Invi­ta­tion from 141 econ­o­mists to join the World Eco­nom­ics Asso­ci­a­tion

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We, the 141 econ­o­mists from the 40 coun­tries listed below, invite you to join the World Eco­nom­ics Asso­ci­a­tion which we are launch­ing today.

Two com­mit­ments listed in our Man­i­festo sum up the project.

1. To plu­ral­ity. The Asso­ci­a­tion will encour­age the free explo­ration of eco­nomic real­ity from any per­spec­tive that adds to the sum of our under­stand­ing. To this end, it advo­cates plu­ral­ity of thought, method and phi­los­o­phy.

2. To global democ­racy. The Asso­ci­a­tion will be demo­c­ra­t­i­cally struc­tured so as not to allow its dom­i­na­tion by one coun­try or one con­ti­nent.

The cre­ation of the WEA addresses an obvi­ous gap in the inter­na­tional com­mu­nity of econ­o­mists – the absence of a truly inter­na­tional, plu­ral­ist asso­ci­a­tion. Today’s dig­i­tal tech­nol­ogy makes it fea­si­ble to close this gap quickly and cheaply through a bot­tom-up, grass-roots approach.

The WEA has been legally con­sti­tuted in the United King­dom as a “Com­mu­nity Inter­est Com­pany”, a spe­cial legal cat­e­gory (with an asset lock) for non-profit orga­ni­za­tions whose pur­pose is to serve the pub­lic inter­est.

Mem­ber­ship of the World Eco­nom­ics Asso­ci­a­tion is free. To join, all that you need to do is go here and then enter your name, email address and coun­try and then click. You will also be given the option of pro­vid­ing us with a few pro­fes­sional details, but none of these are required. You will receive an email con­firm­ing your mem­ber­ship of the WEA. You will also be given the oppor­tu­nity to make a dona­tion to the run­ning of the WEA. We want to empha­size that the WEA has no major donors, nei­ther insti­tu­tional nor indi­vid­ual, behind it.

The WEA will ini­tially pub­lish three jour­nals, two of them new. Online access will be free to mem­bers, with print copies avail­able to libraries and indi­vid­u­als for a fee. The WEA’s very large mem­ber­ship from which to draw papers will ensure a high stan­dard of schol­ar­ship. The gen­eral-pur­pose flag­ship jour­nal will be the World Eco­nom­ics Jour­nal. The other new jour­nal, Eco­nomic Thought, will focus on the his­tory, method­ol­ogy and phi­los­o­phy of eco­nom­ics. The Real-World Eco­nom­ics Review will hence­forth be pub­lished under the umbrella of the WEA. If you wish, you may read a doc­u­ment detail­ing the struc­tures and pro­ce­dures, which include an open review process, for the jour­nals.

From its web­site, the WEA will also run online con­fer­ences.

Help eco­nom­ics and your­self. Become a WEA mem­ber now.

Hop­ing you will join us as mem­bers,



Fantu Cheru,
Nordic Africa Insti­tute

Ghana / Kenya

Charles Abu­gre,
United Nations Mil­len­nium Cam­paign in Africa


Thandika Mkan­dawire, Lon­don School of Eco­nom­ics

South Africa

Lucien Van Der Walt, Uni­ver­sity of the Wit­wa­ter­srand

Salim Vally, Uni­ver­sity of the Wit­wa­ter­srand



Ping Chen, Cen­ter for New Polit­i­cal Econ­omy, Fudan Uni­ver­sity

Chi­nese Acad­emy of Social Sci­ence

Shulin Gu, Tsinghua Uni­ver­sity

Kainan Huang, Shan­dong Uni­ver­sity

Yanli Huo, Chiba Insti­tute of Tech­nol­ogy

Dic Lo, Ren­min Uni­ver­sity of China and Uni­ver­sity of Lon­don

Henry C. K. Liu

Ying Ma, Wuhan Uni­ver­sity

Yougui Wang, Bei­jing Nor­mal Uni­ver­sity

Dapei Zuo,
Insti­tute of Eco­nom­ics, Chi­nese Acad­emy of Social Sci­ences


V. Bhaskar, Uni­ver­sity Col­lege Lon­don,

C. P. Chan­drasekhar, Jawa­har­lal Nehru Uni­ver­sity
Jishnu Das, World Bank

Jay­ati Ghosh, Jawa­har­lal Nehru Uni­ver­sity

Prab­hat Pat­naik, Jawa­har­lal Nehru Uni­ver­sity


Toru Iwami, Uni­ver­sity of Tokyo

Richard C. Koo, Nomura Research Insti­tute


Ha-Joon Chang, Cam­bridge Uni­ver­sity


Ali Kadri, United Nations and Lon­don School of Eco­nom­ics


Rajah Rasiah, Uni­ver­siti Malaya


Akmal Hus­sain, Bea­con­house National Uni­ver­sity


Pasuk Phong­pai­chit, Chu­la­longkorn Uni­ver­sity


Eyup Özvveren, Mid­dle East Tech­ni­cal Uni­ver­sity

- — - — - — - — - — - — - -


Peter Earl, Uni­ver­sity of Queens­land

Steve Keen, Uni­ver­sity of West­ern Syd­ney

J. E. King, Monash Uni­ver­sity

New Zealand

Robert Wade, Lon­don School of Eco­nom­ics



Ulrich Brand, Uni­ver­sity of Wien


Chris­t­ian Arnsperger, Uni­ver­sity of Lou­vain

Ernst Stet­ter, Foun­da­tion for Euro­pean Pro­gres­sive Stud­ies u


Bengt-Åke Lund­vall, Uni­ver­sity of Aal­borg


Wolf­gang Drech­sler, Tallinn Uni­ver­sity of Tech­nol­ogy

Rainer Kat­tel, Tallinn Uni­ver­sity of Tech­nol­ogy


Uskali Mäki, Uni­ver­sity of Helsinki


Bruno Amable, Uni­ver­sité Paris 1 Pan­théon-Sor­bonne

Rolande Bor­relly, Insti­tute of Applied Math­e­mat­ics and Eco­nom­ics

Jean-Pierre Dupy, École Poly­tech­nique and Stan­ford Uni­ver­sity

Olivier Favereau, l’universite Paris X 

Jean Gadrey, Uni­ver­sity of Lille

Bernard Guer­rien, Uni­ver­sité Paris 1 Pan­théon-Sor­bonne

Frédéric Lor­don, Bureau d’économie théorique et appliquée 

André Orléan, Ecole Nor­male Supérieure

Jacques Sapir, Ecole des Hautes Etudes en Sci­ences Sociales

Henri Ster­dy­niak,
Obser­va­toire français des con­jonc­tures économiques


Heiner Flass­beck, United Nations Con­fer­ence on Trade and Devel­op­ment

Ulrich Fritsche, Uni­ver­sität Ham­burg

Nor­bert Haer­ing, Han­dels­blatt

Gus­tav Horn, Macro­eco­nomic Pol­icy Insti­tute

Lorenz Jarass, Uni­ver­sity of Applied Sci­ences of Wies­baden

Wal­ter Krämer, Unvier­sity of Dort­mund

Man­fred Nitsch, Freie Uni­ver­si­taet Berlin

Sigrid Skarpelis-Sperk, for­mer mem­ber of the Bun­destag

Friederike Spiecker


Yanis Varo­ufakis, Uni­ver­sity of Athens


Jean Fey­der, Ambas­sador to the United Nations


Nicola Aco­cella, Uni­ver­sity of Rome

Gio­vanni Dosi, Sant’Anna School of Advanced Stud­ies

Grazia letto-Gillies, Lon­don South Bank Uni­ver­sity,

Cristina Mar­cuzzo,
Uni­ver­sity of Rome 

Ugo Pagano, Uni­ver­sity of Siena

Luigi Pasinetti, Catholic Uni­ver­sity of Milan

Alessan­dro Roncaglia, Uni­ver­sity of Rome

Annal­isa Rosselli, Roma Tor Ver­gata


Esther-Mir­jam Sent, Rad­boud Uni­ver­sity Nijmegen 

Irene van Staveren, Inter­na­tional Insti­tute of Social Stud­ies of Eras­mus Uni­ver­sity


