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Know your enemy: understanding the origins of right-wing, laissez-faire, economics

As a doctoral research fellow I have been working to identify where the various ideas that we call ‘economic rationalism’ come from whilst also trying to understand how these irrational ideas come to be championed by so many right wing politicians and their ill-educated, ignorant, and greedy supporters.

While most right-wingers like to present ‘economically rational’ ideas as being both financially and rationally justified; this is simply not the case. The vast majority of economists across the globe think that these ideas are not only silly but dangerously nonsensical. The people who study our economic systems know that these ideas are ‘junk economics’.

Yet still the majority of our politicians continue to pretend that cutting corporate taxes, reducing government services, removing corporate regulations, and allowing the rich to gather huge piles of money to pass onto their chinless offspring, is all in the best interests of our society.

The following extract is presented to assist readers in understanding just how duplicitous our politicians are being when they advocate on behalf of laissez-faire economic doctrines that are specifically designed to make the rich richer, the poor suffer, and let corporations rape and pillage our society and the global environment.

* * * *

The ‘freshwater school of economics’ is often referred to as the ‘Chicago school of economics.’ The term ‘freshwater’ was coined to contrast this school of economic thought, which was developed and championed mainly by a small number of economists practicing in Universities lying in the heart of the American continent, with the much larger, mainstream, ‘saltwater school of economics’, based predominately in the many coastal states of North America.

The majority of the original concepts which animated the ‘freshwater school’ of thinking are now considered to be arcane and outdated by both freshwater and saltwater economists alike. Both these schools of thought now tend to talk about the predominant ways of thinking about economics that are current in the modern era as constituting ‘a new synthesis’ or the ‘new economics’.

The ideas championed by the freshwater school are closely aligned with the political ideology of the Republican Party. These ideas have influenced the policies implemented by many recent Republican administrations. In contrast, the ideas of the saltwater school of economics are best typified as being a congress of more traditional economic concepts. So while the ideas of the freshwater school are largely confined to the right-wing, the ideas of the saltwater school are shared by a much broader range of economists and politicians and so have provided the rationale underlying many policy decisions taken by both Democratic and Republican administrations. A similar dynamic is evident in many other western world countries (including here in Australia).

The freshwater school of economics is the origin of the majority of the ideas that are generally known as ‘free market economics’. The theories that are central to this school of thinking relate to how these economists view the dynamics of the financial marketplace and its cyclical nature. In many ways the freshwater school might be described as being fundamentally anti-Keynesian. This is because many of the theories which define this school are based on refuting the work of John Maynard Keynes, thus advocating for a return to neo-classical ideas relating to the way in which economies function and how an economy should be managed by a government.

In the 1930s Keynes developed a series of economic theories that were largely based on a critique of many of the ideas that were central to the existing neoclassical forms of economic thinking. The neoclassical view of the marketplace is that the economy is a largely self-correcting system, where, following any downturn in demand that occasions an increase in unemployment, as long as workers are moderate in their wage demands, and there is an adequacy of resources available, the ‘free markets’ will eventually, spontaneously, return to an equilibrium in the short to medium term; all without any need for government intervention.

So, without the government doing anything, the unemployment rate will eventually fall again and activity in the marketplace will again pick up. The neoclassical view is, therefore, a conception of the economy as being a self-correcting artificial organism, driven by the need for the means of production to supply the basic materials that the community desires, and powered by the aspirations of the owners of capital to service those desires and therefore generate more profits. Thus the neo-classicists believed that ‘supplyside’ factors are always the dominant motivating and driving forces that are propelling a ‘self-correcting’ economy.

Another aspect of the neoclassical orthodoxy that is of particular significance for our investigations is the belief that the relationship of the individual to the economic activity within society is best conceived in a naïve manner. The neo-classicist generally conceived of society as being constituent of self-interested autonomous individuals making rational decisions that are in their own best economic interests. So rather than focussing on classes of citizens, or aggregations of economic interest, the neoclassical view is that society is best described in a manner that roughly parallels the modern neoliberal concept of society as being a community of atomised and autonomous decisionmakers.

