Vote for Revere Award

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Voting is now open for the Revere Award for Economics. The Revere Award is the positive companion to the Dynamite Award in Economics, which was developed by the Real World Economics Review to recognize the failure of the vast majority of economists to foresee the Global Financial Crisis. It was awarded to the three economists whose work most helped cause the GFC, with the eventual winners being Alan Greenspan, Milton Friedman and Larry Summers (see Greenspan, Friedman and Summers win Dynamite Prize in Economics).

The Revere Award, on the other hand, will go to three of the handful of economists who foresaw the global financial crisis.  Yours truly is one of the nominees, along with Dean Baker, Wynne Godley, Michael Hudson, Paul Krugman, Jakob Brøchner Madsen, Ann Pettifor, Kurt Richebächer, Nouriel Roubini, Robert Shiller, George Soros and Joseph Stiglitz. Click here to go to the Real World Economics Review voting site.

The remainder of this post reproduces the three relevant entries from the RWER:

For the record, I voted for Wynne Godley, Michael Hudson, and myself.

Voting is now open for the Revere Award for Economics

The Revere Award for Economics is named in honour of the American revolutionary hero Paul Revere, who rode through the night to warn of the approaching British army. In this its inagural year, it will be awarded to the 3 economists who first and most clearly saw the Gobal Financial Collapse coming and whose work is most likely to prevent another GFC in the future.

96 people were nominated for the prize.  Through consultation with contributors to the Real-World Economics Review Blog, the following shortlist of twelve economists has been selected for the ballot: Dean Baker, Wynne Godley, Michael Hudson, Steve Keen, Paul Krugman, Jakob Brøchner Madsen, Ann Pettifor, Kurt Richebächer, Nouriel Roubini, Robert Shiller, George Soros and Joseph Stiglitz.

As with the Dynamite Prize, which attracted over 7,500 mostly economist voters –, the ballot will be conducted by PollDaddy.

Voting is quick and easy.  The ballot is near the top of the right-hand column (of the Real World Economics Review Blog home page).   Click on your three choices and then the big yellow “vote” button.

Foresight and Fait Accompli: Two Timelines for the Global Financial Collapse


Steve Keen concludes his JPKE paper “Finance and economic breakdown: modelling Minsky’s ’financial instability hypothesis’” as follows:

There are, however, severe doubts as to whether the kind of government that has been constructed over the last thirty years is a sufficiently powerful or balanced stabilizer to capitalist investment behaviour.

From the perspective of economic theory and policy, this vision of a capitalist economy with finance requires us to go beyond that habit of mind that Keynes described so well, the excessive reliance on the (stable) recent past as a guide to the future.  The chaotic dynamics explored in this paper should warn us against accepting a period of relative tranquillity in a capitalist economy as anything other than a lull before the storm. [emphasis added]


Wynne Godley in a paper with L. Randall Wray argued that the current stability in the US economy was unsustainable, because it was driven by the growth of households’ debt, which in turn was fuelled by real estate capital gains.  Using an accounting framework of the US economy developed by Godley, they predicted that when debt growth slowed down – as it inevitably would within years -, growth would stop.


Kurt Richebächer in September 2001 wrote:

the new housing boom is another rapidly inflating asset bubble financed by the same loose money practices that fuelled the stock market bubble.


Dean Baker in August published “The Run-Up in Home Prices: Is It Real or Is It Another Bubble?” in which he said:

While the short-term effects of a housing bubble appear very beneficial—just as was the case with the stock bubble and the dollar bubble—the long-term effects from its eventual deflation can be extremely harmful, both to the economy as a whole, and to tens of millions of families that will see much of their equity disappear unexpectedly. The economy will lose an important source of demand as housing construction plummets and the wealth effect goes into reverse. This will slow an economy already reeling from the effects of the collapse of the stock bubble of 1999, … Unfortunately, most of the nation’s political and economic leadership remained oblivious to the dangers of the stock market and dollar bubbles until they began to deflate. This failure created the basis for the economic uncertainty the country currently faces … [which] will be aggravated further by the deflation of the housing bubble. This process will prove even more painful if the housing bubble is allowed to expand still further before collapsing.


Jakob Brøchner Madsen (month unknown) wrote:

I am very pessimistic. We are heading into something in the world which is worse than what we experienced in 1982. It will be the worst recession since the Second World War”.

Ann Pettifor in August published in Open DemocracyThe Coming First World Debt Crisis”.  The article, which focused on “a giant credit bubble”, began:

The reckless financial policies of leading western powers in the last two decades make it likely that the next seismic debt crisis will be in America, not Argentina. It can be avoided . . . only by serious efforts to bring regulation and balance to the international economy.

