Eco­nom­ics Stu­dents: Join Toxic Text­books

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A new Face­book group ded­i­cated to reform­ing eco­nom­ics tuition has just been estab­lished by Edward Full­brook, the coor­di­na­tor of PAECON, the Post-Autis­tic ECO­nom­ics Net­work.

Called Toxic Text­books,  its aim is to sup­port and coor­di­nate stu­dent protest against neo­clas­si­cal eco­nom­ics at uni­ver­si­ties and schools around the world. Its man­i­festo is:

Toxic textbooks helped cause the economic meltdown

The cur­rent eco­nomic melt­down is not the result of nat­ural causes or human con­spir­acy, but because soci­ety at all lev­els became infected with false beliefs regard­ing the nature of eco­nomic real­ity. And the pri­mary sources of this infec­tion are the “neo­clas­si­cal” or “main­stream” text­books long used in intro­duc­tory eco­nom­ics courses in uni­ver­si­ties through­out the world. 

Mass miseducation

Every year these “main­stream” books serve to indoc­tri­nate mil­lions of stu­dents in a quaint ide­ol­ogy (per­fect ratio­nal­ity of eco­nomic agents, mar­ket effi­ciency, the invis­i­ble hand, etc.) cun­ningly dis­guised as sci­ence.  This mass mise­d­u­ca­tion deprives soci­ety of the moral and intel­lec­tual capac­i­ties it needs in order to design and main­tain the sup­port sys­tems required by mar­ket economies. 

We need new, non-toxic textbooks

More eco­nomic cat­a­stro­phes will befall us and our chil­dren if we do not replace these toxic text­books with non-toxic ones imme­di­ately.  If decency and good sense pre­vail in acad­e­mia, then affect­ing this reform will not be a prob­lem.  But text­book reform will dam­age many eco­nomic fac­ul­ties and toxic text­book authors. The for­mer will suf­fer losses to their rep­u­ta­tions, the lat­ter to their roy­al­ties, which in some cases run to mil­lions of dol­lars.  

Together, we can overcome these vested interests

Soci­ety can there­fore expect well-placed and richly-funded strate­gic resis­tance to doing the right and nec­es­sary thing.  This web­site and the asso­ci­ated Face­book group exist to help cit­i­zens, espe­cially stu­dents, mobi­lize and orga­nize them­selves to over­come these vested inter­ests.

Edward has also estab­lished a web­site, also called Toxic Text­books, , as an adjunct to the Face­book group.

As I have argued numer­ous times on this blog, though there is no doubt that most neo­clas­si­cal econ­o­mists are well-mean­ing and fer­vently believe they make a pos­i­tive con­tri­bu­tion to soci­ety, their under­ly­ing model of the econ­omy is delu­sional. Fol­low­ing a bad the­ory ulti­mately leads to cat­a­stro­phe, and that is what we have today with the Global Finan­cial Cri­sis.

Con­ven­tional eco­nom­ics not only com­pletely failed to antic­i­pate this calamity, but actively if uncon­sciously aided its growth by pro­mot­ing dereg­u­la­tion of finance, by the devel­op­ment of finan­cial deriv­a­tives, and via res­cues of the finan­cial sys­tem that sim­ply encour­aged its Ponzi behav­iour to scale heights that poor old Charles Ponzi could only have dreamed of.

If eco­nom­ics were in any sense a sci­ence, this dra­matic fail­ure would lead to a period of soul search­ing and intel­lec­tual for­ment from which would emerge a more empir­i­cally grounded vision. But with the essen­tially unsci­en­tific nature of eco­nom­ics, this devel­op­ment is unlikely unless enor­mous pres­sure is brought to bear on aca­d­e­mic eco­nom­ics depart­ments by their stu­dents, by busi­ness groups, unions, and com­mu­nity groups–in short by any­one whose wel­fare is affected by the econ­omy.

The most imme­di­ate source of pres­sure will be stu­dents of eco­nom­ics, who can and should actively protest against being taught neo­clas­si­cal dogma as the global econ­omy goes into melt­down around them.

As an under­grad­u­ate, I led such a revolt at the Uni­ver­sity of Syd­ney in 1973. We had marked suc­cess in that bat­tle, but lost the war in that eco­nom­ics in gen­eral came to be dom­i­nated by the false vision of Mil­ton Fried­man, rather than by truly sci­en­tific, empir­i­cally grounded analy­sis. In a very direct way, the finan­cial cri­sis is a direct con­se­quence of Friedman’s intel­lec­tual vic­tory in the 1970s. Now that we can see the con­se­quences of that vic­tory, it is essen­tial to finally win the war to bring real­ism into eco­nom­ics.