Keynes, however, refuted the idea that the marketplace was ‘self-correcting’. He asserted that the economy had to be managed by governments in a proactive manner because the aggregate demand for products would often fall below the output capacity that the owners of capital had generated to service the requirements of the marketplace at its peak, so without constant ongoing government intervention, the economy would always be subject to a boom and bust cycle. Moreover, due to the slow development of efficiencies in the means of production, and the concentration of capital resources within particular segments of the economy (and other factors), without government intervention the economy would often breed high levels of unemployment even when there was both a sufficiency of demand for products and relatively stable and moderate wage outcomes. So governments had to manage the economy by utilising fiscal policies. In other words, governments had to always manage the amount of money that was available in the economy, the relative value of the currency, the minimum wages being paid to workers, the conditions of employment, interest rates, and other significant factors that impact upon the economic environment. So Keynes was in favour of interventionist fiscal policies. By the mid-1950s virtually all western world governments had adopted most of Keynes policy prescriptions for running an economy.

The majority of the ‘saltwater school of economics’ might be described as being those economists who are modern Keynesians, although prior to the 1970’s there was no real need for such a distinction because the mainstream of economics was almost exclusively focussed on elaborating Keynesian ideas, with the various schools of economic thought all generally being in favour of interventionist governments applying different mixes of fiscal policy prescription. Economics was mainly all about squabbles regarding the nature of the best types of interventionist policy prescription rather than whether or not they were required at all.

Then along came the 1970s and America suffered a period of economic downturn caused by what is known as ‘stagflation,’ which is an economic condition where there is a long period of high inflation, high unemployment, and stagnant demand. In response to these conditions the interventionist fiscal prescriptions proposed by the various mainstream schools of economic thinking did not seem to be able to provide any adequate nor ready solutions.

From the end of WWII until the 1970s both the conservative and the more liberal elements of the political culture in the US were largely united in believing that the employment of one or another form of Keynesian fiscal policy was the best way to run a complex modern economy. However, during the downturn of the 1970s, the conservative forces in American politics were also becoming far more radical than they had been for the previous two and a half decades. During this period, bipartisan agreement regarding the Keynesian solution broke down, and many of the more radical conservative politicians began to advocate on behalf of a return to a more neoclassical approach where the government stepped back from the economy and let it ‘run itself’. This breakdown in economic bipartisanship was primarily driven by ideological aspirations favouring ‘small government’ and a consequent adoption of a more laissez-faire approach to corporate and social regulation and government spending.

So, in the 1970s, the more conservative forces in American politics began championing the ideas of Milton Friedman, of the University of Chicago, and other theorists who were generating economic theories that accorded with their own ideological prescriptions for society. This led to the rise of the freshwater school of economics. This brief history assists in explaining why this small group of economists, proposing theories that were well outside of the mainstream of economic thinking, came to be so influential.

In 2008 the economist Paul Krugman described the freshwater school in the following manner:

‘… macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense.’

‘Freshwater economists are, essentially, neoclassical purists. They believe that all worthwhile economic analysis starts from the premise that people are rational and markets work…’

‘The neoclassical revival was initially led by Milton Friedman of the University of Chicago…’

‘Friedman’s counterattack against Keynes began with the doctrine known as monetarism. Monetarists didn’t disagree in principle with the idea that a market economy needs deliberate stabilization. … Monetarists asserted, however, that a very limited, circumscribed form of government intervention namely, instructing central banks to keep the nation’s money supply, the sum of cash in circulation and bank deposits, growing on a steady path – is all that’s required to prevent depressions. … Friedman made a compelling case against any deliberate effort by government to push unemployment below its “natural” level (currently thought to be about 4.8 per cent in the United States): excessively expansionary policies, he predicted, would lead to a combination of inflation and high unemployment – a prediction that was borne out by the stagflation of the 1970s, which greatly advanced the credibility of the anti-Keynesian movement.’

‘Eventually, however, the anti-Keynesian counterrevolution went far beyond Friedman’s position, which came to seem relatively moderate compared with what his successors were saying’.