Ann Pettifor in September published her edited collection Real World Economic Outlook: The Legacy of Globalization: Debt and Deflation, which examined the growth and new dominance of the financial sector. Contributors included Dean Baker, Herman Daly, Wynne Godley, Michael Hudson and Joseph Stiglitz.

Pettifor’s introduction said:

Removing controls over the finance sector paved the way for its rise to dominance, which in turn has led to a transformation of the global economy and increased instability.

[One of] the consequences for the global economy [is an] enormous increase (or ‘bubble’) in the stock of financial assets in relation to the real economy, as measured by GDP or the stock of physical, human, and technological capital.

There will be a collapse in the credit system in the rich world, led by the United States

Once default rates approach 1 per cent of the value of the debt across the whole lending spectrum, the profitability of banks is called into question. If default rates reach 2 per cent, the probability of a financial crisis rises appreciably.

Also in September, Pettifor restated her arguments for a forthcoming global financial collapse in a cover article for The New Statesman magazine.

Dean Baker published in the Los Angles Times on December 3 “Who to Blame When the Next Bubble Bursts. This was the first of dozens of columns that Baker wrote on the bubble. (most can found at

Dean Baker’s column “Building on the Bubble” in May appeared in six US newspapers. He wrote:

The fact that people are borrowing against their homes at a rapid rate (more than $750 billion in 2003) is more evidence of an unsustainable bubble. The ratio of mortgage debt to home equity is at record highs.

This is especially scary because equity values may be inflated by as much as 30 percent due to the bubble,

Michael Hudson in June presented at an academic conference the paper “Saving, Asset-Price Inflation, and Debt-Induced Deflation”. He noted that the ‘large debt overhead – and the savings that form the balance-sheet counterpart to it” is the ‘anomaly of today’s [US] economy’.  He warned against the ‘self expanding growth of savings’ and the unsustainable ‘growth of net worth through capital gains’ induced by US monetary and tax policies.  He said that the:

natural limit to the process was reached in 2004 when the Federal Reserve reduced its discount rate to 1 percent. Once rates hit this nadir, further growth in debt threatens to be reflected in draining and amortization payments away from spending on goods and services, slowing the economy accordingly.

Dean Baker sponsored through the CEPR a $1,000 essay contest to solicit the most-convincing argument that the housing market was not in a bubble.  The contest was twice written up in the New York Times.

Jakob Brøchner Madsen (month unknown) wrote:

There is something completely wrong. We are seeing large bubbles and if they bust, there is no backup. House prices and shares are completely out of proportion. And it will go wrong.


Dean Baker and Paul Krugman in March predicted in a paper written with J. Bradford DeLong that asset prices in the US were bound to fall in the medium term.

Robert Shiller in May in the Introduction to the second edition of his book Irrational Exuberance warned that home prices were looking “very anomalous” and that:

further rises in the [stock and housing] markets could lead, eventually, to even more significant declines… A long-run consequence could be a decline in consumer and business confidence, and another, possibly worldwide, recession. This extreme outcome … is not inevitable, but it is a much more serious risk than is widely acknowledged.

Paul Krugman on 27 May wrote in his NYT column:

If housing prices actually started falling, we’d be looking at [an economy pushed] right back into recession. That’s why it’s so ominous to see signs that America’s housing market … is approaching the final, feverish stages of a speculative bubble.

Nouriel Roubini in summer 2005 predicted that real home prices were likely to fall at least 30% over the next 3 years.

Steve Keen in December, drawing heavily on his 1995 theoretical paper “Finance and economic breakdown: modelling Minsky’s ‘financial instability hypothesis’” and convinced that a financial crisis was approaching, decided to go very public with his analysis. He registered the webpage dedicated to analyzing the “global debt bubble”.  His site soon attracted a large international audience.  At the same time he began appearing on Australian radio and television with his message of approaching financial collapse.

Jakob Brøchner Madsen (month unknown) wrote:

I feel lost. Money growth is increasing, oil and commodity prices have doubled in the last 10 years. Therefore inflation and interest rates should increase, but nothing happens. All the models we use to predict inflation have broken down, it is chaos.


George Soros in January on CNBC television said:

There’s (a) problem that I think is brewing, and that is the end of the housing boom in the United States and the ability of households to spend more than they earn because the value of their house is rising.

So I expect that by ‘07 there will be a significant decline in U.S. consumer spending and I don’t see what will take its place because it’s so important as a motor of the world economy.

