So, I was doing a bit of that aimless reading one so often does on the internet and I came across the transcript from the trial of Hjalmar Schacht at Nuremberg afterb WW II. Schacht was, of course, the chief architect of Nazi economic policy and the inventor of the infamous Mefo bill, which we shall discuss in more detail below. The transcript is fascinating because it includes a nice overview of Nazi economic policy during the war and the years of rearmament.Please share this article – Go to very top of page, right hand side, for social media buttons.I’ll give some context first of all. As is well-known, after WWI the allies had banned the defeated Germany from having a size-able standing army. In the 1930s, however, after the election of Hitler in 1933 the allies moved more and more toRead More »
Posted on 20 February 2020
Written by Philip Pilkington
Article of the Week from Fixing the EconomistsToday most mainstream economists, even those who call themselves Keynesians, hold to the idea that something like a ‘Great Moderation’ existed between the mid-1980s and 2008. This period, characterised by low inflation and moderate GDP growth, was then and is now generally interpreted as being due to the perfection of the use of monetary policy as a macroeconomic stabilisation tool. It is this rather unusual specter of an argument that lies behind the assumption that once we exit our present so-called ‘liquidity trap’ we will be back to business as usual.Please share this article – Go to very top of page, right hand side, for social media buttons.Why do I call this a specter of anRead More »
Dear Phil,There’s a segment in the Hitchhikers Guide to the Galaxy where Arthur Dent orders a tea from a hyper-intelligent dispensing machine, and gets given something that is almost, but not quite, completely unlike tea.This post almost, but not quite, completely misrepresents my approach to economics. No offense taken, but if you’re going to write a blog post with my name in the title, at least read the relevant paper next time.I think That particular line comes from a lead up to my Economics E-journal paper (aspects of which, especially not using double entry bookkeeping, I am now critical of) in which I was trying to explain how monetary profits were possible when much of the Circuit literature asserted they were not – in a stock-flow confusion. I needed a pricing equation for that andRead More »
By Philip Pilkington
In my previous post I was concerned with summarising Lawson’s argument regarding the term “neoclassical” for an audience that was not going to read his paper in full. Thus, I did not wish to insert too much of my own thoughts on the matter. However, I would now like to deal with something which I only mentioned in passing in yesterday’s post.
Toward the end of the paper Lawson makes a distinction between three different groups. He writes:
In short, I am suggesting that there are three basic divisions of modern economics that can be discerned in the actual practices of modern economists. These are:
1) those who both (i) adopt an overly taxonomic approach to science, a group dominated in modern times by those that accept mathematical deductivism as an orientation to science for us all, and (ii) effectively regard any stance that questions this approach, whatever the basis, as inevitably misguided;
2) those who are aware that social reality is of a causal-processual nature as elaborated above, who prioritise the goal of being realistic, and who fashion methods in the light of this ontological understanding and thereby recognise the limited scope for any taxonomic science, not least any that relies on methods of mathematical deductive modelling; and
3) those who are aware (at some level) that social reality is of a causal-processual nature as
By Philip Pilkington
After my recent post on a paper by Tony Lawson I was corresponding with the author and he suggested that I might want to take a look at a paper he has written that came out in the September 2013 issue of the Cambridge Journal of Economics. The paper, which is entitled What is this ‘School’ Called Neoclassical?, can be downloaded for free.
In the previous post on Lawson I wrote the following:
I should say that while agree with Lawson’s arguments against the ideology crowd, which I shall lay out shortly, I do not agree that the term “neoclassical” does not denote a tendency in economics that has fed into the very formalism that, as we shall see, Lawson despises. I think that a great deal of the problems with modern economics is its marginalist and, ultimately as I have shown before, teleological tendencies. These are hallmarks of the neoclassical approach and it is these tendencies that accommodate to the problems that Lawson identifies.
The present paper can be seen, in some sense, as a response to that comment. Of course, Lawson was not actually responding to me directly but it seems that others have made similar comments and this is what Lawson is dealing with in the present paper.
Fixing the Economists Article of the Week
by Philip Pilkington
Noah Smith has a recent post on inflation in which he urges economists to learn to love inflation. We live, as everyone knows, in a period of low inflation and high unemployment and I suppose Smith’s point is that we shouldn’t worry much about inflation and instead focus on income growth. Fair enough. But would-be Keynesian policy enthusiasts really should temper their language.
Real people — and their representatives in government — don’t like inflation much you see. “Irrational nonsense!” says the vulgar Keynesian policy enthusiast, “when the price of everything goes up, your wage should rise as well. Why? Because on average, we are all sellers of something. If you work in a tea shop and the price of tea goes up, your wage can be expected to go up as well, and so forth. Remember, every dollar that one person spends becomes the income of another person!” (The latter part of that quote is Smith).
That sounds great but things are actually a little more complicated. In fact, the man in the street’s distrust of inflation is probably more grounded than Smith’s abstractions. Why? Because inflation has a distributive element: it does not affect all income groups equally.
Last year a friend and colleague, Javier López Bernardo, and I did a mock report for a class we were taking on just this issue.