[This post replaces an earlier one, which does not properly reflect modern banking practice.]
For most people the question of where money comes from is probably a bit mysterious, that is if the question ever even occurs to them. They might recall that notes and coins are produced at a mint, owned by the government. However notes and coins comprise only a small percentage of the money circulating in a modern economy. The rest exists only as accounting entries in banks and other places. In other words it exists only as numbers in computers. How does all this money come into existence?
[This longish essay was just published at Real World Economics Review Blog. It is addressed to the “heterodox” community, those diverse economists of various schools that are not the dominant neoclassical school, though otherwise it is not particularly technical.]
Much of the current discussion of reforming economics focusses on the need for pluralism, particularly in teaching curricula, and very recently again on RWER. Pluralist teaching is seen as challenging, because heterodox economic ideas are diverse, have little coherence, and are to a significant extent mutually incompatible.
This theme crops up frequently in discussions on RWER. Now Cameron Murray, in the first issue of Inside, published by the Institute for Dynamic Economic Analysis, proposes to identify over-arching themes that can bring out the relationships among the various approaches. This is commendable but it will not, on its own, result in a reformed economics.
[Probably last post until Sept – see previous post. The tax-cutting mania may have started in California, so it’s fitting if CA shows the way back. It was always nonsense. The real reason is to shrink government. Governments get in the way of rich people making money, because a few of the things they do are good for the rest of us. Well, used to be good for the rest of us. So Jerry Brown may be among the most subversive people on the planet at the moment, because he’s showing government isn’t all bad. It can do good stuff. Of course the lesson will probably be lost on Oz for another decade, it usually takes about that long.]
How Jerry Brown Got Californians to Raise Their Taxes and Save Their State
There’s a case to be made that Jerry Brown is the most successful high-profile Democrat in America today. And there is simply no debating that, after four decades in the national limelight, he stands out as an intellectually dynamic and politically untethered leader in a time of gridlock, frustration and dysfunction.
Sack the Economists will be launched by Professor Steve Keen, author of Debunking Economics and winner of the Revere Award for his clear warnings of the approaching Global Financial Crisis.
RSVP Gleebooks or phone 02 9660 2333
Sunday, 4th May 2014, 3:30 for 4 pm, Gleebooks, 49 Glebe Point Road, Glebe NSW.
The flier below can be downloaded here: LaunchAd&CoverGlee (pdf 300k), or as jpg from the image. Please feel free to distribute it.
[This is a more technical post, addressed to those interested in re-making the field of economics into something relevant, informed and capable of self-improvement.]
Debates about whether economics is or can ever be a science appear frequently on the Real World Economics blog, such as making economics a relevant science. Perhaps more in the subsequent comments than in the articles themselves, there are some recurring confusions and misconceptions, such as whether mathematics should be involved, about what the role of mathematics might be, about “prediction” as a necessary part of a science, about the role of assumptions and approximations, about whether any study involving people can ever be a science and, fundamentally, about what science really is.
I have commented in passing on this topic before, for example here, but in this comment I’d like to offer a more focussed discussion.
Print-on-demand hardcopies of Sack the Economists can now be ordered from CreateSpace and Amazon.com.
More sources of both ebook and hardcopy versions will be added soon, including the UK and Australia.
Also the ebook will be available in formats other than Kindle – so any reader will work.
Go to Sack the Economists for more information and all purchase options.
There is no sound basis at all, in economic theory or in practice, for expecting free markets to be beneficial, or harmful for that matter.
We should manage the economy the way we manage life, and always be aware that the best-laid plans might go awry.
More in my article in The Age today.