And to an audience in Singapore Soros said:

the soft landing (for the US economy) will turn into a hard landing. That’s why I expect the recession to occur in 2007 not 2006.

Michael Hudson in April published ‘The Road to Serfdom: An Illustrated Guide to the Coming Real Estate Collapse’, in Harper’s Magazine. In it he wrote:

almost everyone involved in the real estate bubble thus far has made at least a few dollars. But that is about to change. The bubble will burst… America holds record mortgage debt in a declining housing market… For those who bought at the top and who now face decades of payments on houses that soon will be worth less than they paid for them, serious trouble is brewing. …. Rising debt-service payments will further divert income from new consumer spending. Taken together, these factors will further shrink the “real” economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagnation or worse.

Wynne Godley in May in a paper with Gennaro Zezza, “Debt and Lending: A Cri de Coeur”:

demonstrated again the US economy’s dependence on debt growth and argued that only the small slowdown in the rate at which US household debt levels were rising, resulting form the house price decline, would immediately lead to a “sustained growth recession … somewhere before 2010

Kurt Richebächer in July wrote in his newsletter:

The one thing that still separates the U.S. economy from economic and financial disaster is rising house prices that apparently justify ever more credit and debt”…

… a recession and bear market in asset prices are inevitable for the U.S. economy. … This will not be a garden-variety recession, in which monetary easing unleashes pent-up demand, as it used to do in past business cycles”.

… the great trouble for the future is that the credit bubble has its other side in exponential debt growth

The U.S. liquidity deluge of the last few years has had one single source: borrowing against rising assets backed by the Fed’s monetary looseness… all hinging on further rises in asset prices. But they are going to plunge.

Michael Hudson published his paper “Saving, Asset-Price Inflation, and Debt-Induced Deflation”.

Joseph E. Stiglitz et al. in August 2006 published Stability with growth: macroeconomics, liberalization and development which includes a chapter on “capital market failures” that looks “at how capital market liberalization can exacerbate the problems posed by coordination failures and broader macroeconomic failures” [p. 189]

Robert Shiller on August 30, writing with K. Case in the Wall Street Journal, said:

there is significant risk of a very bad period, with slow sales, slim commissions, falling prices, rising default and foreclosures, serious trouble in financial markets, and a possible recession sooner than most of us expected.

Nouriel Roubini  on August 23, 2006 wrote:

By itself this [house price] slump is enough to trigger a US recession.

On August 30 he wrote:

The recent increased financial problems of … sub-prime lending institutions may thus be the proverbial canary in the mine – or tip of the iceberg – and signal the more severe financial distress that many housing lenders will face when the current housing slump turns into a broader and uglier housing bust that will be associated with a broader economic recession. You can then have millions of households with falling wealth, reduced real incomes and lost jobs…

Like Baker and Keen, Roubini now put out repeated public warnings of the systemic implications of the housing bubble.

Kurt Richebächer in September 2006 wrote:

There is no question that the U.S. housing bubble is finished. All remaining questions pertain solely to speed, depth and duration of the economy’s downturn.

Ann Pettifor in October published her book The Coming First World Debt Crisis, an extension of the analysis she had presented in 2003 and which detailed legislation needed to avert the coming collapse.  She summarized her book’s analysis in articles for The Guardian and Open Democracy.

OctoberThe boom in US house prices begins to reverse its course.  Defaults on home mortgages approach record levels.

Joseph E. Stiglitz on October 30 on the Alex Jones radio show discussed the warning signs of plummeting real estate prices in the U.S. and the possibility of a global economic downturn. He said:

If it’s well managed it will only be a slow-down, if it’s not well-managed it could be a recession,


….I think we can avoid an implosion if we manage this carefully but it’s going to be very risky

Steve Keen in November began publishing on his monthly DebtWatch Reports (33 in total). These were substantial papers (upwards of 20 pages on average) that applied his previously developed analytical framework to large amounts of empirical data. Initially these papers analyzed the GFC that he was predicting and then its realization. His first report was titled “The Recession We Can’t Avoid?”.

Dean Baker in November, published the paper “Recession Looms for the U.S. Economy in 2007” (  in which he forecasts that weakness in the housing market was likely to push the economy into a recession in 2007, predicting -0.7 % GDP growth over 2007, Baker wrote:

The wealth effect created by the housing bubble fuelled an extraordinary surge in consumption over the last five years, as savings actually turned negative. …This home equity fuelled consumption will be sharply curtailed in the near future…. The result will be a downturn in consumption spending, which together with plunging housing investment, will likely push the economy into recession….Over the course of the year, the economy will shed 1.2 million jobs.”