Erik S Rein­ert, The Other Canon Foun­da­tion


Vladimir Avtonomov, Higher School of Eco­nom­ics, Moscow

Elena Sapir, P.G.Demidov Yaroslav State Uni­ver­sity


Peter Söder­baum, School of Sus­tain­able Devel­op­ment of Soci­ety and Tech­nol­ogy


Anto­nio Gar­rido, Uni­ver­si­dad Politéc­nica de Madrid


Paul H. Dem­bin­ski, Uni­ver­sity of Fri­bourg

Jochen Hartwig, Uni­ver­sity of Zürich

Friedrich von Kirch­bach, Inter­na­tional Trade Cen­tre

Paul Meier, Swiss Futures and Options Asso­ci­a­tion

Ser­gio Rossi, Uni­ver­sity of Fri­bourg

United King­dom

Mark C. Cas­son, Read­ing Uni­ver­sity

Vic­to­ria Chick, Uni­ver­sity Col­lege Lon­don

Fran­cis Cripps, Cam­bridge Uni­ver­sity

Diane Elson, Uni­ver­sity of Essex 

Sheila C. Dow, Uni­ver­sity of Stir­ling

Edward Full­brook, Real-World Eco­nom­ics Review

Geof­frey Hodg­son, Uni­ver­sity of Hert­ford­shire

Tony Law­son, Cam­bridge Uni­ver­sity

Mary Mel­lor, Uni­ver­sity of Northum­bria at New­cas­tle

Paul Ormerod, Volterra Con­sult­ing

Paul Ray­ment, for­mer direc­tor of UN Eco­nomic Com­mis­sion for Europe

Ann Pet­ti­for, Pol­icy Research in Macro­eco­nom­ics

Robert Skidel­sky, Uni­ver­sity of War­wick

John Weeks, Uni­ver­sity of Lon­don

Latin Amer­i­can and West Indies


Aldo Caliari, Rethink­ing Bret­ton Woods Project

Roberto Frenkel, Uni­ver­si­dad de Buenos Aires

Gus­tavo Mar­qués, Uni­ver­si­dad de Buenos Aires


Keith Nurse,
Uni­ver­sity of the West Indies


Luiz Car­los Bresser-Pereira, Getulio Var­gas Foun­da­tion and Uni­ver­sity of São Paulo

Ana Celia Cas­tro, Fed­eral Uni­ver­sity of Rio de Janeiro

Fer­nando Fer­rari Filho, Uni­ver­si­dade Fed­eral do Rio Grande do Sul

Luiz Fer­nando de Paula, Uni­ver­si­dade do Estado do Rio de Janeiro


Mario Cimoli, UN Eco­nomic Com­mis­sion for Latin Amer­ica and the Caribbean


Juan Calos Moreno-Brid, UN Eco­nomic Com­mis­sion for Latin Amer­ica and the Caribbean

Ali­cia Puyana, Latin Amer­i­can School of Social Sci­ences


San­ti­ago Roca, Uni­ver­si­dad ESAN

Jür­gen Schuldt, Uni­ver­si­dad Paci­fico de Lima

- — - — - — - — - — - — -


Marc Lavoie, Uni­ver­sity of Ottawa 17,300

Jim Stan­ford, Canada, Cana­dian Auto Work­ers

United States

Alice Ams­den, Mass­a­chu­setts Insti­tute of Tech­nol­ogy

Dean Baker, Cen­ter for Eco­nomic and Pol­icy Research

Michael A. Bern­stein, Tulane Uni­ver­sity

Joerg Bibow, Skid­more Col­lege

Ron Black­well, AFL-CIO

Bruce J. Cald­well, Duke Uni­ver­sity

David Colan­der, Mid­dle­bury Col­lege

Robert Costanza, Pot­land State Uni­ver­sity

Her­man E Daly, Uni­ver­sity of Mary­land

Paul David­son, Jour­nal of Post Key­ne­sian Eco­nom­ics

John B. Davis, Mar­quette Uni­ver­sity

Lloyd J. Dumas, Uni­ver­sity of Texas

James Gal­braith, Uni­ver­sity of Texas at Austin

Kevin Gal­lagher, Boston Uni­ver­sity

Jo Marie Gries­graber, New Rules for Global Finance Coali­tion

Stephany Grif­fith-Jones, Colum­bia Uni­ver­sity

Michael Hud­son, Uni­ver­sity of Mis­souri at Kansas City 

Fred­eric S. Lee, Uni­ver­sity of Mis­souri at Kansas City

Robert Locke, Uni­ver­sity of Hawaii

Stephen Mar­glin, Har­vard Uni­ver­sity

Anne May­hew, Uni­ver­sity of Ten­nessee

Deirdre McCloskey, Uni­ver­sity of Illi­nois at Chicago 

Julie A. Nel­son, Uni­ver­sity of Mass­a­chu­setts, Boston

Richard Parker, Har­vard Uni­ver­sity

Peter Rad­ford, The Rad­ford Free Press

Dani Rodrik, Har­vard Uni­ver­sity

Lance Tay­lor, New School for Social Research 

Immanuel Waller­stein, Yale Uni­ver­sity

Mark Weis­brot, Cen­ter for Eco­nomic and Pol­icy Research

Charles K. Wilber, Uni­ver­sity of Notre Dame

L. Ran­dall Wray, Uni­ver­sity of Mis­souri, Kansas City

Stephen T. Zil­iak, Roo­sevelt Uni­ver­sity

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • Lyon­wiss


    You said: “…the ulti­mate test of both MMT and the Austrian/neoclassical the­o­ries.” Econ­o­mists do not test their the­o­ries — they sim­ply ignore the evi­dence. The­o­ries of Marx, Keynes etc have never been really tested in any sci­en­tific sense. Where poli­cies have been imple­mented in their names have been eco­nomic fail­ures, and widely rec­og­nized as such.

    Most would have accepted that the US Fed, most devel­oped and many devel­op­ing coun­tries (through IMF and World Bank) have largely fol­lowed neo­clas­si­cal eco­nomic poli­cies for the past few decades. Is the GFC and its ongo­ing after­math, not enough evi­dence of the fail­ure of those the­o­ries? What make you think that what hap­pens in China will affect eco­nomic the­o­ries?

    China does not fol­low any spe­cific (or coher­ent) eco­nomic the­ory, as it doesn’t care whether a cat is black or white, so long as it catches mice. So far it has fol­lowed Japan’s post-war pol­icy to grow its econ­omy through exports, based on cheap labor. The World Bank Chief Econ­o­mist Justin Li has a descrip­tion of suc­cess­ful eco­nomic devel­op­ment strate­gies.

    Eco­nomic the­o­ries are cur­rently like reli­gions, which can­not be tested. Once eco­nom­ics has seri­ous and suc­cess­ful pro­ce­dures for test­ing the­o­ries, it will move from being reli­gion to sci­ence. The “sci­ence” of eco­nom­ics cur­rently is merely “sci­en­tism”, as Hayek called it. The new eco­nomic par­a­digm is much more than just a new eco­nomic the­ory.