The time has come for eco­nom­ics stu­dents to once again be revolt­ing. Edward Full­brook has estab­lished this group to pro­vide a New Media focus for such stu­dent action. I have proudly joined, and I encour­age all crit­i­cal eco­nom­ics aca­d­e­mics and stu­dents to do like­wise.

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  • ned

    Hi AK,

    I like most of your com­ments on here, but I have to pick up on this one regard­ing China, “I can’t see any sys­temic prob­lems inside their coun­try”, you only “see” of China what they want you to see. 

    I agree that China are on a long march but I don’t think their major prob­lem will be eco­nomic. Their prob­lem is going to be polit­i­cal and that is why they are on the long march. The Com­mu­nist party is try­ing to work out how to make China the dom­i­nant coun­try in the world (both eco­nom­i­cally and mil­i­tar­ily) while keep­ing it’s peo­ple under con­trol.

    I am sure they are aware that as peo­ple become more wealthy the more that want and expect. This is why they don’t want the yeun to increase in value. 

    If you think that they have devel­oped into a mar­ket econ­omy I would dis­agree. While pri­vate own­er­ship and entrepreneur’s are allowed you still need approval from the local com­mu­nist party mem­ber before you can start any enter­prise, plus if they decide some­one else is more deserv­ing of the enter­prise (say the local party mem­bers son or nephew) they feel it is well within their rights to “dis­trib­ute” your prop­erty as they see fit. Cen­tral plan­ning and cor­rup­tion is still alive and well over there.

    They may look sta­ble from the out­side but I can see there is going to be some major con­flict as the mid­dle class looks to break free of the con­trols that have been placed on them while the Com­mu­nist party and the army asserts itself. Will be inter­est­ing times, can’t say when but I see it is loom­ing.



    In your ref­er­ences to China;

    I can’t see any sys­temic prob­lems inside their coun­try”

    I can. It’s called com­mu­nism.

    And as a means of organ­is­ing human soci­ety, it is proven as flawed because it is based on a con­cept that is anath­ema to basic mod­ern human instincts : ie the right to own and pro­tect one’s pri­vate prop­erty and the desire to live free from oppres­sion.

    China’s cur­rent vari­ant of a “sys­tem” is extremely imma­ture. It began with Deng in the early 80’s, after the late 40’s vari­ant started implod­ing. Hardly a model wor­thy of emu­lat­ing on that basis let alone it’s deplorable approach to the rights and free­doms of its cit­i­zens.

    The polit­i­cal sys­tem is effi­cient and stable”.I’m sure those sen­ti­ments can be found in the 30’s too with Hitler’s rise — at one time he too had a cathar­tic effect on Germany’s ills.Even Stal­in­ist Rus­sia would have been con­sid­ered among other things “effi­cient and sta­ble”.

    Your admi­ra­tion for the ben­e­fits bestowed by China’s sys­tem is very well artic­u­lated. Thanks.

  • mahaish

    con­grats drwasho and bet­ter half:)

    hope the wed­ding goes well, and the mar­raige goes even bet­ter

  • mahaish

    quite right ak,

    the com­pet­i­tive de val­u­a­tion of the yuan,

    and the yanks are mighty urked!

    this sort of thing hap­pened in the 30’s as well, a deval­u­a­tion race to the bot­tom.

    what odds on trad­ing blocks and cur­rency enclaves also mak­ing an appearence in the not to dis­tant future.

    one of the strik­ing things about the “com­mu­nists” in china are how spec­tac­u­larly more suc­cess­full they have been in the eco­nomic devel­op­ment race as oppossed to their east­ern block com­rads.

    one of the main rea­sons for this is that they started with a rel­a­tively clean sheet. they didnt have the anti­quated social­ist indus­trial archi­tec­ture to dis­man­tle or work around like in the soviet block. just ask the ger­mans!

    it just may be that the so called com­mu­nists in china wer­ent the died in the wool com­mu­nists we thought they were, and that under­neath all these labels, what moti­vates them is the same as what moti­vates us

  • ak


    I really wanted to save it for another day or for Steve to com­ment…
    How­ever, briefly:

    1. We have to dis­tin­guish between Stal­in­ism (end of 1920-ties..1956) and so-called Real Social­ism period (1956–1989 or 1991). Stal­in­ism was as evil as Nazi ide­ol­ogy and it was The Total­i­tar­i­an­ism. Below I will dis­cuss Real Social­ism only. I don’t agree with Zbig­niew Brzezin­ski that late Real Social­ism in Poland was total­i­tar­i­an­ism.