Nouriel Roubini in a Nov 17 blog said:

[t]he housing recession is now becoming a construction recession; and the construction recession is now turning into a clear auto and manufacturing recession; and the manufacturing recession will soon turn into a retail recession as squeezed households – facing falling home prices and rising mortgage servicing costs – sharply contract their rate of consumption.

Steve Keen’s December report, titled “The runaway train of debt”, concludes:

Clearly households can’t go on like this. At some point, whether voluntarily or by duress, households have to stabilise, and preferably substantially reduce, their level of debt. They can only do this by either significantly reducing spending, or by liquidating assets. Long before this process actually causes the debt burden to fall, the economy will be in a debt-induced recession.

Paul Krugman on 4 December in the NYT wrote

Right now, statistical models based on the historical correlation between interest rates and recessions give roughly even odds that we’re about to experience a formal recession.

2007 (The GFC becomes a fait accompli)

Steve Keen continues through the year with Debtwatch Report

February The decline in US house prices accelerates. HSBC issues its first profit warning in its 142-year history, citing bad debts in its US subprime unit.

April New Century, the US’s largest subprime lender, goes bankrupt.

Wynne Godley in April foresaw output growth “slowing down almost to zero sometime between now and 2008 and then recovering toward 3 percent or thereabouts in 2009–10”; but warned that “unemployment [will] start to rise significantly and does not come down again.”

July – Investment bank Bear Stearns reveals it has made huge losses in two of its hedge funds.

August – Banks around the world begin to disclose that they too have large holdings in mortgage-backed securities.

September – British bank Northern Rock requests emergency funds, prompting a run on the bank.

Steve Keen on 14 September published, with the Centre for Policy Development, a 79 page report “Deeper in Debt”, analyzing the causes of the financial breakdown in the US and the possibility of it spreading to Australia.

October – Citigroup reports subprime related losses of $40bn.

George Soros in early November in a lecture at New York University said that after decades of overspending the U.S. economy is “on the verge of a very serious economic correction”

Wynne Godley and others in November 2007 predicted “a significant drop in borrowing and private expenditure in the coming quarters, with severe consequences for growth and unemployment”.

George Soros in January at Davos said:

The current crisis is not only the bust that follows the housing boom,… It’s basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency.

March – Bear Stearns collapses and, days later, is sold to JP Morgan Chase for just $2 a share.

September 14 – Mortgage lenders Fannie Mae and Freddie Mac are rescued in one of the largest bailouts in US history.

September 15 – Lehman brothers files for bankruptcy, prompting panic as investors had assumed the US government would prevent a bank of Lehman’s size – it was the US fourth largest investment bank – from going under.

As Merril Lynch approaches insolvency, it is bought by Bank of America for $50bn.

September 16 – Credit rating agencies downgrade status of AIG, America’s largest insurer. The US Federal Reserve loans the AIG $85bn and takes an 80 per cent stake.

September 19 – Henry Paulson, then US treasury secretary, unveils plan to use taxpayers’ money to stabilise firms and buy up toxic assets.

September. 29: Dow suffers largest ever one-day drop.

September to October – In the space of a month, banks around the world, notably HBOS, Royal Bank of Scotland,Washington Mutual, Fortis, Hypo Real Estate and Landsbanki, collapse.

October. 6: Dow drops below 10,000 for the first time since 2004.

October. 9: Dow falls below 9,000.

November. 19: Dow drops below 8,000 for first time since 2003.

November 25 US Fed announces further $800bn stimulus.

November 28 The IMF approved a $2.1bn loan for Iceland.


January. 29: US jobless claims hit all-time high.

March – Stock markets hit record lows, wiping out gains made since 1997. The Dow drops below 7,000.

* In compiling the Foresight Timeline, much use has been made of  Dirk Bezemer’s outstanding paper ‘“No One Saw This Coming”: Understanding Financial Crisis Through Accounting Models’. Bibliographic details may be found therein.

Short bios of the twelve shortlisted economists, the selection criteria used for the shortlist and background about the prize can be read here.

Shortlist for the Revere Award for Economics

This Award is named in honour of the American revolutionary hero Paul Revere, who rode through the night to warn of the approaching British army. In this its inagural year, it will be awarded to the 3 economists who first and most clearly saw the Gobal Financial Collapse coming and whose work is most likely to prevent another GFC in the future. 