  • @ Lyon­wiss May 23, 2011 at 1:06 pm | #

    Eco­nomic the­o­ries are cur­rently like reli­gions, which can­not be tested.” Of course, you are cor­rect but this is the way it is pre­ferred so “can­not” doesn’t arise in rel­e­vance or cor­rec­ti­tude. China’s Cen­tral Com­mit­tee and radi­ally aligned con­sul­ta­tive advi­sors are well versed in all the ‘eco­nomic-ide­olo­gies’ of the day and fol­low their own inter­pre­ta­tions just as Bernanke, Gei­th­ner, Stevens and Trichet, et al.

    Why? Because “eco­nom­ics” as it is wielded in real­ity, is a polit­i­cal tool of con­ve­nience. Cen­tral Banks pro­vide the flex­i­bil­ity and com­mer­cial banks pro­vide the unseen hand of power and mass con­trol albeit in the Pol­icy of the Recur­sive. The rela­tion­ship between pol­i­tics and bank­ing is sym­bi­otic and par­a­sit­i­cal — as writ­ten his­tory clearly shows over the past 2 mil­len­nia; this is eco­nom­ics as it is prac­tised.

    How­ever, the root dri­ver of mon­e­tary value is the socio-eco­nomic order­ing force, in a val­ued orga­ni­za­tion of ‘true’ lead­er­ship. Today, it is the break­down of the socio-eco­nomic order­ing through a total lack of integrity of applied “lead­er­ship” which is bring­ing about global dis­lo­ca­tion and the invol­un­tary geo-politico-mon­e­tary reor­ga­ni­za­tions through crisis’s and force­ful attempts at crasse power intim­i­da­tions.

    How­ever, a deeper look into the lat­ter phe­nom­ena, clearly indi­cates a deeper and more per­va­sive Cause event com­ing directly from the rapidly grow­ing wave of clar­ity in the per­cep­tions of the masses, in the con­text of their past and cur­rent treat­ment by cur­rent “lead­er­ship” — which they find want­ing. In other words, the con­scious­ness of the socio-eco­nomic masses are advanc­ing at a far greater rate than “lead­er­ship” — which are actu­ally retreat­ing back to bru­tal fun­da­men­tals of dic­ta­to­r­ial method­olo­gies and social manip­u­la­tions in order to main­tain their sta­tus and posi­tions of con­trol and pres­i­den­tial pri­or­ity, a pri­ori, at any cost.

    Or, if you pre­fer, the peo­ple are becom­ing smarter and wise to the ways of “lead­er­ship” which is glob­ally revert­ing to brute force and lies, albeit in obvi­ous des­per­a­tion.

    You say: “The new eco­nomic par­a­digm is much more than just a new eco­nomic the­ory.”

    Absolutely! And, we would be well advised to con­sider again the works of Lord Acton, Adams, V. Hayek and v. Mises, Marx, Pop­per, et al — in great detailed focus with the empha­sis on the real­i­ties of the dynamic inter-rela­tion­ships (read: entan­gle­ments) between the fun­da­men­tals of socio-eco­nom­ics and real eco­nom­ics (as opposed to the reli­gious beliefs of the true-believ­ers of the broth­er­hood of blind econ­o­mists).

    Much, much more; indeed.

  • ak


    I mostly agree with your assess­ment but for me the “audi­ence” and judges are his­to­ri­ans and com­mon peo­ple rather than econ­o­mists. I do not expect an eco­nomic the­ory to enable sci­en­tific man­ag­ing of every­thing. Also — in the pres­ence of noise and uncer­tainty mak­ing pre­dic­tions even at the level of con­fi­dence sim­i­lar to short-term weather fore­cast­ing seems to be impos­si­ble because of the very nature of the sys­tem con­sist­ing of human agents.


    The Soviet bas­tardised ver­sion of Marx­ism called Marx­ism-Lenin­ism was fal­si­fied but not because a for­mal proof was pre­sented. The sys­tem sim­ply failed and the state which was imple­ment­ing it dis­in­te­grated.

    If some­one in the UK makes state­ments that “reduc­ing bud­get deficit will bring about increased busi­ness con­fi­dence and help restor­ing growth of the GDP and reduc­ing unem­ploy­ment” — that state­ment will either come out to be true, false or (what is not likely but pos­si­ble) exter­nal cir­cum­stances will change the rules of the game so much that the ver­i­fi­ca­tion will be impos­si­ble in let’s say 2 years time.

    I am not so sure about the orig­i­nal Key­ne­sian the­ory which was mis­in­ter­preted even when Keynes was still alive. 

    In regards to Michal Kalecki it would be inter­est­ing to ask you to have a look at the fol­low­ing paper writ­ten by one of his col­leagues and to decide whether this the­ory has also been proven to be incor­rect:

    Kaz­imierz Laski,
    Three Ways to … High Unem­ploy­ment

    In a speech held on the occa­sion of his 65th birth­day, Kalecki told us that, with few
    excep­tions, he avoided teach­ing all his life and saw his role rather as an eco­nomic advi­sor. With one excep­tion his advice was sim­ply ignored and found its last­ing use in papers which have remained and con­sti­tute until today a rich source of inspi­ra­tion for those who wish to learn. In only one case – Kalecki said – his advice was not ignored but taken account of. This hap­pened in Israel at the very begin­ning of its inde­pen­dence. Instead of sim­ply ignor­ing Kalecki’s advice, the Israeli Gov­ern­ment did exactly the oppo­site. It is prob­a­bly the fate of his reme­dies that we can repeat his sar­cas­tic remark half a cen­tury later in the Ger­man con­text, and not only in that one.”

    There will be no new par­a­digm, I am afraid. We may sim­ply find the fourth, ulti­mate road to high unem­ploy­ment — the mis­han­dling of debt-defla­tion con­di­tion. In the mean­time the Chi­nese cat will keep catch­ing mice. This is the proof I had in my mind when I was writ­ing the pre­vi­ous post. Whether our main­stream econ­o­mists change their minds is rather irrel­e­vant in that con­text.

  • mahaish

    its not a mat­ter of opin­ion lyon­wiss,

    the gov­ern­ment finan­cial bal­ance + the domes­tic pri­vate sec­tor finan­cial bal­ance + the for­eign domes­tic pri­vate sec­tor finan­cial bal­ance =0

    so atleast one sec­tor has to be in deficit .

    its account­ing real­ity.

    and fur­ther­more we are act­ing as if the deficit is some pol­icy choice of gov­ern­ments when a large part of it is endoge­nously deter­mined by pri­vate sec­tor sav­ings and invest­ment deci­sions

    how the deficit is spent is another mat­ter alto­gether. no one here thinks the fhog was a good exam­ple of pub­lic invest­ment.

    have a look at the US data , deficits ris­ing , pri­vate sav­ings ris­ing.

  • Lyon­wiss

    Ak May 23, 2011 at 9:22 pm

    The key to real eco­nomic growth is real sav­ings, from which to finance real invest­ments, which lead to more effi­cient pro­duc­tion of con­sum­able goods. I can­not think of a sin­gle eco­nomic the­ory (includ­ing Kalecki and Laski in the paper you men­tioned) that would dis­agree with this state­ment. Over the short-term, eco­nomic cycles can lead to unem­ploy­ment which Key­ne­sians and MMTers say should be fixed by gov­ern­ment fis­cal or mon­e­tary stim­u­lus, but which Aus­tri­ans and neo­clas­si­cists say should be allowed to work itself out, since the gov­ern­ment doesn’t know what it’s doing. 

    Regard­less of the short-term dynamic, there is a long-term dynamic occur­ring over decades, where real invest­ment and tech­nol­ogy have led to pro­gres­sive sub­sti­tu­tion of labor by cap­i­tal, i.e. robots and machin­ery which are steadily replac­ing peo­ple in many indus­tries, includ­ing man­u­fac­tur­ing, min­ing and agri­cul­ture. Tra­di­tional employ­ment in many areas are dis­ap­pear­ing per­ma­nently and this change is not to be feared or resisted, since repet­i­tive, bor­ing and uncre­ative jobs are not what human beings should aspire to. 

