
- Raphie Kaplinsky, Professor of International Development, Open University, UK
- Richard Morgan, UNICEF (in personal capacity) Isabel Ortiz, UNICEF (in personal capacity)
- Ruth Pearson, Emeritus Professor of International Development, University of Leeds
- Frances Stewart, Professor, Department of International Development, University of Oxford
Review here by Duncan Green, the Head of Research for Oxfam GB, who blogs at "From Poverty to Power" on Oxfamblogs.
The election of Francois Hollande is making me very optimistic for the first time in a long time. I am getting more bullish on France and for Europe in general. (Maybe even for the U.S. too, but that could be a bit of a stretch.)
The reason I am so optimistic is because Hollande has promised to go after the rich and shrink the financial sector while creating millions of new and very needed civil service jobs. I believe it's a formula that can absolutely work.
| The 57-year-old Socialist has openly admitted that he "does not like the rich" and declared that "my real enemy is the world of finance". This means taxing the wealthy by up to 75 per cent, curtailing the activities of Paris as a centre for financial dealing, and ploughing millions into creating more civil service jobs. |
I am fully aware that all you hear is exactly the opposite. Ever since Hollande shot to the top of the polls we've been warned about the dangers of taxing the rich. We've been told that we need the rich because without them we wouldn't have the most productive members of society. Innovation would be stifled and job creation would plummet. A new Dark Ages would result because--let's face it--all the rest of us owe the very air we breathe to the benevolence that trickles down from the wealthy few.
Let me tell you something...don't pay any attention to that crap. It's all just a bunch of propaganda being orchastrated by the rich themselves, who fear losing the cushy public welfare support they've had for the past 30 years.
The fact is, we don't need the rich at all, nor do we need a big financial sector. Tell me, what "wealth" do the rich create? The modern day rich are mostly involved in stock, commodity and real estate speculation and other forms of gambling and rent seeking. The rich are mostly idle, whereas the real wealth is created by workers toiling in factories, on consturction sites, in laboratories and schools and in so many other areas of our economy and society that never get any attention.
A society run by a small group of billionaires who get to play in their own personal "casino economy" while everyone else struggles to get by is a shitty society. Hollande gets it. The people of France get it. Let's hope that real change is on the way in France, not like the "real change" we saw here.
Bottom line is, I am rooting like hell for Hollande to succeed because maybe, just maybe, it will break the back of this brutal, selfish and destructive Reagan/Thatcher/Friedman neoliberal free-market bullshit dogma that has enslaved us for the past 30 years.