In simple terms, the freshwater school of economics extrapolated upon the relatively temperate theorising initially engaged in by Friedman regarding the need to return to neoclassical principles, until eventually, it came to be advocating for governments to not manage the economy at all. Their policy prescriptions were all about reducing (or preferably abolishing) most forms of government spending (but not military spending), privatising any parts of the government that unfortunately still had to spend money, reducing corporate and personal taxes, removing as many other taxes as possible, and doing away with any regulations that might impact upon corporate practices. At the core of this school of thought was the idea that our society is primarily an economy, and since economies are self-correcting, governments should simply ‘get out of the way’ and let economic forces run their course.

The administration of Ronald Reagan, which spanned virtually the entire decade of the 1980s, embraced many of the concepts being advocated by the freshwater school of economics. At the same time these ideas spread to many other western world countries. Ideas which are now commonplace within the majority of western world democracies, such as ‘trickle-down’ economics, ‘economic austerity,’ boosting the economy by cutting corporate taxes, reducing income tax levels and government spending, eliminating peripheral taxes, reducing government ‘red-tape,’ and most other ‘free market’ ideas, all spring from the embrace by the Reagan administration, and right wing politicians across the globe, of ideas that were initially advocated by the freshwater school of economics.

However, even before the turn of the last century, many western world governments were already returning to a more Keynesian approach to governing their economy. This is because, while the benefits of laissez-faire policies were largely debatable, the growing inequality and wages gap occasioned by the employment of these policy prescriptions was not. Nor were the constant high levels of unemployment, increasing government indebtedness, the harmful effects of degraded government services, the negative social and environmental impact of reductions in corporate regulation, the growing instability in financial markets, the appearance of housing bubbles, and the consequent social unrest.

It must be stressed that even while the freshwater school of economics was immensely influential politically, it had always represented the thinking of just a small fraction of the professional and academic economists across the western world. The majority of these economists have always regarded the theories being put forward by this group of academics as being invalid at best, and dangerously nonsensical at worst. However, because these ideas aligned so well with the ideology of many right wing politicians across the western world, they had a grossly disproportionate impact upon the nature of the policy prescriptions being implemented across the globe. Or at least they did until the global financial crisis of 2008/9.

The reason that the majority of economists have always considered this school of theoretical endeavour to be dangerous and silly, and why the global economic crisis marked the point beyond which not even the most rabidly committed of academic economists could any longer advocate on behalf of these theories, is best left to an economist to explain, so once again we turn to Paul Krugman:

‘Freshwater economists are, essentially, neoclassical purists. They believe that all worthwhile economic analysis starts from the premise that people are rational and markets work…’

‘As they see it, a general lack of sufficient demand isn’t possible, because prices always move to match supply with demand….’

‘But don’t recessions look like periods in which there just isn’t enough demand to employ everyone willing to work? Appearances can be deceiving, say the freshwater theorists. Sound economics, in their view, says that overall failures of demand can’t happen – and that means that they don’t. Keynesian economics has been “proved false,” Cochrane, of the University of Chicago, says.’

‘Yet recessions do happen. Why? In the 1970s the leading freshwater macroeconomist, the Nobel laureate Robert Lucas, argued that recessions were caused by temporary confusion: workers and companies had trouble distinguishing overall changes in the level of prices because of inflation or deflation from changes in their own particular business situation. And Lucas warned that any attempt to fight the business cycle would be counterproductive: activist policies, he argued, would just add to the confusion….’

‘Put baldly like that, this theory sounds foolish – was the Great Depression really the Great Vacation? And to be honest, I think it really is silly’.

So, due to the extended ‘temporary confusion’ and widespread ‘vacations’ that were occasioned by the global financial crisis, the freshwater school of economics was finally discredited so absolutely that these ideas have largely been abandoned by even the most committed of former advocates. Even the economists who are still members of the Chicago School of economics have now modified their ideas. To once again quote Paul Krugman, the economists at Chicago University have, in recent times, become ‘more brackish every year’.

