Over the weekend 28th-29th June a conference on ‘Rethinking Economics’ is being held at University College London. For programme and speakers see rethinkingeconomicslondon.org
Rethinking Economics is an international network of students campaigning for pluralism within economics, particularly the economics curriculum, which is, at present, heavily biased towards the methods of the neoclassical school. Rethinking Economics was launched with the 2013 conference, and brought together a number of smaller groups advocating changes to economics. Together, those groups, along with many others, produced the ISIPE open letter, calling for an overhaul of the way economics is taught.
Writing in the Real World Economics Association’s blog, Edward Fulbrook comments: ‘It is not only the world economy that is in crisis. The teaching of economics is in crisis too, and this crisis has consequences far beyond the university walls. What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in.’
In 1994 Shepheard-Walwyn published The Corruption of Economics in which Professor Mason Gaffney charged his colleagues with using a theoretical apparatus that is fatally flawed. He accused the founders of neoclassical economics of acting in bad faith, bending the science of economics to protect vested interests. In this they succeeded, but in debasing their discipline, economists deprived themselves of the ability to diagnose problems, forecast trends and prescribe solutions.
The fact that ‘nobody saw it [2008 crash] coming’ suggests the accuracy of that charge. As long ago as 1983 Shepheard-Walwyn published The Power in the Land in which Fred Harrison, on the basis of a different economic model, warned of the 1990 crash and recession. Again in 2005 in Boom Bust: House Prices, Banking and the Depression of 2010, he warned of the 2008 crash which led to the ‘Great Recession’. The Depression was avoided by bank bailouts and quantitative easing, shifting the burden onto the taxpayer.
To avoid a repetition of these economic disasters, the students are to be congratulated for their initiative. We hope they will find food for thought in our Ethical Economics list.
Comments Off on Rethinking Economics | Posted in Blog
In 2010 international environment lawyer and activist Polly Higgins proposed to the United Nations Law Commission that Ecocide be made the fifth Crime Against Peace as a way of halting the degradation of the environment. In Eradicating Ecocide, she argues that our planet is fast being destroyed by the activities of corporations and governments, facilitated by ‘compromise’ laws that offer insufficient deterrence.
Under her proposal, a law of Ecocide would create a duty of care, a duty owed collectively by humanity to the Earth. She distinguishes between Trusteeship Law which is about putting the welfare of the beneficiary first, as distinct from Property Law which views the Earth as a tradable commodity. This requires a change in our values.
In her second book, Earth is our Business, she takes up the issue of a change in our values. The purpose of the Law of Ecocide is not to imprison those who offend against it, but to redirect economic activity from current practices towards a sustainable economy. To read more, click here.
Comments Off on Creating a Legal Duty of Care | Posted in Blog
This was the headline of a report in the Guardian of a conference hosted by the Treasury in London ‘in answer to critics who argue that economists failed to spot the 2008 crash because they ignored the impact of financial markets and relied on outdated theories’.
Welcome as this is, the suggestion is that it is financial markets that undermine stability, but this overlooks an underlying cause of instability in financial market. This is the property market, more precisely the market in land. This was first noted in 1983 by Fred Harrison in The Power in the Land which revealed the cyclical nature of land markets in Australia, Japan, the United Kingdom and the United States, the pattern being so similar that it suggested the timing of the next crash was predictable. Having witnessed the repetition of the boom-bust pattern in 1989-92, Harrison felt emboldened in 1997 to predict the next peak in 2007 with the crash following in 2008. This prediction was reiterated in 2005 in Boom Bust: House Prices, Banking and the Depression of 2010. While a depression may have been avoided, this was at the cost of a massive taxpayer bailout and quantitative easing.
The Financial Times also commented on the need for a new economics in an editorial on 13th November. In a subsequent letter published in the FT, Brian Hodgkinson, the author of A New Model of the Economy pointed out that the failure to recognise land as a separate factor of production is a ‘key omission from current models of the economy’. As he spells out in his book, the ‘flat earth’ models economists employ are totally unrealistic because they ignore the huge influence of spatial location, which gives rise to economic or Ricardian, rent.
In Ricardo’s Law, Fred Harrison reveals how ignorance of the law of rent creates the perverse situation where low-income taxpayers fund infrastructure improvements that enrich the affluent. Whether the overhaul of the economic curriculum will take cognizance of this or not remains to be seen.
Comments Off on University economics teaching to be overhauled | Posted in Blog
In recognition of her work to create a new body of Earth Law, international environmental lawyer and activist, Polly Higgins, has been appointed to the Arne Naess Chair for Global Justice and the Environment at the Centre for Development and the Environment (SUM), an international research institution at the University of Oslo, which promotes scholarly work on the challenges and dilemmas posed by sustainable development. Previous holders of the Chair include James Lovelock and Stephan Harding.
In March 2010 Polly Higgins proposed to the United Nations that Ecocide be made the 5th Crime Against Peace.
