MACRO 33 theses for an economic reformation

33 theses for an economic reformation 2017

theguardian 2017 heretics-welcome-economics-needs-a-new-reformation by Larry Elliot

theguardian  2017  delving-deeper-into-an-economics-reformation  –  letters

————————————————————————————–    2017   Thirty-three flawed Theses 

” … this is my critique of the whole 33 Theses. Instead of homing in on areas where the economics profession appears have to lost its way, and using deep scholarship and impeccable logic to expose error and corruption, as Luther did, the authors have introduced what amounts to a new religion and demanded that what they call “mainstream” economists adopt it, without ever explaining exactly why they should. This is indeed a missed opportunity.”

————————————————————————————–     2018    Debate: What is missing in the ‘33 Theses for an Economics Reformation’   

“On the occasion of the 500th anniversary of Martin Luther’s Reformation, 33 Theses for an Economics Reformation were formulated by Rethinking Economics and the New Weather Institute. The document was symbolically nailed to the door of the London School of Economics In December 2017 and endorsed in The Guardian, and was supported by an impressive list of over 60 leading academics and policy experts. The initiative offers a rare and most welcome refreshing message from the House of Economics. While the “33 Theses” are a much needed initiative, three absences are nevertheless noticeable …”

1) Lack of focus on financialisation as production of unproductive money :

“While the problems of financialisation are discussed, by going back to Martin Luther himself, in his 1524 book On Trade and Usury, we find an older tradition that more clearly separates unproductive hoarding from productive finance. In his 1355 De Moneta, Nicolas Oresme contrasts the negative effects of hoarding with the positive effect of investments in the real economy. …  The religious term for unproductive money is mammon. If we combine Oresme’s insight with J A Schumpeter’s understanding of financial crises as an occasion to clean out failed investments from the global portfolio, we find that in the name of “saving” investments we have made the mistake of saving bad projects and poor nations that should have been allowed to go bankrupt. We have helped accumulating mammon at the expense of real investments and consumption that would have “served the purpose of life” as Luther would have put it. Seeing the present world through the eyes of King Theodoric, we have printed mammon – unproductive capital – which is useless to keep the living alive, but which promotes speculative bubbles. By doing this we have made the perfect conditions for vulture funds, but failed the poor.”

2) Omission of experience-based historical school as one to be taught:

“The second is the absence from the list of theories to be taught of Erfahrungswissenschaft, economics as a science of experience. This is in essence what most economics has been about until fairly recently. How influential this experience-based historical school was can be seen in a working paper, “80 Economic Bestsellers before 1850: A Fresh Look at the History of Economic Thought”. On the list is Adam Smith’s Wealth of Nations, chronologically No. 53 of 80 bestsellers before 1850, reflecting the fact that capitalism and industrialization were already long in existence when Smith wrote what today’s students are misled to think was the beginning of economics.

3) Omission of “trade” and its central place in status quo of globalisation: The Fallacy of “Free Trade” 

“The third missing element is the world trade. Neoclassical trade theory – based on the theories of David Ricardo (1817) – presents trade as a harmony-producing mechanism. Ricardo achieved this by basing his model of international trade on the barter of qualitatively identical labour hours. … Ricardo’s trick of making every labour hour qualitatively identical is at the core of the problems of globalisation.  …  Ricardo’s illusion is a main mechanism of today’s centripetal economic forces. This illusion has collapsed several times before, most notably in 1848, when the Ricardian economic paradigm was brought down through attacks from Marx and Engels on the left and the “great liberalist” John Stuart Mill on the right. Mill recognized that poor countries needed “infant industry protection” before they could graduate into free trade.”          read whole article here


The need for an Economic Reformation   2017   by Richard Murphy

“I was not an author of these demands. I gather Mariana Mazzucato, Victoria Chick, Steve Keen, Larry Elliott and Kate Raworth were. That’s a powerful grouping and I have almost no argument with what they have written, barring the fact that there is no explicit reference to the role of tax in economics in the demands made, and that is a mistake in my view.”      more here

Richard Murhpy’s 45 theses:  45-theses-on-taxation-and-related-issues-my-homage-to-martin-luther

————————————————————————————–   2017   The economics profession does not need a ‘reformation’  –  ‘Heterodox’ economists make some valuable points, but they should dispense with the daft generalisations    by  Ben Chu

… “First, it’s a vigorous assault on what James Kwak has called “economism” – the idea that supply and demand curves are the only analytic tool one ever needs and that issues such as imperfect competition, missing information, psychological biases and institutional complexities, and myriad other wrinkles in the free market ideal, can be safely and confidently brushed to one side. This nonsense is generally promoted by right-wing think tanks funded by rich libertarians who want to pay less tax.

Second, the thesis-nailers are attacking a particular branch of macroeconomic theorising and forecasting, which tends to make simplifying assumptions for the purpose of creating tractable models. These assumptions include a single “equilibrium” for the economy and “rational expectations” among a homogeneous collection of economic actors.

On both counts the critique has some justification, especially the first. Economism really is distressingly common in public debate. Yet the problem comes in conflating these kinds of approaches with the work all the entire profession. As a group of distinguished and eminent academic microeconomists (people who generally conduct empirical analyses of labour markets, tax policy and consumer behaviour) associated with the Institute for Fiscal Studies and University College London have written, it’s simply untrue to imply that they and hundreds of thousands of their mainstream colleagues are guilty of the sins of economism outlined in the 33 Theses.”             read more here


“It has become routine to assault the “dismal science” with a dismal ignorance of what economics actually involves. Writers, students and even some social scientists from other disciplines who have very little exposure to what economists do are quick to point the finger and declare economics as a veil for vested interest, and dismiss it as a way of thinking that is fossilised in numbers.”