    It is amaz­ing that great econ­o­mists can sug­gest full employ­ment to be financed by taxes, deficit spend­ing or print­ing money to re-cre­ate bor­ing or destruc­tive jobs, includ­ing break­ing win­dows to help the glass indus­try or bury­ing jars with fiat cur­rency for peo­ple to dig up. Full employ­ment is impor­tant only in labor inten­sive economies. In the post-indus­trial soci­ety, it is eco­nomic pros­per­ity that leads to full employ­ment, mainly in ser­vices, not the other way around.

    Gov­ern­ments every­where are cor­rupted by incum­bent ren­tier indus­tries and wast­ing enor­mous resources to re-cre­ate the pre­vi­ous sta­tus-quo, which had failed and will fail again. Eco­nomic pros­per­ity based on the finan­cial ser­vices indus­try is illu­sory and unsus­tain­able, made evi­dent by the GFC. It is pros­per­ity that is based on real pro­duc­tion that leads to employ­ment in the ser­vices. As ser­vice employ­ment is also being dis­placed by tech­nol­ogy, e.g. dis­ap­pear­ance of typ­ists, bank tellers, retail sale staff etc. tra­di­tional employ­ment is also dis­ap­pear­ing.

    In the post-employ­ment soci­ety, it is pos­si­ble that peo­ple will find new ways to live and con­sume, with­out being employed in the tra­di­tional sense. This is already true in the con­sult­ing indus­try, free­lanc­ing, con­tract­ing, telecom­mut­ing etc. (It is not clear whether offi­cial sta­tis­tics accu­rately mea­sures the chang­ing nature of employ­ment.)

    The new eco­nomic par­a­digm can­not auto­mat­i­cally assume that eco­nomic growth and full employ­ment are vir­tu­ally the same thing. The cur­rent eco­nomic par­a­digm hin­ders progress as it is far too restric­tive to even com­pre­hend the eco­nomic prob­lem I have sketched here. Nei­ther Kalecki’s “Three Ways to Full Employ­ment” nor Laski’s “Three Ways to … High Unem­ploy­ment” is so crit­i­cally impor­tant in con­text of the new eco­nomic par­a­digm. Indeed, the surges in unem­ploy­ment in Ger­many at var­i­ous times over the past fifty years, referred to in Laski’s paper, have not pre­vented Ger­many from becom­ing the strongest econ­omy in the Euro area today.

  • ak

    The key to real eco­nomic growth is real sav­ings, from which to finance real invest­ments, which lead to more effi­cient pro­duc­tion of con­sum­able goods. I can­not think of a sin­gle eco­nomic the­ory (includ­ing Kalecki and Laski in the paper you men­tioned) that would dis­agree with this state­ment.”

    Actu­ally both Kalecki and Laski would dis­agree. Accord­ing to them invest­ments brings about its own sav­ings, not the other way around.

    This is prob­a­bly the key dif­fer­ence between the neo­clas­si­cal, New Key­ne­sian and Aus­trian schools and Kaleckian/MMT/Post-Keynesian tra­di­tion.

    (all fol­low­ing quotes from the paper men­tioned in the pre­vi­ous post). 

    Imag­ine an econ­omy con­sist­ing exclu­sively of a ver­ti­cally inte­grated con­sumer goods sec­tor. If all incomes in this econ­omy (equal to the value of pro­duced con­sumer goods) are spent, all out­put can be sold. If part of the incomes is not spent, a cor­re­spond­ing sur­plus of con­sumer goods comes into exis­tence which,
    how­ever – accord­ing to our assump­tions – can­not be sold because the con­sumer goods sec­tor is the only one in the econ­omy. Now, assume that a ver­ti­cally inte­grated invest­ment goods sec­tor exists together with the con­sumer goods sec­tor. If that sec­tor pro­duces some invest­ment goods, pri­vate house­holds related to this sec­tor get incomes and spend part of them on con­sumer goods. These expen­di­tures cre­ate the very mar­ket for the sur­plus of the con­sumer goods sec­tor and make sav­ing in this sec­tor (and in the whole econ­omy) at all pos­si­ble. This is how invest­ment cre­ates ‘its own’ sav­ing while sav­ing is not able to cause ‘its own’ invest­ment.
    The the­sis that sav­ing of a given period can­not deter­mine invest­ment of the same
    period does not mean that sav­ing does not mat­ter when invest­ment is analysed – it
    mat­ters very much. This applies espe­cially to that part of sav­ing that is appro­pri­ated by firms. Sav­ings of firms increase their own cap­i­tal, hence they pos­i­tively influ­ence firms’ invest­ment deci­sions by pro­vid­ing finance. Indi­rectly they play the same role by facil­i­tat­ing access to the cap­i­tal mar­ket and by allow­ing firms to expose them­selves to the increas­ing risk always involved in new invest­ment deci­sions. Firms can and do invest more than they have saved: when they decrease their liq­uid­ity and take cred­its from the bank­ing sec­tor, or less: when they decide to increase their liq­uid­ity and pay back their cred­its to the bank­ing sec­tor. As, how­ever, invest­ment increases over time, the busi­ness sec­tor invests more than it saves while the pri­vate house­hold sec­tor saves more than it invests (in dwellings).”

    This analy­sis is per­fectly con­sis­tent with the expla­na­tion of the credit-impulse increase led recov­er­ies pro­vided by Biggs, Mayer and Pick in their first paper:

    Credit impulse in their model is related to increased invest­ment in the cap­i­tal goods.

    Also — the account­ing iden­tity men­tioned by Mahaish is men­tioned in the paper, when Laski extends the orig­i­nal Kaleck­ian model to open econ­omy:

    If we broaden the model so as to include the Gov­ern­ment and the out­side world we have OSP = IP + D + E where IP, D and E denote, as was already said, pri­vate invest­ment, bud­get deficit and trade bal­ance, all three being now off­sets to pri­vate sav­ing OSP.”

    Laski acknowl­edges both pos­i­tive and neg­a­tive effects of pro­duc­tive capac­i­ties under­util­i­sa­tion:

    In steady-state growth u = 1 (mean­ing that capac­ity is fully uti­lized) when invest­ment I hap­pens to be equal to full employ­ment sav­ing sY*. In a cap­i­tal­ist econ­omy we have as a rule u < 1; this is the great weak­ness of the cap­i­tal­ist econ­omy, because it can­not assure the full uti­liza­tion of capac­ity which in nor­mal cir­cum­stances it is able to cre­ate in abun­dance. This is also the major source of its strength, because it puts the pro­duc­ers under con­tin­u­ous pres­sure forc­ing them to com­pete for the con­sumer.”

    The analy­sis leads to very clear con­clu­sions:

    We have thus four major venues for keep­ing the degree of capac­ity uti­liza­tion rel­a­tively high and unem­ploy­ment rel­a­tively low. These four ways are: (1) stim­u­lat­ing pri­vate invest­ment; (2) increas­ing deficit spend­ing; (3) sup­port­ing the trade bal­ance; (4) reduc­ing the pri­vate sav­ing ratio.”