Comments Off on Another Honour for Polly Higgins | Posted in Blog
A reviewer of The Science of Economics in Network Review, the Journal of the Scientific and Medical Network, wrote ‘The editor of The Science of Economics, Raymond Makewell, has done a wonderful job of making MacLaren’s thinking relevant to our times … MacLaren has important ideas on economic justice that we also need to reflect on in the wake of banking scandals and growing economic inequality.
Although MacLaren made his thought independent of its original inspiration in the work of Henry George, there is no doubt that George’s influence runs right through this book … MacLaren, like George, insists that land is the basis of economic activity … George’s vision … is certainly the inspiration for the many groups today arguing for the LVT [land value tax], and, in MacLaren’s reworking of it, deeply thought-provoking.
Whether one agrees that MacLaren’s economics is more scientific than any other, or agrees with the arguments for the LVT, is not the point here. What matters is to engage with any thinker who is serious about economic justice. It matters because, although it may seem like a deeply refractory problem, not thinking about it is collectively the most likely cause of the economic mess we are in today. This book will be of great interest to anyone concerned with this problem.’
Two reviews of Re-solving the Economic Puzzle by different reviewers appeared in the same issue of the American Journal of Economics and Sociology stating: ‘[Rybeck] gives us a multifaceted and enlightening book combining public policy analysis and autobiography … Rybeck is probably best known for developing the concept that land value taxation is actually a “super user charge” (1983). First it constitutes payment for the “license” to exclusive use of a particular site and, second, it overcomes the difficulty of setting individual user charges for each public service because location values provide an excellent means of judging the value of the totality of public facilities and services available to users of any particular site.
‘Its major benefits would include abundant jobs at living wages, affordable housing for all, self-financing infrastructure, an end to sprawl and urban decay, and a rational tax system, to give only the first five of his list of 10. He concludes that land value taxation should appeal to reasonable people on both the left and the right, providing greater social justice while remaining within the framework of a free-market system.
‘A broader application of Henry George’s insight into the role of the community in creating value has the potential to make the Georgist tradition central to contemporary debates over how to turn the United States away from its increasing trend towards plutocracy and develop an ethical economy that is compatible with democracy.’ Stephan Barton
‘While the media, politicians, and even economists claim that we must choose among painful trade-off alternatives, Rybeck shows there is a way to solve the puzzle. The solution is a tax shift that replaces taxes that hamper the economy with public revenues that do not hurt and may even benefit the economy … This book is truly one of the best introductions to real-world economics that I have come across.
‘His book is an ethical as well as an economic inquiry. Rybeck provides an analogy with slavery: the main argument against slavery was moral, beyond any economic analysis. For land issues, [his] message is one of harmony, as the policy that provides the greatest justice is also the policy that promotes maximum prosperity.
‘Land is central to the economy and to history, yet modern economists ignore it. While growing inequality is much discussed, there is little mention of the concentration of land ownership … The concentration of land value in a few hands is a global phenomenon.
‘This is indeed a book that should be read by every economist, every student, and every person who has been puzzled and troubled by our economic woes. It would be wonderful if a policymaker happens to read this book and actually implements its solution, but otherwise, the people should know that there are economic solutions, and that it is politics, not economics, that blocks universal prosperity.’ Fred Foldvary
Click here for full review
Comments Off on Economic Justice | Posted in Blog
‘This analysis [The Traumatised Society] integrates many data and many explanations to attack private land ownership as the basis of current economics. Harrison argues that cultural genocide … has afflicted Western civilization … [He] relates this to the omission of land as a term from the U.N. Universal Declaration of Human Rights and to the evisceration of economic rent by neo-classical economics.
‘Harrison offers a general theory of cheating; all to do with the control of land … The dishonesty which appropriates the commons to the purposes of a minority has established a dishonest social order.
‘Harrison’s views on humanicide merge with those of Polly Higgins on ecocide, and with those of Marx, J.S. Mill, Adam Smith and Ricardo. Harrison is trying to establish again and again that the privatising of value in land underlies all rottenness in society.
‘Harrison’s analysis of capitalism’s flaws pervades the book, but the chapter [ch.11] on society’s automatic stabiliser begins with the question (p. 172) “why, despite more than 200 years of economic data, are economists still unable to offer a coherent explanation for the regularity of disturbing booms and economic busts?” … The overwhelming strength of this one chapter – indeed, the book – is that the knowledge exists to correct course, but there is a lack of ethical or political capacity to make wise decisions.
‘Harrison cites a US intelligence report which – at last, after ca. 40 years – acknowledges the prospect of converging and interacting problems which may exceed the capacity of man to devise good outcomes or avoid bad ones. Yet the appallingly ill educated generality of politicians – not only in the US – continue as if they were capable of looking ahead beneficially and justifying their decisions on sound evidence: a charades of government. Harrison calls for psychotherapists.
‘What would happen if Harrison were to give a series of Reith Lectures, or even a Dimbleby Lecture?’