    Here comes a short story to prove my point:
    I was asked to take part in the offi­cial cel­e­bra­tions of the May Day at school but when I refused I was only threat­ened by the prin­ci­pal with expul­sion. Nobody was sent to Siberia. In the Soviet Union or GDR (DDR) it was a bit dif­fer­ent but if you weren’t inter­ested in pol­i­tics and didn’t want to make a career you could pretty much ignore the whole sys­tem. Even mem­bers of the Com­mu­nist Party were going to church to bap­tise chil­dren — although covertly. 

    Dys­func­tional econ­omy, food rationing, queues for every­thing — this was a real prob­lem.

    2. In China Cul­tural Rev­o­lu­tion was an equiv­a­lent of Stal­in­ism. They did have hard­core com­mu­nism and killed mil­lions of peo­ple.

    3. The main dif­fer­ence between China and East­ern Europe was the endemic poverty in China. 

    4. The main fea­ture of the social­ist econ­omy was that all the means of pro­duc­tion were owned by the state (or cen­tralised coop­er­a­tives) and that cen­tral top-bot­tom plan­ning was in place. It was a kind of top-bot­tom sys­tem of micro­man­age­ment. It was con­trolled by the organs of com­mu­nist party. Since noth­ing belonged to indi­vid­u­als a lot of things were stolen and cor­rup­tion was wide­spread. Peo­ple had no incen­tive to work. Imag­ine that in such a fer­tile coun­try as Poland we have food rationing even in 1988. Nobody was hun­gry but we had coupons for meat, shoes, sugar, (vodka was made of sugar), vodka proper, petrol, choco­late etc. 

    There was a con­stant threat of infla­tion due to con­stant lack of goods but in order to pre­serve social sta­bil­ity arti­fi­cially set prices of con­sumer goods were frozen. When they were increased in 1970 peo­ple went to streets of my home city and the com­mu­nists shot many of them.
    When cri­sis started to bite again in 1980 strikes broke out and Sol­i­dar­ity trade union was formed also in my home city. My dad was an activist, later had prob­lems with the Secret Police when the move­ment was sup­pressed in 1981. So now you know why I am so inter­ested in pol­i­tics…

    5. The cap­i­tal­ist (mar­ket) sys­tem works dif­fer­ently — what F.A. Hayek dis­cov­ered: “freely formed and freely adjust­ing mar­ket prices con­tain infor­ma­tion about the plans and inten­tions of mil­lions of mar­ket par­tic­i­pants. Because of this, changes in prices reflect chang­ing rel­a­tive scarci­ties for fac­tors, goods, and ser­vices, and they thereby enable mar­ket agents to plan and to bring their sub­jec­tively formed per­cep­tions and expec­ta­tions about mar­ket con­di­tions into line with actual con­di­tions.”

    Hardly sur­pris­ing this works bet­ter than sys­tem with cen­tral plan­ning espe­cially if you want to make com­put­ers not kalash­nikov rifles.

    6. So now the rea­sons for undo­ing of Real Social­ism are obvi­ous. If any­one has doubts I can pro­vide a few more sto­ries from every-day life in the 1980-ties or throw a few links.

    Not every­thing was bad for exam­ple edu­ca­tion was quite good and health care was accept­able.

    The sys­tem col­lapsed because of its inher­ent inef­fi­ciency. Peo­ple had had enough but the com­mu­nists and Sovi­ets main­tained iron grip over the soci­ety in most of the coun­tries except for Poland and maybe Hun­gary.

    Another rea­son for undo­ing of Real Social­ism in Poland was the for­eign debt. Sounds famil­iar?

    7. There were numer­ous attempts to reform the sys­tem but because the state own­er­ship of almost every­thing and cen­tral plan­ning were still in place all failed. Pri­vately owned small farms and small busi­nesses were allowed in Poland and these worked fine. 

    8. Per­e­stroika in the Soviet Union was the final attempt to reform the sys­tem by allow­ing for some ele­ments of gen­uine democ­racy and some ele­ments of mar­ket econ­omy. It failed and sud­denly it was all over — we were free in Poland. But very poor and a bit daz­zled. In the for­mer Soviet Union things went worse though and they entered a period of insta­bil­ity.