Yet, of course, this has still not dissuaded many right wing politicians from continuing to advocate on behalf of laissez-faire economic theories. Presumably on the basis that, while their policy prescriptions remain valid and accurate; reality continues to get it wrong.


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  1. nickthiwerspoon

    This is a remarkably succinct and insightful precis of the two rival economic schools. Thank you.

  2. Steve Laing

    A greatly educative and useful article James. Thanks for contributing it – it helped clarify a lot of jargon very succinctly!

  3. wam

    A great read and re-read, James,
    In everything newton’s first applies whether deliberate or consequential..
    So in trump’s laissez faire, S(t)eagulls fight and steal on the edge of both fresh and salt and his
    chondriches prey equally in both.

    The ordinary Aussie, who wonders WTF all ordinaries are doing, dropping their dacks and letting seng hang out in the news, is just forced to nod and repeat baahh liberal economy goood labor debt baahd

  4. Miriam English

    Nicely put. Thanks James.

  5. Glenn K

    Brilliant article. Thank you. I have often tried to explain this to others, and it’s not easy to do. Your logical explanations are refreshing.

  6. billshaw2013

    Thanks James. As a layman I now have a better understanding of economics albeit I’m far from being fully up to scratch. Any chance Morrison would understand any of this?

  7. olddavey

    We’re f*cked!

  8. Rossleigh

    Even Adam Smith was less off an ideologue than the muppets in the current government.

  9. Harquebus

    U.S. Recession; 1969 – 1970
    U.S. peak conventional oil; 1970
    Nixon abolishes gold standard; 1973
    OPEC oil embargo (Oil shock 1); 1973
    U.S. Recession; 1973 – 1975
    Energy crisis (Oil shock 2); 1979
    U.S. Recession; 1981 -1982
    Record high oil prices ~$140bl; 2005
    Peak conventional oil; 2006
    Global financial crisis; 2007 – 2008

    “the mainstream media has been carefully crafting the propaganda meme that the Trump administration is inheriting a global economy in “ascension,” when in fact, the opposite is true. Trump enters office at a time of longstanding decline and will likely witness severe and accelerated decline over the course of the next year.”
    “which only adds to the mountain of evidence proving that most mainstream economists are intellectual idiots.”

  10. Miriam English is a biased conspiracy site. I wouldn’t put much store by what they say.

    Trying to tally up recessions with oil doesn’t work very well. If you want to see a very neat correlation have a look at the effect of loosening up market regulation. Every time controls are taken off markets it produces a bubble that bursts and leaves a recession.

    With Trump at the helm the USA is about to see loosening of regulations like never before. Get ready for the collapse that will follow.

  11. Wun Farlung

    Will be attempting to get some of my workmates to read this.
    Great enlightenment tool.
    onya James

  12. Peter F

    At last I have the beginnings of understanding the subject of ‘economics’. Thank you James, I am indebted to you. I now have information to back up my long held belief that our current ‘government’ is a mob of fools.

  13. michael lacey

    Neoconservative economics has not been a failure for the 1%

    The events that led to Donald Trump’s election started in England in 1975. At a meeting a few months after Margaret Thatcher became leader of the Conservative party, one of her colleagues, or so the story goes, was explaining what he saw as the core beliefs of conservatism. She snapped open her handbag, pulled out a dog-eared book, and slammed it on the table. “This is what we believe,” she said. A political revolution that would sweep the world had begun.
    The book was The Constitution of Liberty by Frederick Hayek. Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an outright racket. The philosophy was called neoliberalism.

    By the time Mrs Thatcher slammed his book on the table, a lively network of thinktanks, lobbyists and academics promoting Hayek’s doctrines had been established on both sides of the Atlantic, abundantly financed by some of the world’s richest people and businesses, including DuPont, General Electric, the Coors brewing company, Charles Koch, Richard Mellon Scaife, Lawrence Fertig, the William Volker Fund and the Earhart Foundation. Using psychology and linguistics to brilliant effect, the thinkers these people sponsored found the words and arguments required to turn Hayek’s anthem to the elite into a plausible political programme.

