- Written by: Kamran Mofid
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Those familiar with my writings know well that in the last number of years I have been at the forefront of highlighting the serious shortcomings of modern economics, as well as the failure of the majority of the economists who teach the subject. Please note: “the majority of the economists”. Of course not all economists are to blame.
In the wise words of the Real-World Economic Review, “It is the delusional mindset of ‘neoclassical’ economists that caused the GFC (Global Financial Crisis). There are realist approaches to economics but which through power politics have been suppressed in universities and excluded from government policy making. Some practitioners of these other approaches did what neoclassical economists falsely claimed was impossible: they foresaw the Global Financial Crisis and warned the public of its approach.”
In all, for a long time now, I have been saying that the current global crises has given us a golden opportunity to ask ourselves some fundamental questions on the role of education in general and the economic, business, finance, marketing and management education in particular and to search for possible answers to these crises. Soul- searching and self-criticism should not be seen as a source of weakness, but as a source of strength, humility and the search for wisdom.
Here, I do not wish to note these writings of mine once again. They can be seen at this website (www.gcgi.info ), for example. What I wish to do however is to share with you an article by a fellow economist that I recently read, reflecting on the failures of modern economics and economists. I found this article very interesting and telling.
As I have said in the past, I hope that with this kind of articles and reflections we may begin an open dialogue with all concerned- colleagues, students and others, so that together we can prescribe a working solution.
Now I wish to present you with the gist of Prof. John T. Harvey’s article, who is a Professor of Economics at Texas Christian University.
“A lot of blame has been spread around regarding the financial collapse and the onset of the Great Recession. Greedy speculators, big banks, Wall Street executives, and Fannie Mae and Freddie Mac have all taken turns as whipping boys. But one group has largely avoided their fair share of attention: economists. They were the ones who provided the intellectual justification for the transformation of our economy over the past thirty years. They stood idly by as jobs went overseas, demand was sapped by increasingly uneven distributions of income, competition was destroyed by lax attitudes towards antitrust laws, and safeguards were discarded in the financial sector. More than that, many actually praised these events. This is not insignificant. Much of the financialization of the U.S. economy (the shift from producing goods and services to managing financial wealth that played such a central role in our collapse) could not have occurred without economists offering their tacit and open approval. Opposition would have slowed, if not stopped, these trends.
There was actually a poll among economists to determine which of their brethren they thought most responsible for our current debacle. The “winners” were as follows:
Alan Greenspan (5,061 votes): As Chairman of the Federal Reserve System from 1987 to 2006, Alan Greenspan both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation.
Milton Friedman (3,349 votes): Friedman propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature. This, together with his simplistic model of money, encouraged the development of fantasy-based theories of economics and finance that facilitated the Global Financial Collapse.
Larry Summers (3,023 votes): As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), Summers worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also helped Greenspan and Wall Street torpedo efforts to regulate derivatives.
One might wonder how there could be such a disconnect between the theories employed by these economists and the real world. But, to those of us in the profession, it comes as no surprise. Some of us have been worried to death about it for years.”…
Read the article:
- Written by: Kamran Mofid
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Who is being punished for the failures of the de-regulated, privatised, market-forces led capitalism? The capitalism of no heart, spirit, conscious and soul
Austerity has been the main prescription across Europe for dealing with the continent's nearly three-year-old debt crisis, brought on by too much government spending. But what does it mean for the average European?
Economic and Financial Crash, Debt Crisis: Those who caused the crises are not the ones paying the prices!!
- Written by: Kamran Mofid
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Voters in France and Greece delivered a harsh judgement on their ruling parties in elections on Sunday 6 May, ousting President Nicolas Sarkozy from power in France and severely punishing the two leading parties in Greece.
These electoral successes, backed by the collapse of the Dutch government, rejection of the coalition government’s austerity policies in the UK’s local elections, and continuing and deepening protests in Spain, Italy, Portugal, Ireland and mayhem elsewhere, notably, Greece, tilts the balance of the European debate sharply away from austerity; cruelty to the 99%.