    9. In China Deng Xiaop­ing saw the prob­lem dif­fer­ently — he allowed for mar­ket reforms but didn’t loosen the grip of power. Basi­cally he got rid of inef­fi­ciency of cen­trally con­trolled sys­tem and removed the micro­man­age­ment of every­thing by the Party. He allowed for pri­vate com­pa­nies to work for profit.The over­all con­trol is main­tained and there is a lot of unof­fi­cial con­trol as well. But the basic advan­tage of the mar­ket sys­tem is fully har­nessed to improve the effi­ciency.

    10. The Com­mu­nist Party has been trans­formed into a kind of tech­no­cratic oli­garchy and ide­ol­ogy has as much power as a king in the con­sti­tu­tional monar­chy. Nation­al­ism (but not too aggres­sive) is also present.

    11. All the power comes from the polit­i­cal struc­ture. If you are rich and own a multi­na­tional cor­po­ra­tion you may be tempted to exer­cise influ­ence…

    Good luck Rupert in China.

    12. In west­ern coun­tries how­ever politi­cians and par­lia­men­tar­i­ans are not tech­nocrats. Power comes with money. Want to change law? No prob­lem. Just a bit of lob­by­ing and it’s all yours. For exam­ple:

    So now we are back in our real­ity.
    1. Is Chi­nese sys­tem still com­mu­nist, social­ist or just author­i­tar­ian (“mod­er­ated democ­racy”)?
    2. Is it bet­ter for us to be led by cor­po­ra­tions or by tech­nocrats? Are there any other options? 

    My answer to ques­tion 2 is that I still pre­fer our democ­racy (not anar­chy, obvi­ously not real social­ism, not rule of big cor­po­ra­tions, not lib­er­tar­ian min­i­mal state and def­i­nitely not soci­ety mod­er­ated by a tech­no­cratic oli­garchy how­ever it is called).

    I want more democ­racy not less. Period.

    In some coun­ties though (China and to some extent Rus­sia) tech­no­cratic oli­garchy works. Putin got rid of west­ern cor­po­ra­tions which bought min­eral assets almost for free and put some of Russ­ian oli­garchs to prison. He restored the sta­bil­ity but he vio­lated human rights. You may not like him. But this doesn’t mean that his sys­tem is not work­ing bet­ter than Jelcyn’s “clep­toc­racy”.

    When­ever I read news about GFC I have a strong feel­ing of deja vu. Do you know why?

    Thank you Steve for wak­ing me up. Democ­racy is the solu­tion. I haven’t changed my views since 1988.

  • Tel

    I think that retro­fitting a solu­tion from the 17th cen­tury (when the vol­ume of inter­na­tional trade was small com­pared to GDP) to our glob­alised econ­omy is sim­ply a very naive idea. 

    You are going to have to work very hard to con­vince me (or any­one else) that the buy and sell we do today is fun­da­men­tally dif­fer­ent to the buy and sell done cen­turies ago. The only dif­fer­ence that I see is that mod­ern gov­ern­ments can cre­ate money with a wave of the hand (and a nod from the bankers), which IMHO is a back­wards step from the 17th cen­tury (and even­tu­ally I expect we will relearn this).

    A stan­dard gold “leaf” is 35mm by 35mm, and 1000 leaves weigh 20 grammes, so 80 met­ric tonnes of gold is suf­fi­cient for 4,000,000,000 such leaves and I’m sure that would serve the pur­pose of any phys­i­cal exchange between hands. There is noth­ing to pre­vent half and quar­ter leaves being in cir­cu­la­tion, gold is one metal that can be sub­di­vided in astound­ingly small por­tions.

    Of course, as I already pointed out, Aus­tralia is a major pro­ducer so we have a steady sup­ply of new gold com­ing online all the time, and China is also a major pro­ducer so they do too.

    The liq­uid­ity argu­ment is a com­plete fur­fey.

    The use of gold as cur­rency does not pre­clude elec­tronic trad­ing either, pro­vid­ing suit­able audits are reg­u­larly con­ducted. Some peo­ple will demand the metal in their hand (as per­sonal pref­er­ence might have it), oth­ers will enjoy the con­ve­nience of an elec­tronic sys­tem. Buy­ing or sell­ing goods on account (e.g. 30/60/90 day terms, or hire pur­chase, or other mutu­ally agree­able con­tract terms) would remain unchanged… the risk would be on the shoul­ders of those party to the credit agree­ment and when the gold finally changed hands the account would be paid and cleared.