    … by increas­ing IP, D or E it is pos­si­ble to increase incomes of work­ers and cap­i­tal­ists at the same time. This is the eco­nomic basis for co-oper­a­tive cap­i­tal­ism in the above sense of the word. How­ever, the redis­tri­b­u­tion of incomes implied by the turn­ing of the SP ray is laden with social con­flicts. From the point of view of short-run full employ­ment, there is no basic dif­fer­ence between the four meth­ods pre­sented above, but if we take future growth into account, the role of pri­vate invest­ment is unique because it cre­ates future jobs. There­fore stim­u­la­tion of pri­vate
    invest­ment should be the main instru­ment for full employ­ment pol­icy, and other meth­ods should be taken into con­sid­er­a­tion only when this main way does not yield sat­is­fac­tory results. This is true with but one reser­va­tion. There exists a level of pri­vate invest­ment which is nec­es­sary and suf­fi­cient to con­tin­u­ously recre­ate con­di­tions for full employ­ment, assum­ing that these con­di­tions have existed
    already in the ini­tial sit­u­a­tion.”

    Laski would not agree with ” full employ­ment to be financed by taxes, deficit spend­ing or print­ing money to re-cre­ate bor­ing or destruc­tive jobs, includ­ing break­ing win­dows to help the glass indus­try or bury­ing jars with fiat cur­rency for peo­ple to dig up”. This is one of the rea­sons he was among reformist econ­o­mists per­se­cuted as “Zion­ists” and expelled from Poland by the com­mu­nist ruler Wla­dys­law Gomulka after 1968.

  • ak

    … also there is one more state­ment I dis­agree with that “we are in a post-indus­trial era”.

    It is obvi­ous that the total num­ber of peo­ple involved in farm­ing and in man­u­fac­tur­ing is much lower than it used to be 50 years ago. Has this vac­uum been fully filled with new jobs in the ser­vice sec­tor? Also — employ­ment in man­u­fac­tur­ing has shifted from the West to Japan, Korea, China and other coun­tries. That’s why we don’t have fac­to­ries and have very few man­u­fac­tur­ing jobs in the West what led to destroy­ing our skills. Should we be happy that we lost com­pe­ti­tion in man­u­fac­tur­ing due to cheap labour else­where?

    How­ever if our highly devel­oped civil­i­sa­tion is to sur­vive a few hun­dred years with­out destroy­ing the human habi­tat we have to prac­ti­cally rebuilt a sig­nif­i­cant chunk of our trans­port infra­struc­ture, reduce the amount of energy required to pro­vide food and hous­ing, develop and build new sources of energy what prob­a­bly would include a new gen­er­a­tion of nuclear reac­tors, solar, wind, bio­mass and geot­her­mal power sta­tions and much more.

    This requires a lot of man­u­fac­tur­ing and con­struc­tion work.

    The recent progress in both appli­ca­tions of infor­ma­tion tech­nol­ogy and biotech­nol­ogy makes that goal the­o­ret­i­cally viable, how­ever I can­not imag­ine the West­ern coun­tries prac­ti­cally ruled by the lob­bies related to the old indus­try to embrace this really new par­a­digm of acknowl­edg­ing that our nat­ural resources are finite.

    This is a good exam­ple of who rules the Amer­ica:

    So in my opin­ion the “new par­a­digm” is rather an old one but in new clothes…

    In order to change any­thing we first have to mas­sively invest in research and devel­op­ment. Only despised by the seek­ing truth econ­o­mists and cor­rupt by def­i­n­i­tion gov­ern­ments can do that. Koch Indus­tries will invest in get­ting rid of oil depen­dency as much as Big Tobacco in anti-smok­ing cam­paigns. This would under­mine the via­bil­ity of the busi­ness model. Instead of fix­ing the bro­ken rela­tion­ship between the humans and the habi­tat Koch Broth­ers pay econ­o­mists to pro­duce more spin that we run out of money and the gov­ern­ments are impo­tent. They pay media and politi­cians to remove cer­tain top­ics from the pub­lic dis­course.

    Together with Rupert Mur­doch they oper­ate their own super­in­junc­tion sys­tem in Amer­ica and almost every­where else — by gen­er­at­ing so much noise that rea­son­able voices drown in it and nobody hears them.

    The mas­sive mis­al­lo­ca­tion of nat­ural resources is the most fun­da­men­tal fea­ture of the over­con­sump­tion-dri­ven growth model where goods are man­u­fac­tured in the coun­tries with cheap labour and pushed on lazy “post-indus­trial” and “post-employ­ment” con­sumers where con­sump­tion is often increased by push­ing cheap credit. This is an inge­nious way of reduc­ing aggre­gated sav­ing propen­sity of the pri­vate sec­tor — while allow­ing some of the agents to hoard mas­sive amounts of claims on other agents (deposits in the bank­ing sys­tem and deriv­a­tive instru­ments). Another failed mech­a­nism was stim­u­lat­ing “invest­ment” in the hous­ing bub­ble.

    Cer­tainly if we humans are ratio­nal as a species and we care about our sur­vival there is a plenty of real work to be done — not just improv­ing mar­ket­ing to tar­get the con­sumers bet­ter by fin­ger­print­ing them over social net­works and per­son­al­is­ing the rub­bish which is then pushed to them. But of course we don’t know any­thing for sure and eco­nom­ics is not a sci­ence so we have to stay in the dark­ness of our igno­rance until the last drop of oil is extracted by Koch Broth­ers. Then the light can go off…

  • Lyon­wiss


    There are many “chicken and egg” ques­tions in eco­nom­ics which per­mit dif­fer­ent answers, which are not nec­es­sar­ily con­tra­dic­tory. In the short-term, you take your pick on sav­ing ver­sus invest­ment. But I do not nec­es­sar­ily agree with Laski’s expla­na­tion, because he said house­holds have incomes and “spend part of them on con­sumer goods” i.e. sav­ing is needed for invest­ment in the next period. Only empir­i­cal data could pro­vide more infor­ma­tion on the tim­ing ques­tions of his process.

    Is China’s high eco­nomic growth due to high sav­ing or high invest­ment? China’s accu­mu­lated sav­ings is increas­ingly being used to buy West­ern cap­i­tal goods and resource assets all over the world to increase fur­ther domes­tic invest­ment and con­sump­tion.

    But over the long-term (decades and cen­turies) it is self-evi­dent that invest­ment and tech­nol­ogy has led to the sub­sti­tu­tion of labor by cap­i­tal in one indus­try after another. My main point is: this sub­sti­tu­tion effect together with grow­ing world pop­u­la­tion may mean that full employ­ment in the tra­di­tional sense may not be achiev­able. The high unem­ploy­ment in many parts of the world may be more per­ma­nent, not eas­ily fixed by usual fis­cal and mon­e­tary stim­u­lus.

    The cur­rent eco­nomic par­a­digm leads to “the over­con­sump­tion-dri­ven growth model” you described. That growth is not sus­tain­able growth, because it is growth bor­rowed from the future through credit. I agree with you that “there is plenty of real work to be done”. We can start by not wast­ing resources on failed poli­cies: such as cre­at­ing more and more credit.

    This chart is Aus­tralian nom­i­nal GDP divided by total credit. The curve may be called “the veloc­ity of money” or the “pro­duc­tiv­ity of debt”. The down­ward slope show­ing declin­ing mar­ginal pro­duc­tiv­ity od debt sug­gests more and more money chas­ing fewer and fewer goods due to finan­cial spec­u­la­tion, includ­ing our hous­ing bub­ble.

  • For those of you who need an excel­lent sum­mary of the “eco­nom­ics’ pro­fes­sion” and the state of the USA “econ­omy”, I rec­om­mend view­ing these two videos show­ing an inter­view with the highly respected John Paul Roberts and Max Keiser via Karl Den­ninger.

    Says it all really.

    The Whole Thing Is a Fraud”

    What is clear, is that “Eco­nomic The­o­ries” have no place in a World where gov­ern­ments’ just doesn’t give a damn about such things that is to say, “eco­nomic the­ory” plays no role in final deci­sions of gov­er­nance. As in Aus­tralia, only re-elec­tion poli­cies are of any impor­tance other than obey­ing the Lobby.