    The end products we are certainly seeing now!

  14. Harquebus

    Miriam English
    A limited search found nothing to support your accusation.

    Search criteria: oil recession relationship

    “The fall from grace was triggered by the 1936 publication of John Maynard Keynes’ The General Theory of Employment, Interest and Money. The book is rigorously indecipherable. What’s more, it has the ill-effect of making those who read it dumber.”
    “Not long ago, Keynes devotee, Paul Krugman, took this logic and ran with it to the outer limits of deep space. In the process, he seems to have lost his mind.”
    “when the crash does inevitably come, we don’t think President Trump is who the fingers of blame should be pointed at.”
    “Rather, the core of the problem is that today’s fiat money system is completely out of control.”
    “Total government debt and stock valuations are at all-time extremes. Something big is coming. You can guarantee it.
    But don’t blame Trump when the world ends. There ain’t a doggone thing he or anyone else can do to stop it.”

    Don’t Blame Trump When the World Ends


  15. Deanna Jones

    Thanks, James. You’ve explained Keynes much better than my uni lecturers could. Great graphic too, I’ve nicked it for my fb.

    Michael Lacey thanks for your comment too. Interesting indeed.

    Harquebus, Miriam did not “accuse” you of anything.

  16. totaram

    Excellent summary and explanation. I’m not sure that most mainstream economists disagree with the Chicago School. Every single “economist” you see on the TV seems to spout the same Monetarist stuff and all the people in treasury and the RBA seem to hold similar views. It seems to me that once you misunderstand the true nature of fiat currencies, you are forced to worry about govt. “debt” and that puts you into the monetarist camp willy-nilly.

  17. totaram

    For those interested, here is what I found on the web-site called “the economic Prism”

    “The Economic Prism is written peering through a prism of free market principles, limited government, and individual liberty. ”

    In other words monetarists.

  18. Harquebus

    Deanna Jones
    Miriam’s accusation was made against a website that I linked to.

    Criticize the message and I will debate you. Shooting the messenger is bad form.


  19. Kate Ahearne

    Harquebus, ‘Criticize the message and I will debate you. Shooting the messenger is bad form.’ Then why on earth do you do it, Harquebus? Why are YOU so offensive to others who don’t agree with you?

  20. Harquebus

    Kate Ahearne
    First, I don’t consider it offensive.
    Second, our world is dying if, you hadn’t noticed and I am angry about it.
    I asked you to join my mailing list but, no, you’d rather stay oblivious and discuss anything that does not involve saving it.
    I was very disappointed at your incomprehension of theAIMN’s recent Abrupt Climate Change article. I honestly thought that you were smarter than that.

  21. Kate Ahearne

    Harquebus, You say, ‘I don’t consider it offensive.’ That’s pretty clear, but I DO consider it offensive, and so do all the other people who are telling you that your remarks are routinely offensive.
    I declined your offer to join your mailing list because I am appalled at the way you go about ‘saving the planet’.

  22. Roswell

    “Shooting the messenger is bad form”.

    And so it is. We’ve been telling you that for a very long time.

    “I was very disappointed at your incomprehension of The AIMN’s recent Abrupt Climate Change article”.

    I am disappointed at your incomprehension of 99% of The AIMN’s articles.

  23. Deanna Jones

    Harquebus, all here know the world is dying and we all have a pretty good understanding of why.

    I was disappointed with your incomprehension of my response to you on the topic of overpopulation. You accuse others of not paying enough attention to your arguments but you yourself do not listen to anyone else either. The sad part is, I agree with much of what you write here, but you have this dismissive, arrogant way of engaging and it defeats your whole purpose. It is going to take lots of perspectives and lots of different areas of interest if people like us are ever going to be able to save the planet. You think other people aren’t angry? Try paying attention.

  24. Miriam English

    Harquebus, the wonderful False, Misleading, Clickbait-y, and/or Satirical “News” Sources page by communication lecturer Melissa Zimdars is a great resource for sorting out reliable sites from nutty ones. The site is a nutty one. I didn’t just take her word for it though. I visited the site and saw what they had to say, and yep. They are heavily biased and promote loony conspiracy theories.