To its great shame, the economics establishment has attempted to evade responsibility for the Global Financial Collapse by calling it an unpredictable, “Black Swan” event.  That assertion is manifestly untrue. Numerous non-neoclassical economists foresaw the crisis and warned the public (usually at the cost of ridicule) of its approach. The Revere Award aims to give these economists the professional and public recognition that they deserve, to encourage others to utilize their methods, and – most important — to increase the likelihood that, for the benefit of humankind, empirically responsible economists will be listened to in the future

97 people have been nominated for the award.  Some of these did not fit the requirement stated in the original announcement of the award, that the nominees should be economists(broadly interpreted) and to have publicly warned of this particular collapse, not collapses in general.  From those nominees who filled these requirements and through consultation with this blog’s community of authors, a shortlist of 12 has been selected.  All of them are worthy of our special regard.  If any of them had been listened to by the powers that be, a colossal amount of human misery would have been avoided.

Criteria used in the selection included the following:

  1. that the prediction was not whimsical or lucky, but was driven by theories, methods, and tools that are clearly within the domain of ‘economic thought’;
  2. that the forecast could be replicated given similar data;
  3. that the forecast was made public, and
  4. that the methods and tools used will spur the development of economics such that the subject gains rather than loses traction as a result of the crisis.

As with the Dynamite Prize, which attracted over 7,500 mostly economist voters –, the ballot will be conducted by PollDaddy.

You may vote for three of the shortlist nominees.

The prize will be awarded jointly to the three economists receiving the most votes.

But before voting (the ballot box opens in a few hours), please consult the post Foresight and Fait Accompli: Two Timelines for the Global Financial Collapse.

Shortlist for the
Revere Award for Economics

Dean Baker, formerly a professor at Bucknell University, is co-director of the Center for Economic and Policy Research in Washington. He is the author of many research papers, an economics columnist for the Guardian, a weekly online commentary on economic reporting, and several books, most recently False Profits: Recovering from the Bubble Economy.

Wynne Godley is professor emeritus of applied economics at Cambridge University and more recently a Distinguished Scholar at the Levy Economics Institute of Bard College, New York. He is noted for his research that uses accounting macroeconomic models to reveal structural imbalances.

Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri (Kansas City), president of the Institute for the Study of Long-term Economic Trends and a Wall Street financial analyst. He has long been a critic of growth induced by asset-price inflation.

Steve Keen is a professor of economics and finance at the University of Western Sydney and a specialist in financial instability. His analytical framework draws on Minsky, Fisher and Keynes. Beginning with the 2001 publication of his book Debunking Economics, he gained international prominence through his mathematically oriented attack on the neoclassical mainstream, his explanation of why the latter is such a poor guide to the way the economy actually works and his hypothesis of financial instability.

Paul Krugman is Professor of Economics at Princeton University, winner in 2008 of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel and op-ed columnist for The New York Times.

Jakob Brøchner Madsen was a professor of economics at the University of Copenhagen until 2006, when he moved to Monash University in Denmark.

Ann Pettifor is the author of several books on debt and international finance.  Beginning in 2000, she headed the New Economics Foundation’s research unit on global macro-economics.  Currently she is executive director of Advocacy International, which undertakes research and advises governments and organisations on matters relating to international finance and sustainable development.

Kurt Richebächer (1918-2007) was chief economist for Dresdner Bank from 1964 to 1977, when he left it for private consultancy. He wrote one of the longest-standing investment newsletters, “The Richebächer Letter,” in which he warned against the bubble in technology stocks in the late ’90s. Paul Volker, former Chairman of the US Federal Reserve, once remarked that the challenge for today’s central bankers “is to prove Kurt Richebächer wrong.” He died on August 24, 2007, two weeks before the collapse began.

Nouriel Roubini is Professor of Economics and International Business at the Stern School of Business, New York University, Research Associate at the NBER and Research Fellow with the CEPR. He is a former advisor to the U.S. Treasury Department and former member of the  White House Council of Economic Advisers. He runs the Roubini Global Economics Monitor and the blog Roubini Global Economics.

Robert Shiller is a Yale economics professor.  Like Richebächer he warned against the dotcom bubble.

George Soros, legendary financier and founder of a global network of charitable foundations, has authored numerous books on finance and economics, including The Crisis of Global Capitalism (1998). Like Richebächer and Shiller, he warned against the dotcom bubble. His analysis identifies fundamental instabilities in capitalism, most notably — and reminiscent of Keynes — the reflexivity of markets.