    Or, if you pre­fer, whichever Lobby has cap­ture of “lead­er­ship” gets to set the rules as they pre­fer or, the “Eco­nomic The­ory”, that is the “new par­a­digm”, is naught but selec­tive cor­rup­tion aka theft and mis­ap­pro­pri­a­tion.

    As I have pre­vi­ously stated here, “eco­nom­ics” today, as a pro­fes­sion, is just a pure waste of time — because nobody cares and nobody is inter­ested — any more. There is no social demand for its imple­men­ta­tion — other than just lip-ser­vice.

    If then any­body still thinks that there is some cred­i­bil­ity left in today’s USA “lead­er­ship” I would highly rec­om­mend them read­ing Pro­fes­sor Noam Chom­sky and Gary North.

    And M’s Gillard wants to allow the US Mil­i­tary to occupy Aus­tralia? Hope­fully, as she has failed at every­thing else that she has attempted, she will also fail here too. 

    But M’s Gillard does rep­re­sent a stun­ning mon­u­ment and sym­bol to / of “lead­er­ship” through­out the World today, that is to its excel­lence in incom­pe­tence and fail­ure; aka “Poverty of Lead­er­ship”.

  • ak


    I think that the role of sav­ing is crit­i­cal in explain­ing the dynam­ics of the econ­omy. Kalecki built a sim­pli­fied model where the role of the finan­cial insti­tu­tions is reduced to inter­me­di­a­tion between dif­fer­ent groups of agents and some lim­ited inter­me­di­a­tion in time. 

    If we want to pro­vide a more detailed descrip­tion we need to dis­tin­guish between dif­fer­ent ways of financ­ing invest­ment and dif­fer­ent port­fo­lio choices of savers. We can imag­ine all the sav­ing occur­ring in the form of buy­ing new equi­ties of the firms — in this case there will be no growth in aggre­gate debt. We may also imag­ine a sit­u­a­tion where all the invest­ment is financed by credit and all the sav­ing occurs in banks in the form of deposits. We have to dis­tin­guish between short-term revolv­ing credit and long-term debt. This is some­thing I am plan­ning to spend some time look­ing into in the near future. The dimin­ish­ing veloc­ity of money may be a symp­tom of ris­ing cost of cap­i­tal com­pared with the cost of labour over a period of time. It may also mean that the aver­age period of pro­duc­tion is get­ting longer. Another (not mutu­ally exclu­sive and prob­a­bly the most plau­si­ble) expla­na­tion is pres­ence of a fast grow­ing pool of long term deposits and debt com­pared with a slowly grow­ing revolv­ing fund of short-term credit used to finance pro­duc­tion — cor­re­spond­ing to the size of the econ­omy mea­sured by GDP

    I accept that grow­ing pri­vate debt may make the econ­omy less and less sta­ble. It is also obvi­ous to me that inter­ests on debt and deposits lead to pas­sive redis­tri­b­u­tion of income between dif­fer­ent groups of agents on a grand scale.

    In regards to cau­sa­tion we may need to look at the way credit is cre­ated and destroyed. If we assume that deposits are cre­ated when loans are extended to cred­it­wor­thy (hav­ing enough assets and high enough income to ser­vice the debt) bank cus­tomers and the sub­se­quent oper­a­tions (spend­ing money to pay for invest­ment goods or to pay wages) only lead to shift­ing own­er­ship of the deposits to dif­fer­ent agents and even­tu­ally stor­ing them by these agents who are will­ing to post­pone con­sump­tion (save money) then the expla­na­tion pro­vided by Kalecki and Laski is per­fectly valid. Loans cre­ate deposits and invest­ment dri­ves sav­ing. How­ever nobody negates the influ­ence of sav­ing on the econ­omy (that some peo­ple choose to post­pone their con­sump­tion or that they want to buy invest­ment goods in order to con­sume more in the future) and the fact that the banks need a cer­tain com­po­si­tion of their assets. 

    (below I’m assum­ing for sim­plic­ity that a closed econ­omy is analysed)

    If we con­sider sav­ing as the process of not con­sum­ing (and destroy­ing) all the goods pro­duced but rather mak­ing goods whose pur­pose is mak­ing other goods then yes, the higher sav­ing, the higher eco­nomic growth. But this sav­ing is actu­ally invest­ment and we are talk­ing about the real rather than finan­cial aspect of the func­tion­ing of the econ­omy. 40% of the goods made in China are invest­ment goods — or — the Chi­nese only con­sume 60% of what they make and the rest is saved.

    How­ever if we con­sider sav­ing as the process of not spend­ing all the (mon­e­tary) wages and prof­its — but leav­ing money to be spent in the future — that sav­ing slows down the econ­omy by reduc­ing the aggre­gate demand and reduc­ing invest­ment (by the neg­a­tive accel­er­a­tor effect). Leav­ing money unspent does not enable credit cre­ation in gen­eral. That con­cept is based on mis­un­der­stand­ing how the bank­ing sec­tor works — oth­er­wise QE1 and QE2 would have cre­ated mas­sive infla­tion. Only very lit­tle of that saved money is needed to pro­vide liq­uid­ity to the bank­ing sec­tor. Leav­ing money unspent (the “sov­er­eign” deci­sion of the pri­vate agents) cre­ates a gap which can only be filled by the gov­ern­ment deficit spend­ing. (On the other hand if the agents dis-save the gov­ern­ment needs to run a sur­plus).

    The mis­guided response to a reces­sion (and result­ing higher gov­ern­ment deficits) pre­ferred by the neo­clas­si­cals and Aus­tri­ans is to frus­trate the savers and force them to reduce their sav­ing or even to net spend — by refus­ing to fill the gap and caus­ing the GDP to fall. We have to keep in mind that this tool is blunt as there are agents who have to ser­vice and keep repay­ing their debt. These may go bank­rupt. Whether this process leads to a pos­i­tive “cre­ative destruc­tion” can be dis­puted.

    An inter­est­ing ques­tion arises whether a saver actu­ally cares whether his finan­cial asset (let’s say a deposit in a bank) is off­set by somebody’s else debt or by the gov­ern­ment lia­bil­i­ties. I think that this is irrel­e­vant as long as the real value of the deposit is not eroded by neg­a­tive real inter­est rates. If we reject the quan­tity the­ory of money the amount of mon­e­tary base should not directly affect the price level. So the gov­ern­ment can print money dur­ing a reces­sion. On the other hand the debtors may really want to pay back their debt dur­ing a reces­sion. Unless the gov­ern­ment steps in and pro­vides its lia­bil­i­ties (money or bonds) to sub­sti­tute for the repaid debt a deeper depres­sion is inevitable as men­tioned ear­lier.

    On the other hand in an open econ­omy too much money (or gov­ern­ment debt) in for­eign hands may encour­age for­eign spec­u­la­tors to short the cur­rency and cre­ate an exchange rate insta­bil­ity.

    If we are not happy about agents sav­ing too much money (we think that propen­sity to save in the form of finan­cial assets is too high), the incen­tive in the form of high real inter­est rate should be removed (zero inter­est rate pol­icy advo­cated by MMT should be per­ma­nently intro­duced) and fis­cal pol­icy should replace the mon­e­tary pol­icy as a reg­u­lat­ing tool. MMT might be the most effi­cient way of forc­ing the pri­vate sec­tor not to take too much credit (tax­a­tion should dis­cour­age that) and do not deposit too much money in the finance sec­tor.

  • sir­ius
  • sir­ius


    One of the main con­cerns of MMT is full employ­ment, which is yesterday’s prob­lem and hardly any­one seems to under­stand this “game changer”.