    The site doesn’t appear on her list (yet), but as totaram says, it does have a strongly neo-conservative monetarist view, which is exactly the kind of view that James is explaining in his article is so badly flawed and detached from reality.

    Harquebus, everybody here is aware of the acute problems in the world. To think that you alone hold some special insight is… well… I’ll be polite and say misguided. To accuse others here of being oblivious, uncomprehending, and lacking smarts is just plain wrong. A number of the people here are among some of the smartest people I’ve met online.

    When you say that you talk about saving the world, I really have to argue with you. You don’t generally talk about solutions; you talk about it being all too hard to fix, that we need to stop breeding (impossible, so is not a solution), that we need to get back to a veggie patch, candles, a horse, and a gun. That’s not a solution that’s a description of giving up.

    There are solutions, but you refuse to admit them. Renewable energy is part of the solution, but you’ve latched onto one very old study that found they weren’t efficient from back in the day when they weren’t, and you rely on other stuff funded by fossil fuel companies that unsurprisingly condemn renewable energy. We have increasingly efficient ways to generate and use energy. There is a growing move toward better use of limited resources that let us maintain a high standard of living but without the appalling level of waste that is currently “normal” in the developed world. Things are changing. Are they changing fast enough? No. But we need to speed it up, not discard it.

    I can certainly understand someone not wanting to subscribe to your list, Harquebus, because it saps the will; it is depressing. We need optimism in order to attempt anything worthwhile. There is plenty to be optimistic about, but if your view is clouded by the darkness of pessimism you just won’t see it and can be forgiven for thinking that giving up is the only way out.

    The mainstream media (deliberately or not) work very hard to make everybody feel threatened and powerless. That, more than anything else is the enemy. We are not powerless. Humans are the most powerful creatures on the planet. But by propagating that feeling of powerlessness and fear and doom you become part of what is destroying the planet. I’m sure you don’t intend to be, but that’s the effect your pessimism has.

  25. Kate Ahearne

    Miriam, Thank you. Thanks to all of those who have so eloquently and so reasonably opposed themselves to the nuttiness that Harquebus never tires from hammering people with, not to mention the abusive way he goes about it.

  26. Harquebus

    I do listen and I do comprehend. I just don’t agree.

    Miriam English.
    Renewables are not going to do it. We’ve had this argument many times. Your advocating these inefficient devices only gives false hope and delays doing what is required.

    Kate Ahearne
    I have been saying the same things for years, have been mostly ignored and yet, events are unfolding exactly as myself and others who can grasp physical concepts have been saying and you call me nutty.
    When the problems facing us start to improve then, your arguments might carry some weight. As they are only worsening, your arguments carry no weight at all.


  27. Kaye Lee

    Harquebus, there are whole sites devoted to your one and only topic. Why not go there? You want to impose your limitations on the rest of us. That is not ok

  28. Rossleigh

    Harquebus, parroting stuff from anti-Keynesian capitalists does nothing for your credibility as the one true genius that the world doesn’t appreciate.
    Your inability to see propaganda sites for what they are would be funny if it wasn’t for the fact that – multiplied by a few million – it led to the election of Donald Trump!

  29. Rossleigh

    And simply, saying, “I’m right, I’m right. And you’ll all know it one day!” doesn’t replacing rational argument and careful evaluation of evidence. For heaven’s sake, comment on the end of the world as much as you like, but don’t start talking economics where it’s obvious that you haven’t got the faintest idea and haven’t studied it in any meaningul way.
    You have all the credibilty of a climate change denier who says that they don’t need to listen to the scientists because they read somewhere that it was all made up to provide jobs for climate scientists!

  30. Miriam English

    Harquebus, you prove my point by continuing to dismiss renewable energy technologies even though they have moved far beyond the initial forms that may have cost more energy to produce than they delivered. Now we have a much greater selection of significantly more efficient sources.