Joseph Stiglitz holds chairs at Columbia University and Manchester University and in 2001 received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.  He is know for his critical views of globalization, free-mrket fundamentalism, the IMF and the World Bank.

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42 Responses to Vote for Revere Award

  1. ak says:


    “My main interest in the Award is the possibility that it might alert Stiglitz and Krugman to the existence on non-neoclassical economics.”

    I think that you are 100% right.

    In my opinion there may be another way of letting Krugman know as he has some presence in the “blogosphere” and he seems to be a very bright person. It is just a matter of carefully crafting the message and choosing the right time to deliver. We may work on that during the walk.

    I wonder whether Krugman (or his assistant) bothers to read the comments or it is a write-only medium for him …

  2. TruthIsThereIsNoTruth says:

    I have looked at islamic banking and to call it ‘backward’ is a little short sited and I think we have to be a little careful our language here. It is not backward, it is a different perspective.

    It does bring up some interesting thoughts which are the main reason for this post rather then the opening critism. I think the reason islamic banking works is because people believe in it. It could work anywhere as long as people have a motivation for it to work. And that goes for any economic system. Systems work well if people believe in them and are therefore motivated by them. Ultimately you want people to go to work and some way of allocating capital in a way which keeps the system going in a positive direction. Both things need a certain level of confidence for it all to work, the confidence underlies the motivation to perform both functions.

    Of course in the context of the GFC we know the system is not perfect. But in saying that and arguing that it should be better we sort of assume that the system is meant to be ‘perfect’ or socially just, stable… But was it really meant to be all those things? Is this part of the design? When was society ever stable or just or ‘perfect’. This seems to be a deep desire in a lot of human beings but is society as a whole ready for that? We do however make incremental progress in this direction, while a lot of people see the GFC as evidence to the contrary I see it as one of those things which inspires a lot of progress in the right direction. If we overhauled it and made it nice and stable and just to the people pledging allegiance to the same flag or system would we stop and pat ourselves on the back while the real majority of the human population still suffers and is left behind. From my personal perspective I hope that this progress encompasses the whole world and that we stop ignoring the places which our system ignores and leaves behind, which makes up more than 50% of the human population. I wonder what the standard of living is like for the human being right on the 50% point.

  3. Steve Keen says:

    Re #5 5billkerr,

    Welcome aboard Bill. I think the absence of nominations for Marxists may be the root cause–check the discussion to see whether any were nominated.

    I see Minsky’s work as distilling the best in Marx on financial dynamics, and I find most so-called Marxist attempts to understand money rather pedestrian: they seem to stick with the first 7 chapters of Capital I where Marx deliberately used a gold money model to remove the extra complexities caused by credit.

    At some stage I’ll post a lengthy entry on Marx and Marxists here. In a nutshell, I think some of Marx’s greatest enemies are those who call themselves his friends. Though there are honourable exceptions (Hilferding, Rosdolsky, Magdoff, Meek come to mind), much of what was written by self-described Marxists took Marx’s own logic backwards rather than forwards.

  4. noah cross says:

    George Soros backs Oxford to refresh economics

    It is part of an attempt to steer the discipline away from the champions of the free market and deregulation who, the billionaire financier believes, share the blame for the global economic crisis.

    The institute, as yet unnamed, is being funded by the New York-based Institute for New Economic Thinking (Inet), a think-tank and educational and grant-giving organisation founded last October with a $50 million pledge from Mr Soros to stimulate debate about the role of government regulation in the economy and financial markets.

    It could be time to send him a proposal…

  5. burrah says:

    Ambrose Evans-Pritchard muses on the great conundrum of our times; who was right, Milton Friedman or the creditists, those who think the credit mechanism matters most.
    Deflation on the prowl as Bernanke shuts down his printing press

  6. Philip says:

    On the topic of Marx and Marxists, I would have to say that the economist Michael Perelman came very close to having some “insight” to when an economic catastrophe was going to occur.

    He published a book in 2007 called The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. The most interesting chapter in my opinion was towards the end where he examines the current state of economic theory and finds it lacking in any realism to analyzing the real world.

  7. Lyonwiss says:

    noah cross

    Blind Freddy could now see that the economics or more precisely the economics that underlies public policy is seriously flawed. But few can see that the organization structures for economic studies, public policy, education and public service generally are so flawed that they are responsible for producing the nonsense and chaos around us.

    Another think-tank will solve the problem? There must be hundreds of economic think-tanks around the world already. Has any of them produced any original economic thought that really mattered? The fact that the global financial crisis has been allowed to happen puts a big question mark over such organizations. They get bogged down for one reason or another.