President Hollande has a rare opportunity to reshape the political and the socio-economic landscape not only in France, but in Europe too. The right has failed economically as its austerity measures continue to keep much of Europe's economy bumping along the bottom. Hollande must win. We must wish him good luck.
A word of caution and hope:
I hope and pray that President Hollande will keep his words and promises. In Britain, very similar to what happened in France yesterday, we, the people, by a huge majority voted for change and hope, electing a Labour government in May 1997. After many dark and hopeless years of Thatcherism, the people voted for hope, honesty, integrity, equality and ethics. In short, the electorate voted for a new domestic and foreign policy, guided by high moral compass.
However, in return, Messrs Blair and Brown cheated us, destroying our hope and dreams. This is why I dream that monsieur Hollande will not become a Sarkozy with glasses, as Blair and Brown became Thatcher in trousers! Of course, many believe that the same is also true across the Atlantic when comparing Mr Obama to Mr. Bush.
French president François Hollande promises 'a new start' for Europe
Those Revolting Europeans
If President Hollande is serious about offering democratic Socialism as a true alternative to neo-liberalism and feral capitalism, then, he must remain true to his words.
The People Have Spoken: Europe is calling for an Alternative Economic Model-- A Reflection
The world today is facing a multitude of crises in politics, economics, finance, banking, energy, food, environment, education, and more, resulting in much uncertainty, fear and anxiety. There is no doubt we should see these crises, as well as others, such as terrorism, wars and xenophobia, as a wakeup call to action, to see things as they are. Moreover, the rapid and unsustainable rise in consumerism and materialism devoid of human and spiritual values, has seriously destroyed the fabric of society, and has catastrophically weakened the ethical, moral and spiritual dimensions of our communities. In short, the world is facing a crisis of values, ideas, and vision.
Complex world problems and intricate global issues require the coming together of multiple areas of expertise, experience, perspectives and insight. We must recognise that the civilisations of the world are entwined together in a global economic system which is incapable of functioning for the common good of humanity, other species, and this planet which is our home. Now is the time to begin a dialogue amongst civilisations, ideas, visions, disciplines and peoples on how to construct a new economic system and a new economics better designed to meet these ends.
It is clear that serious reflection is in order. To stand back and not question what has happened and why would be to compound failure with failure: failure of vision and failure of responsibility.
A sustainable and prosperous global economy needs to be grounded in the common good. Building a fair society and protecting the environment must accompany profit as goals for business. The failure of markets, institutions and morality during the current financial crisis has shown that the emergence of global capitalism brings with it a new set of risks which call for an ethical, moral and spiritual framework.
In the spirit of reflection and dialogue, seeking alternative possible solutions, perhaps the best is to begin by asking some of the “biggest” questions:
Which paths should be recommended to shift the current destructive global political-economic order from one of unrestrained economic growth, profit maximisation and cost minimisation, leading to ecological degradation, and social inequity to one that preserves and enhances social and ecological well-being, as well as human happiness, contentment, and well-being? Which ethical/spiritual sources should be considered in economic/business ethics and economic behaviour? How can we integrate these into economic theories and decisions? How can we deal with individual or institutionalized greed and self-absorption? What should be the role of universities in building an integrity-based model of business education? What are the requirements of a virtuous economy? How can we overcome poverty and scarcity with limited natural resources? What is the role of the next generation of business leaders? How should the training of young executives be directed? How should it supply insights into the nature of globalisation from diverse economic, technological, and spiritual perspectives? How should such education build support relationships among the participants that will lead to a deeper appreciation of the ethical aspects of business and finance; leading toward action for the common good within their chosen careers? In short, how can the intended outcome develop insight, commitment, and moral capacity in the participants to serve as leaders in the world community, working toward the global common good?
In all, we need to focus more sharply on the multifaceted insights and assets offered by the different perspectives and points of view. This is how we may implement a new agenda for a new economics, business and economic system which functions for the common good of humanity and the earth.