    You have been preaching doom for years and largely ignored. Yes. But people have been preaching doom for thousands of years. You say things are deteriorating. Yes, some things are, but many other things are improving. You say your point of view is validated by simple physics, but that isn’t so. I understand the danger in the human inability to grapple with exponential change, but human growth is not on a simple exponential curve. Population growth has been slowing since the ’60s. In the near future it will cease of its own accord (if calamity doesn’t start it up again). Resource use is not defined by a simple exponential growth curve. Energy use has actually fallen recently. Fallen! This is because people want more efficient devices. It is not the simple picture you make it out to be. Is there danger? You betcha! Can we do something about it? Yes indeedy. Should we throw up our hands and quail “Doom!” and retreat to a pre-industrial existence? No. There are genuine solutions all around us. You are the one who is ignoring physics, and biology, and psychology, and technology, and other sources of these solutions.

  31. silkworm

    Great article.

    I’m looking forward to the next great recession. The housing bubble in Sydney will then finally burst, and then I will finally be able to buy a house.

  32. Miriam English

    Good point, silkworm. If you can insulate yourself reasonably well from it there are some things to look forward to from a recession. Unfortunately that “if” is a pretty big one. How do you insulate yourself from a recession? I’ve been watching a lot of videos lately about alternative living (takes me back to my old hippy days). Combined with appropriate technology it might deliver a nice life. I have a lot yet to learn though.

  33. silkworm

    I read an article on MMT a couple of weeks ago that argued that essentially there is no such thing as government debt. The notion of government debt is just another conservative/neoliberal meme. Rather, debt is something that belongs to state governments and the private sector.

  34. James Moylan

    Thank you Kaye,

    I have seen this article and many of the slides before. Unfortunately it is a very US’centric argument and the author tends to attribute a hive mind to the academic institutions of the US which detracts from many of the good points made in the work.

    As soon as I have had the larger article from which this extract is taken (which is in excess of 52000 words long) peer reviewed then I will post a link (of course this will take several months). It is currently being considered by the Harvard Journal of Legal analysis. In this much more extensive article I address many of the reasons why the ideas of the freshwater school came to be so incredibly influential but I do not depend on any leaps of imagination or posit the existence of any sort of a hive mentality.

    The reality is that the freshwater school (via the Chicago University Economics Department) influenced the basic precepts which underlie the practice of ‘economic analysis in law’ which was itself very influential via such people as Richard Posner, Treblicock, et al. These individuals then went on to teach at many elite institutions in the US which have instructed many congressmen, presidents (such as Obama via the University of Chicago law school), judges, businessmen etc etc. And while the ideas of the mainstream of economic thought evolved the proponents of economic analysis in law continued to be (and still continue to be up until this moment) enamoured of extremely sectional and far-right-wing economic ideas and models. These law professors have thus been influential in introducing many econometric ideas and jargon into the mainstream of the social discourse. Few people realise that the practice of ‘economic analysis in law’ even exists let alone understanding how influential this school of analytical practice has been in our modern world.

    As an academic I tend to do long distance multi-disciplinary work which is difficult to summarise without losing a general audience. So I may write a synopsis of the work under review but I may not as it is a complex topic that is not particularly amenable to sound-bite journalism (which is the sort of journalistic writing I seem to be best at).

    Thank you everyone for your kind words and the interesting debate that ahs ensued.

  35. Deanna Jones

    Harquebus, you did neither. Tell me, what was my response to your post about overpopulation?

  36. Harquebus

    Deanna Jones
    Did neither what?
    If you are talking about your post on my depopulation article, I did respond.
    Would you mind being a little more specific. I will monitor this article for a while waiting for you.

    Depopulate . . . or perish


  37. win jeavons

    Sadly “eventually” is the time gap in which people starve and their children turn to crime and drugs. Humans must eat regularly and need shelter from the elements . Being human they really need much more including community, culture and compassion Ever see a hungry economist?

  38. Miriam English

    James, I’d be very interested in reading the full article when it is published. I’m sure many others here would be too. Would you be able to let us know where it is when it goes public?