To read the full review click here.
Comments Off on Review in International Journal of Environmental Studies | Posted in Blog
The Land Value Tax (LVT) is a “radical” form of taxation first proposed by Henry George in his 1879 Progress and Poverty (see What If Marx Got it Wrong?). What George proposes is to replace taxes on wages, purchases, and investments with a tax on unimproved land and natural resources. Fred Harrison’s The Traumatised Society: How to Outlaw Cheating and Save Our Civilisation provides an exhaustive update of George’s original work.
As Winston Churchill famously observed, “History is written by the victors.” Nearly all history books written in the last 400 years were written by or on behalf of the ruling elite. The Traumatised Society is unique in that it recounts the history of the industrial revolution from the perspective of the 99%. Harrison also presents a simple, but elegant prescription for taking back power from the corporate oligarchy, ending economic inequality and the debt crisis, staving off ecological disaster, and preventing World War III. On the surface these claims appear extravagant and somewhat grandiose. Yet, in my view, Harrison makes his case very convincingly.
Adam Smith was the first prominent economist to propose the LVT as the most “moral” and least economically harmful tax in his classic Wealth of Nations. Neoconservative icon Milton Friedman also considered it the “least bad” kind of tax. The most famous contemporary Georgist is former World Bank Economist and Nobel Prize winner Joseph Stiglitz.
Basically the argument for an LVT goes as follows: click here to read more.
Comments Off on Can LVT Save Us? | Posted in Blog
In an article in the Guardian George Monbiot posed the question: ‘Why do we ignore the most blatant transfer of money from the poor to the rich?’
He explained that on the very same day that the Chancellor announced cuts in benefits for the very poor in Parliament, another minister in Luxemburg thwarted an EU attempt to cut benefits for the very rich through the Common Agriculture Policy. The Government justifies the latter, saying ‘we must help the farmers’, but it is in fact the big landowners who benefit as the main subsidy is paid on a per hectare basis as Duncan Pickard documents in Lie of the Land.
But it is not only in the agricultural sector that the poor taxpayer subsidises the rich. As Fred Harrison points out in Ricardo’s Law wealthier property owners in the South-East enjoy far more benefits from taxpayer funded infrastructure and amenities than those in the North, the unrecognised cause of the ‘north-south divide’.
It is the silence about this that puzzles Monbiot. He suggests three possible reasons, the third of which is that ‘after being brutally evicted from the land through centuries of enclosure, we have learnt not to go there, even in our minds’. This is the trauma to which Fred Harrison refers in the title of The Traumatised Society. Monbiot goes on: ‘Whatever the reason may be, it’s time we overcame these inhibitions and confronted this unembarrassed robbery of the poor by the rich.’ It is this rent-seeking Harrison advocates we outlaw. To read full article click here.
At the Eastern Economic Conference in New York, Alanna Hartzok, Founder and Co-Director, Earth Rights Institute, delivered a presentation entitled, “A Tribute to the New Economics of James Robertson”. He challenges the protagonists of the status quo, arguing that they compound their own incredibility by their refusal or their inability to confront 10 fundamental challenges:
1. That specific increases in output in any economy no longer necessarily create corresponding increases in employment;
2. That in an age of permanently high unemployment, it is neither efficient nor equitable to attempt to distribute a nation’s wealth predominantly through the labour market;
3. That our present standard of living can only be maintained at the expense of denying the basic necessities of life to millions in the Third World;
4. That our present standard of living can only be maintained through the continuing exploitation and degradation of the biosphere;
5. That the social, environmental and spiritual costs of pursuing a policy of permanent industrial expansionism already outweigh the advantages to be derived from it;
6. That ‘GNP’, ‘productivity’, ‘progress’ and many other notional concepts of contemporary economics are incapable of evaluating or expressing real wealth or people’s real standards of living;
7. That neither laissez-faire market economics nor state-dominated socialism is capable of defining the appropriate balance between individual freedom and collective responsibility;
8. That to think in terms of ‘jobs at all costs’ is quite inadequate, in as much as all work should be fulfilling both to the individual and to the community, and should not be destructive of the environment;
9. That the international banking system is on the verge of collapse;
10. That centralised top-down government spending has failed to create sustainable patterns of employment or to promote those structural changes in the economy that are so overdue.
Fred Harrison’s latest book, The Traumatised Society, has been voted into the finals of The Non-fiction section of the People’s Book Prize and so gone through to the next round of voting. Voting to select the winner is open from 21st – 29th May. The Prize will be awarded at a gala dinner in Stationers Hall in the City of London on 29th May with Frederick Forsyth presenting the Prize. To vote again, or for the first time, click here and follow the instructions, noting the additional instruction for finalists. The Traumatised Society is 2nd from the end in the Non-fiction section. You may like to read the comments before voting.
Comments Off on Fred Harrison a finalist in the People’s Book Prize | Posted in Blog