    I do. The UK gov­ern­ment I believe were very happy that we have some 400,000 peo­ple work­ing for the banks and finance indus­try. We have about 8 banks in a very small town. Two would be more than ade­quate.

    We are mov­ing into a post-employ­ment soci­ety, for which tra­di­tional eco­nomic par­a­digm, past and cur­rent eco­nomic poli­cies are irrel­e­vant. ”

    This is another topic alto­gether.””

    I agree and this is some­thing that actu­ally inter­ests me since peo­ple never talk about what should really be done given the con­text of our cur­rent soci­ety.

    In the post-indus­trial soci­ety, it is eco­nomic pros­per­ity that leads to full employ­ment, mainly in ser­vices, not the other way around.”

    That really needs a lot of expla­na­tion. In my mod­els I cou­ple work­ing hours peo­ple energy and envi­ron­ment together. I asked my neigh­bour about it and he agreed that my solu­tion was prefer­able to what is (very) likely going to hap­pen.

    Gov­ern­ments every­where are cor­rupted by incum­bent ren­tier indus­tries and wast­ing enor­mous resources to re-cre­ate the pre­vi­ous sta­tus-quo, which had failed and will fail again.”

    Agreed. Huge amounts of energy are being wasted in this econ­omy every sin­gle day. I have watched that waste increas­ing expo­nen­tially in tye last 20 years. 

    A sim­ple rid­dle: Increas­ing the work­ing speed of an auto­mo­bile dou­bles its energy con­sump­tion.

    Eco­nomic pros­per­ity based on the finan­cial ser­vices indus­try is illu­sory and unsus­tain­able, made evi­dent by the GFC.”

    The masses are not aware of this at all. It’s not the “pros­per­ity” bit that I find most objec­tion­able but the fact that this sys­tem is forc­ing me to live in a way that I do not wish to live (brought on by all man­ner of increased taxes and leg­is­la­tion).

    It is pros­per­ity that is based on real pro­duc­tion that leads to employ­ment in the ser­vices. As ser­vice employ­ment is also being dis­placed by tech­nol­ogy, e.g. dis­ap­pear­ance of typ­ists, bank tellers, retail sale staff etc. tra­di­tional employ­ment is also dis­ap­pear­ing.

    In the post-employ­ment soci­ety, it is pos­si­ble that peo­ple will find new ways to live and con­sume, with­out being employed in the tra­di­tional sense. This is already true in the con­sult­ing indus­try, free­lanc­ing, con­tract­ing, telecom­mut­ing etc. (It is not clear whether offi­cial sta­tis­tics accu­rately mea­sures the chang­ing nature of employ­ment.)

    Too much here to go into it needs break­ing down.

    There are now more peo­ple than ever before doing jobs that are nei­ther pro­duc­tive nor con­struc­tive (and in fact are neg­a­tive).

    I mon­i­tor the local employ­ment sit­u­a­tion around here and it is dete­ri­o­rat­ing.

    So here’s the first step of my solu­tion.

    Reduce the stan­dard work­ing week to 30 hours.

  • sir­ius

    typo in pre­vi­ous post

    A sim­ple rid­dle: Increas­ing the work­ing speed of an auto­mo­bile dou­bles its energy con­sump­tion.

    I meant to state

    A sim­ple rid­dle: Dou­bling the work­ing speed of an auto­mo­bile (say from 30 MPH to 60 MPH) dou­bles its energy con­sump­tion.

  • sir­ius

    Talk­ing to a guy the other day who was rung up at 8 a.m. sev­eral weeks ago and told “don’t bother com­ing into work today, there’s no work”.

    I asked him today if he was back at work. He said no and he wouldn’t be going back there since this was a 3 month tem­po­rary con­tract through an agency. I have expe­ri­ence of agen­cies going back 10 years in 3 years. Another over­grown fac­tor in our “ser­vice econ­omy”.

    In France these tem­poaray con­tracts are the major­ity (so I beleive). It is often stan­dard prac­tice to dump peo­ple before 6 months is up (because they stand to acquire fur­ther rights and the employer has to pay more). Then after a few months the per­son is invited back again. Rinse- repeat.

    When I worked for one I found that the agency got paid more per hour than me. Do you see another pat­tern emerg­ing?

    This has hap­pened to him sev­eral times” he told me.

    I sug­gested that I would pre­fer to see a reduced work­ing week for all at his com­pany rather than redun­dan­cies. He agreed. That was last week. Today I find that the com­pany has made other peo­ple redun­dant. There are 2 major employ­ers in the area. One went into receiver­ship about 2 weeks ago on a Fri­day and then was bought on the fol­low­ing Sun­day by a vul­ture cap­i­tal group whose base seems to be in Miami.

    There is much more that I could say on this mat­ter but I had bet­ter stop there.

    This seem­ing (note the “seem­ing”) over-sup­ply of phys­i­cal labour will not be reme­died (in the UK at least) by the cur­rent par­a­digm but I can gen­uinely say that from talk­ing with “down to earth every­day peo­ple”, that those peo­ple would accept my prac­ti­cal solu­tion.

    I have stud­ied the psy­chol­ogy of peo­ple and I feel con­fi­dent that most peo­ple would accept my solu­tion whether the intro­duc­tion was by com­mand or stealth. (Peo­ple will tol­er­ate an awful lot before they will revolt 🙂 ).

    This was in fact the direc­tion in which things were mov­ing when I was a boy of 16 years of age. But the direc­tion was changed — I assume by the bankers and busi­ness cap­i­tal­ists but of that I am not cer­tain.

    It should not be for­got­ten that “human cap­i­tal” can only be so pro­duc­tive because of the mas­sive use of energy as lever­age.

    It looks to me that we are run­ning out of new gim­micks to sell (IPhone IPad etc). In addi­tion the use of com­plex­ity to cre­ate new jobs also seems to have run its course.

    In short we are reach­ing a “dead-end” on this par­tic­u­lar path.

    Get ready for more deaths on this “eco­nomic high­way”

    I am nearly ready to “retire” from blog­ging. I reckon I have about 2 sig­inif­i­cant posts left and then I am done.


  • Nat­ural Physics: 

    Con­text: New Par­a­digm

    You can­not enter into a new par­a­digm with the same cor­rupt ele­ments that destroyed the old and made it nec­es­sary for a new — con­trol­ling the same ele­ments.

    You can only apply band aid fixes for so long as even­tu­ally the can­cer wins.

    Forces that man­i­fest with­out hav­ing been first equi­lib­rized per­ish in space” (“equi­lib­rized” mean­ing dif­fer­en­ti­ated).

  • ferb
  • Seces­sion­is­tic — er, again, are we? It could be on but not yet and not with this guy as he has the men­tal­ity of the frog in the pan on the fire. Mind you, I am for it if is dis­con­nects us from the Bogan in the FedeAl Gov­ern­ment and its bureau­cratic fungi.

    But note the stum­bling and bum­bling pet Swan,. He doesn’t lie does he? For “lead­er­ship” lying is not only manda­tory but it needs to be a com­pul­sion; all of them.

    I assume that Swan is just try­ing to catch up to his newly adopted boss, M’s Gillard-the-fail­ure.

    That the US ways have become the Aus­tralian ways is becom­ing clearer every day and now the pre­tence that there are other for­eign Par­tys’ that want to buy our RMBS — but in real­ity, what that means is that Swan will pick them up — on our behalf.

    I also won­der about these Aus­tralian Insti­tu­tional investors who are buy­ing up all the other secu­ri­ti­za­tion prod­ucts? Are the “Old Boys” aka “econ­o­mist Heads” that lead these won­der­ful warm TBTF orga­ni­za­tions, get­ting their orders from the Banks, er, I mean Gov­ern­ment.