    I agree that if gold were accepted as cur­rency then the price of gold (rel­a­tive to other goods) would rise sub­stan­tially. I don’t see any­thing shock­ing about this, adjust­ment of price between sup­ply and demand is one of the things about eco­nomic the­ory that has been well sup­ported by real-world obser­va­tion. Short­ages push up prices, sur­plus pushes down prices. Yes there is some insta­bil­ity in the process, but it can’t stay sub­stan­tially out of bal­ance for a long period. You still have not explained where you expect all this gold to get con­sumed?

    Then there is the whole polit­i­cal dimen­sion of the insta­bil­ity I described — pos­si­ble med­dling of a for­eign power (any of them) to seize direct con­trol of the assets if local liq­uid­ity prob­lems arise. 

    For­eign own­er­ship is really a com­pletely dif­fer­ent prob­lem. If our bal­ance of pay­ments is con­sis­tently bad then the choice of what we use as a cur­rency is irrel­e­vant to the pres­sure to sell assets to for­eign pow­ers. The abil­ity for the gov­ern­ment and banks to print money does not pro­tect us in any way from for­eign takeover, gold will offer nei­ther bet­ter nor worse pro­tec­tion.

    In order to block for­eign own­er­ship, a gov­ern­ment of the day merely needs to have the balls to stand up and dis­al­low the trans­ac­tion. That’s all there is to it.

    Con­sump­tion level is max­imised in our econ­omy because peo­ple vote for politi­cians who promise good liv­ing and “wealth”. Also because reduc­ing it would affect the retail and ser­vices sec­tor. One day we will have to con­front this prob­lem any­way.

    With gold as a cur­rency, the politi­cians lose the abil­ity to cre­ate false wealth with a wave of the hand. That is the only thing that changes. Every­thing is busi­ness as usual except the hon­esty of a trans­ac­tion is enforced by the phys­i­cal world, rather than being trusted to those least likely to be trust­wor­thy.

    The Aus­tri­ans and some neo-con­ser­v­a­tives would sug­gest aban­don­ing the con­trols.

    Using gold as cur­rency removes the need for arti­fi­cial mon­e­tary con­trols. That’s all it does. This is a con­trol in and of itself.

    Per­son­ally I am against prop­ping up the unsus­tain­able growth but tech­no­log­i­cal progress is in my opin­ion the only chance to escape the prob­lems cause by shrink­ing resources and dis­rupted envi­ron­ment.

    I am in com­plete agree­ment. How­ever, I’m not one to use tech­nol­ogy for the sake of tech­nol­ogy, nor do I dis­count some­thing merely because the design is old (espe­cially with a strong and proven track record). If you look at the basic things peo­ple have and use in their day to day lives, most of them are largely unchanged designs that might range from hun­dreds of years old to thou­sands of years old. We use them because they work.

    You may not like Kevin Rudd but he is not like Adolf Hitler and our gov­ern­ment is not even nearly as bad as the gov­ern­ment of Aus­tro-Hun­gary send­ing mil­lions of peo­ple to die for noth­ing.

    We send fewer peo­ple out to die for noth­ing (and kill for noth­ing), mak­ing us pro­por­tion­ately less evil. The oil in Iraq or the opium in Afghanistan are very much the same as “die for the hon­our of the house of Haps­burg and the inter­ests the elites” with a name changed here and there. They only get away with it to the extent that they can keep the pop­u­la­tion con­fused and dis­tracted.

    None of this has any­thing to do with using gold as cur­rency. Gold won’t stop wars, it will merely throt­tle the abil­ity for the gov­ern­ment and the elites finance these wars by stealth (until they find some other way to con­vince the masses to sup­port their cause).

  • BrightSpark1


    One other thing about the Chi­nese com­mu­nists is that their lead­ers are mainly tech­nocrats, engi­neers and sci­en­tists. They have nur­tured China’s wealth cre­at­ing capa­bil­i­ties while the west­ern neolib­er­als have been destroy­ing ours.

    They are com­ming unstuck now because their cus­tomers are insol­vent. Insol­vent because we could not com­pete and win against these tech­no­cratic com­mu­nists while prac­tic­ing our neo­clas­si­cal eco­nomic the­o­ries.