    My general thesis in simple terms is that power and money destroy creativity. Power is exercised in hierarchical structures such as bureaucracies and large organizations. Money controls organizations and the heads of such hierarchies. Little creativity is possible, permitted or encouraged in most centralized structures. Not surprisingly this is true even in some scientific organizations (e.g. the story of penicillin).

    The answer perhaps lies with decentralized structures along the lines of Brafman and Beckstrom’s book: “The starfish and the spider”. Examples already exist: the internet and this blog in particular! George Soros should spend his money, not in ways which have proven to lead to failures, but in ways which might just lead to success.

  8. speckie says:

    Hello Steve

    You were my top choice of the many listed candidates. Not sure about some of the other candidates though. Namely, Paul Krugman and George Soros, (for Soros on the basis that he is not an economist). On that point, if non-economists are to be included then what about people like Nassim Taleb.

    There are many other omissions. For a start financial economists and practitioners such as Peter Schiff , Marc Faber or even Robert Pretcher. Hell! I can cite a dozen monographs prognosticating financial Armageddon and none of the authors are cited. Schiff and Faber are significant since they draw their theoretical perspective from the tradition of von Mises and Hayek.

    But there are many others who reported and early analysis of and prediction of a crash by Mark Thornton, including himself. I’ve listed the commentators on his honour role below. Most of the words are his. The hyperlink to his article is

    1. Mark Thornton: Mark Thornton presented such warnings of the bust and an analysis of the credit bubble in public lectures, radio broadcasts, and newspaper articles and on the Internet

    In a lecture in Houston on July 15, 1999, he delivered a lecture on Alan Greenspan’s “luck” in increasing the money stock without price inflation, and warned that the Fed’s actions inevitably would have negative economic consequences.

    2. James Grant: One of the earliest prognostications regarding the boom and bust was analyst James Grant, who closed his book The Trouble with Prosperity, written in May 1996 as follows:
    “at what may or may not prove to be the ultimate peak of the speculative frenzy,”
    Grant continued to warn investors about the stock-market bubble in his investment newsletter, to provide detailed explanations of the cause of the bubble, and to chronicle

    3. Tony Deden: at Sage Capital Management, who wrote in 1999

    “We fully expect a decline in securities prices and the almighty dollar over the next years. . . . There is no new paradigm. Economic sins have consequences. Hopefully, perhaps even economists will learn that inflation is measured by the growth in money and credit rather than in an idiotic index of consumer prices. They might even learn that growth achieved with smoke and mirrors ultimately leads to ruin. Is the incredible rise in securities prices since 1995 a reflection of real value created or is it merely a bubble? Is this really a second Industrial Revolution that changes our very basic economic assumptions or is it not? Is it a “new paradigm”? A world of fast growth, record unemployment and no apparent inflation? Have economic laws been suspended? And if not, how could so many people be so wrong? “

    4. Jorg Hulsmann:

    “Economist Jorg G Hulsmann, in August 1999, provided an analysis and prediction of the stock-market bubble based on the post-1980 monetary regime in the United States. He concluded that the market boom had been created artificially and that it was doomed to fail:

    ‘You do not need a rocket scientist to predict the bitter end of this evolution. . . . Just as any other state of affairs that has been artificially created and maintained by inflation, the present system bears in itself the germs if its own destruction. It will experience a flat landing of which even the most recent crises in South-East Asia, Russia, and Latin-America only give a weak foretaste’ (1999, 140).”

    Thornton notes that Hülsmann is not the only economist who traced this business cycle back to the post-1980 monetary regime of deregulation.

    5. Frank Shostak: Thornton writes that

    “At the height of the bull market, allies of the Austrian school of economics held a conference at which most participants emphasized the role of the Fed in creating the boom. In particular, Frank Shostak highlighted the impact of the central bank’s policies”

    6. Sean Corrigan: Another notables is the Irish economic and stock analyst, Sean Corrigan who in 1999 “…provided well-timed prognostication of the bubble and deep insight into its cause. He compared conditions during the fall of 1999 to those during the late summer of 1987, the Japanese bubble of the late 1980s, and the ‘roaring Twenties’ in the United States. He dismissed the idea that technology and all the musings of a ‘new paradigm’ could have been responsible for the run-up in stock prices in the late 1990s. In his view, debt of all kinds was expanding at high rates at a time when the saving rate was plummeting.”