  39. Royce Arriso

    Once accepting of Economics being famously depicted as a “dismal science”, have been enthusiastically auto-didacting on the subject over the last few years. So cheers are due to AIMN’s John Kelly for his enlightening writings.
    James, your article is in exactly the same vein; many thanks.
    Am now convinced that Friedmanite Neoliberalism is a gigantic con, devised simply to facilitate wealth transfer.
    All that need happen for this to occur is unquestioning acceptance of the erroneous ‘household analogy’–that a national economy is comparable to a household budget. Once that whopper is swallowed, the Neoliberal agenda–privatisation and winding down of govt services, based on an affiliated lie, “the govt can no longer afford to fund…..”–can proceed without difficulty.
    And behind Neoliberalism lies the teachings of Randian Libertarianism, in particular the pernicious elitism which insists that only to the highest echelons of society must all economic spoils flow.
    The rest, wholly undeserving, must fend for themselves in a privatised, dog-eat-dog jungle.
    Which is pretty much what has been ‘achieved’.
    We have all been conned on an enormous scale.

  40. totaram

    Royce Arriso: I wish there were many more like you. Unfortunately, I realise this is not possible. Just think how many hours you have spent sorting all this out in your head. Most ordinary people just don’t have the time or the energy to do it. That is where the MSM with their 24/7 coverage with neoliberal brainwashing win. I despair, but hope that enough people will eventually figure things out. Unlikely in my lifetime, but I can hope for my children!

  41. totaram

    BTW, for those who claim that Bill Mitchell is a “fraud and charlatan” or some such ad hominem remarks:

    At least his forecasts are not way off, while most of the others didn’t do so well. On the other hand some of the other forecasts we have seen on this blog for many years haven’t eventuated, but that is no problem because they never have a time-line so they are basically non-falsifiable.Just keep on predicting that something or the other will happen, without specifying when. And if you know something about science instead of talking about it and sounding knowledgeable, then you would know that making predictions that are non-falsifiable, is just meaningless as far as the scientific method goes. Hey but who am I to talk about science right? All I have is tens of peer reviewed research articles that I have authored or co-authored. But does that count in this day and age of alternate facts? Not much I suspect. All anyone needs to do is to give links to some web-site stating something or the other. No evidence, no data, no analysis required. Just some unsupported assertions.” Search Criteria ” item of choice”. That’s it! Maybe a quote from some share trader’s web-site like

    ““The fall from grace was triggered by the 1936 publication of John Maynard Keynes’ The General Theory of Employment, Interest and Money. The book is rigorously indecipherable. What’s more, it has the ill-effect of making those who read it dumber.”

    Seriously? And we are to take this as gospel, as opposed to the hundreds of economists, academicians etc. who would never make this remark, leave aside the idea of even subscribing to it. When the level of discourse falls to this level, why would anyone even consider engaging? If this is going to save the human race, I think it’s better we disappear.

  42. Harquebus

    Would that be the same “hundreds of economists, academicians etc” that have got us to where we are now? Minimal growth, historic low interest rates, massive unrepayable debt, bubbles in housing, stocks and bonds, resources diminished in quality and quantity, static wages and a disappearing middle class.
    Yeah right. We should all listen to them because, they are economists and they know all about what’s good for us.

    I will read your SMH article. Will you read the feasta article that I have linked above? It contains much of what I would use to discredit your economic arguments.


  43. Miriam English

    totaram 🙂 heheheheh

  44. totaram

    Harquebus: I do not engage with you because it is a waste of time. Just to let you know that the “economists” who brought us to the current situation are exactly the monetarists you are quoting. Obviously you haven’t read or understood any of the articles on economics.on this blog, or even this particular article. So is there any point? I suspect not.

  45. Richard Bull

    Trump and a Post-Truth World

    The Great Divide

    In order to repair the way things are we need to understand human development, and where the different worldviews originate, before we can include them all in this ‘post-truth’ world, without simply adding to the conflict.

  46. Harquebus

    I understand economics fairly well and detest all economist equally. Economics is a non science and lacks credibility.
    That is my opinion.

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