    Let me see: Greece gone — UK going — Spain, Italy, Por­tu­gal, Bel­gium — gone but in denial — Ger­many not so hot it seems — the USA in last throes and China slam­ming on the brakes as it screams towards self-destruc­tion, and…

    So let’s Party!

  • Lyon­wiss

    peter­jbolton May 25, 2011 at 11:00 am

    The “bureau­cratic fungi” (love that) in the Trea­sury are well fed with their super­an­nu­a­tion schemes and they keep them­selves in the dark about what the rest of the coun­try has to do with their super. With stu­pid (or cor­rupt, see below) politi­cians, the bureau­cratic fungi man­age to con­stantly come up with new ad-hoc and hare-brain ideas to change super rules. One moment they want to encour­age con­tri­bu­tions, next moment they want to cap or stop con­tri­bu­tions, with­out any coher­ent plan. Any adverse con­se­quences of such incom­pe­tence is used to pun­ish the cit­i­zens, who of course even­tu­ally protest against the unfair­ness:

    You idea that the Gillard gov­ern­ment is plan­ning to turn Aus­tralia into a US mil­i­tary base is sup­ported by Gillard’s speech to the US con­gress and by Kevin Rudd’s “dis­missal” prob­a­bly engi­neered by Arbib whose loy­alty has been immuned from fur­ther scrutiny after the Wik­ileak rev­e­la­tion:

    The intrin­sic flaws in mort­gage secu­ri­ti­za­tion (RMBS) has been antic­i­pated by Min­sky and were amply demon­strated in the GFC. When the dealer said: “a lot of our tra­di­tional buy­ers have got­ten their fill for a while”, what is meant is that “a lot of our tra­di­tional buy­ers have lost enough money for a while”. The money has been lost from insti­tu­tional super­an­nu­a­tion funds, which are actu­ally gam­bling with ordi­nary citizen’s super money.

    As if gam­bling directly or indi­rectly in the finan­cial mar­kets is not enough, there is some pow­er­ful lob­by­ing in the style of US pol­i­tics to help fools part with their money:

    You are right in say­ing “that the US ways have become the Aus­tralian ways is becom­ing clearer every day…”

  • sir­ius

    You can­not enter into a new par­a­digm with the same cor­rupt ele­ments that destroyed the old and made it nec­es­sary for a new – con­trol­ling the same ele­ments.”

    I really like that (and agree with it entirely).

  • DrBob127

    Ques­tion on notice if you please.

    As peo­ple are more reluc­tant to buy houses and there are less homes sales per unit time, what effect does this decrease in the ‘veloc­ity’ of money have on the econ­omy?

  • sir­ius


    One moment they want to encour­age con­tri­bu­tions, next moment they want to cap or stop con­tri­bu­tions, with­out any coher­ent plan.”

    That is the plan. I call it churn­ing. Look at the posi­tion lim­its sce­nario. The Gub­ber­mint allows the banks to ignore the posi­tion lim­its which results in the cry “the banks are push­ing up the price of food”. There is some sort of back­lash and then the legal and polit­i­cal process will start to “lis­ten” (if the protest is “big” enough”) and then when enough money (or what­ever) is made the Gub­ber­mint will say “oh yes — we will do the right thing and stop this clearly improper behav­iour). The legal and polit­i­cal process though only moves at the speed (slow) that will allow the loot to be got, and by the time the law/regulation comes into force the col­lu­sive forces have already moved onto the next arena.

    I have seen this very famil­iar pat­tern emerge so many times in so many domains. HIPS any­one…

    They were intro­duced on the back of the hous­ing boom and are now gone. These were just a way to extort another 500 GBP from you.

    And hey I fell for a pat­tern myself. Did you know that RyanAir was sub­sidised by the French tourist indus­tries to fly in “investors” to buy their old ruins ?

    If you look at the per­cent­age rates the french estate makes on the basic house price (upto 30% where I was stay­ing) and note that the gov­ern­ment takes about a fur­ther 8–10% and the notary about 1% you really have got an excel­lent sheep aka “fleec­ing” oper­a­tion going on.

    How­ever “Les derniers pigeons”, trans­lated lit­er­ally as “the last pigeons” but the mean­ing is “the last suck­ers” are in decline but then as I said ear­lier “we” have already moved on (and left a num­ber of suck­ers in search of a dream in the mire).

  • Lyon­wiss

    DrBob127 May 25, 2011 at 8:09 pm

    If hous­ing credit has lower mar­ginal pro­duc­tiv­ity than busi­ness lend­ing, then for the same amount of credit, more busi­ness lend­ing (rather than hous­ing lend­ing) will lead rel­a­tively to more pro­duc­tiv­ity and an increase (not decrease) in the veloc­ity of money, i.e. the pro­duc­tiv­ity of debt curve will turn up (against its long-term down trend) at least for a while.

  • Lyon­wiss

    If you believe the evi­dence of the past few years, then the likes of Gold­man Sachs appear to rule the world. Gold­man Sachs and its cronies deter­mine the eco­nomic fate of the US, Greece, Ice­land and any coun­try which plays their game of enrich­ing the deal­ers and impov­er­ish­ing the rest of the pop­u­la­tion. Accord­ing to Robert Green:

    the next bub­ble to burst may be China, because it could be Goldman’s next “lemon trade”:

    What’s the next Gold­man lemon trade? I’m guess­ing it may be brew­ing with China. Ex-CEO Hank Paul­son opened many deals in China, mov­ing many Amer­i­can busi­nesses and jobs to China. Gold­man pumped up China for great profit, with­out any regard for doing busi­ness with the CCP com­mu­nists and cor­rupt par­ties. Gold­man may be arrang­ing its big-China short now to get “closer to home.” If and when the China’s finan­cial-mar­ket bub­ble bursts, Gold­man may make another for­tune on the sell-off.”

    Chi­nese bub­ble burst­ing would be Aus­tralian bub­ble burst­ing. It is hard to know whether Gold­man had manip­u­lated the Chi­nese finan­cial sys­tem (‘pump and dump”) to the same extent as those of the US, Greece and other coun­tries. Cer­tainly it would have been involved in pump­ing up com­modi­ties bub­bles. For exam­ple, it is fore­cast­ing a re-accel­er­a­tion in the rise of oil prices.

  • ferb

    oh man, the baby boomers are deter­mined to shaft us all till the bit­ter end.…..

  • @ Lyon­wiss May 25, 2011 at 2:46 pm | #

    The “bureau­cratic fungi” (love that) in the …”

    It may inter­est you to know that the anal­ogy between bureau­cracy and fungi is strictly speak­ing, pre­cise — as the Can­dida species of fun­gus is a sin­gle-celled amoeba which is preda­tory, extremely inter­nally social as well as being a des­per­ate sur­vival­ist. What it leaves in its wake is ‘can­cer’ lead­ing to the immi­nent deaths of a huge per­cent­age of the Global pop­u­la­tion and a state of extremis in most of what must be termed, ‘the liv­ing dead’.

    I have had a per­sonal rela­tion­ship with this fun­gus, in more ways than one, but although I have rid myself of the inter­nal species after some 3 years, I remain, most unfor­tu­nate, still con­fronted by the exter­nal vari­ety, namely bureau­cracy.

    But the metaphor ar anal­ogy, as you pre­fer is cor­rect. And, I am pleased that you see the com­mon­al­i­ties.

    As regards the ref­er­ence mate­ri­als sup­port­ing my post on M’s Gillard’s inten­tions for the US Mil­i­tary to occupy Aus­tralia, on my Blog at Death Star Aus­tralis, there are many links to exter­nal sources that are in explicit sup­port of my con­tentions.

    It is clear that M’s Gillard dances to the tunes of the UK and the USA and is as ept a nat­ural liar as Johnny “the Sher­rif” Howard.