    In short Thorton also notes that the:
    “…second group of correct predictions came from outside the mainstream of the economics profession and that most came from economists associated with the Austrian school of economics, including academic economists, financial economists, and fellow travelers of the school. These predictions began to come forth in 1996 and continued until after the downturn in the stock market, but most of them occurred close to the peak in the stock markets. Austrians tend to have a negative view in general, and they
    are quick to emphasize the negative aspects of economic conditions, but they also distinguish bubbles and business cycles clearly from other economic phenomena and
    trends. Given that the Austrian economists are both relatively few in number and marginalized in the profession, their dominance in making correct predictions seems to
    be something of an elephant in the soup bowl, especially in light of their general disdain for forecasting and for the mainstream’s requirement of accurate prediction.”

    Thornton’s article is a great read but he also presented it as the Murray N. Rothbard memorial lecture at the Austrian Scholars Conference recently. The link appears below for those interested.

    My apologies for such a long winded comment.

  9. billkerr says:

    31- Phillip
    Thanks for Michael Perelman reference, he has an impressive bio , I plan to follow his blog.

    28- Steve
    Thanks. I also saw your comment about Marx on the other (Topsy) thread. Agree with comments about marxists not understanding marx. I’ve read some of your material which adds dialectics to Minsky’s work (The Minsky Thesis: Keynesian or Marxian). As far as I can tell that is your work, not Minsky’s. I’ve bought a couple of Minsky’s books and have encountered what I think is an error in his interpretation of Marx. On p. 24 of his Keynes bio he says “In Marx it was the inability of workers to purchase back what they produced that led to the surplus”. What Marx said was that the surplus arose from direct exploitation of labour power.

    From that my impression is that Minsky had similar views to Marx as Keynes. Joan Robinson commented that Keynes would have done better if he had understood Marx or Kalecki more.

    I’m still reading Minsky and Marx which I have neglected over the years and have taken up in earnest now due to the crisis which seems to show that at least one of them or perhaps both were on the right track. If your point is that Minsky had a better marxist view of money discovered independently of Marx and marxists then I would not argue with that.

    7- ak
    Interesting comment about China’s overproduction fate in the next round of the GFC.

    Here is a 2009 paper by Robert Brenner where he discusses the crisis in terms of over accumulation, answers a direct question about the Minsky interpretation of the crisis and also looks at the possible future of China (pretty much a Marxist interpretation):
    Overproduction not Financial Collapse is the Heart of the Crisis: the US, East Asia, and the World

  10. billkerr says:

    sorry I forgot to complete the link to Steve’s pdf: The Minsky thesis: Keynesian or Marxian

  11. burrah says:

    “and fellow travelers of the school.”
    The most notable of whom is Nassim Taleb

  12. nickmakwell says:

    I voted Steve, then Robert Shiller and George Soros. Good luck Steve!

  13. Philip says:

    Lyonwiss @ 32,

    You’re starting to sound somewhat anarchistic!

  14. Lyonwiss says:

    Philip, I follow the evidence wherever that leads! Above all I value free thinking and avoid carrying other peoples baggage.

  15. Lengthy but interesting article in the Monthly Review regarding, Keynes, Marx, Minsky and deflation.

    Listen Keynesians, It’s the System! Response to Palley
    John Bellamy Foster and Robert W. McChesney

  16. Steve Keen says:

    Thanks BillKerr,

    You should also take a look at the two preceding published papers (here and here) plus this unpublished one to get a fuller take on my interpretation of Marx.

  17. noah cross says:

    Lyonwiss @ 32…Soros’s new think tank may not be highly effective, and not instantly, but as a plutocrat he is looking after his future reputation. An investment in one may create the long term, generational debate, to re-examine and understand things better. We don’t know yet. At least in a plural society, think tanks ( left right centre, green) are intended to drive ideas. It’s true that whether changing ideas are adopted or not is another thing as the decision makers do not want disruption. In the financial context it could take another 2-3 crises for real change to occur, not just in economics, but in financial markets too.
    As you say think tanks may not be useful, not to the left wing of politics anyway; but in the last 30 years, right wing and genuinely conservative think tanks have promoted ideas in taxation, investment, regulation and social policy in the anglo-saxon world. None of that is to my political outlook but their effect has been real.
    Your view that “Little creativity is possible, permitted or encouraged in most centralized structures.” could have been said by Ayn Rand, (Greenspan’s mentor) and may well be true, as corporations are deadening places. Her book The Fountainhead is making a comeback in the US now. It is a bizarre piece of work.
    And just closing, while the Net and this forum are useful media to share and communicate, they lack direct influential power, that still resides within conventional channels, whether universities, think tanks and/or mainstream media.

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