Author Archives: geoffdavies1944

Eight Elementary Errors of Economics

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[This is my most recent attempt to encapsulate the deep flaws in mainstream economics, and the sensible alternative struggling for recognition.  Posted 7 June at Real World Economics Review blog, with a lively discussion following.]

The Global Financial Crisis, the extreme inequality of wealth world-wide, the materialism of modern life and the dire state of the planet are not accidents, nor just unavoidable consequences of the nature of things.  They are the result of the modern practice of economics, which makes elementary errors of accounting, evidence, perception and theory.

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Saving the School of Music, and the ANU

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English: ANU School of Music, LLewellyn Hall.

English: ANU School of Music, LLewellyn Hall. (Photo credit: Wikipedia)

[Although this is a relatively local issue, it is symptomatic of the venality of the neoliberal dominance of Australia and much of the world.  The Vice Chancellor of ANU recently proposed to downgrade the School of Music from top-class performance to vocational training.  Published in City News 5 June.]

Defenders of the Australian National University School of Music have come up hard against the utilitarian attitudes of the ANU Council, which refused last week to question the Vice Chancellor’s plan to gut the School.  The Council is a politicised body, and Australian politics has itself largely lost interest in excellence.

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Nature and Roles of Money and Banks

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[This article is based on extracts from The Nature of the Beast: how economists mistook wild horses for a rocking chair eBook.  Guest-Posted on Steve Keen’s Debtwatch site 1 June.]

Any discussion of the nature and role of money in modern economies typically brings out a plethora of confusing or conflicting theories, claims and counter-claims about what money is, what role it plays, what dysfunctions it might be responsible for and how they might be fixed.  One common set of claims is that money is a unit if account, a medium of exchange and a store of value.  I argue the first property is a trivial one and the last is only true if the money is wholly or in part a real commodity, like a pig or some tobacco.

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Our views on global warming – sources and opinions

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Two good recent discussions of views on climate change are reproduced under the new AGW tab, above.

The main tab preserves the recent post “The productive way to address global warming”.  The tab will allow me to avoid the post discussions becoming cluttered with sceptic distractions.  Distraction and confusion are, of course, the primary weapons of the professional deniers (those who work for fossil fuel industries).

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How Economies Relate to Wild Nature

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[Extractfrom The Nature of the Beast, Chapter 4]

Prior to the twentieth century, science had built up a picture of the universe as a giant clockwork.  Starting with an investigation of mechanics by Galileo, a series of “laws” had been inferred, and these laws were extremely successful in describing the physical world.  It seemed that the world had been reduced to causes and effects that were precisely known, and therefore it would tick inexorably along according to those laws.  This view was very discomforting to philosophers and theologians, among others, because it seemed to eliminate free will, and to imply that our fates were all sealed at the beginning of time.  The neoclassical theory of free markets is firmly of the clockwork universe kind.

However science underwent three revolutions during the twentieth century, revolutions that profoundly changed scientists’ views of the universe.

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Making sustainability central to the ANU curriculum, and to life

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[Published by The Canberra Times 4 May 2012]

I experienced two kinds of management in my 27 years at the Australian National University, and I know which one worked better.  One looked forward, was ambitious, and supported anyone who had their own ambition.  The other worried about constraints and expended a lot of energy trying to identify and eliminate “under-performers”.

Vice Chancellor Ian Young’s recently announced intention to free up resources by cutting ANU’s expenses, through various measures that still include firing some people “as a last resort”, leans toward the negative.  It immediately provoked unrest on campus and it will undermine morale for as long as the policy is pursued.

Reading a book by the late Ray C. Anderson, the founder and CEO of billion-dollar US company Interface Carpets Inc., inspires me to point to another course.

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The Productive Way to Address Global Warming

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Most of the discussion of global warming is about the wrong questions.  The important debate is about the level of risk, the consequences of inaction and the cost of action.

The debate about scientific uncertainty is secondary, and exploited as a distraction.  So as to minimise the continuing spurious discussions here and elsewhere, I’ll set it out as I see it.

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How banks destabilise the economy – and take your money

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[Extract from The Nature of the Beast]

Almost every institution involved in the financial system is, in the jargon, highly leveraged.  This is as true of old-fashioned banks with fractional reserves and mainstream banks with capital adequacy requirements as it is of shadow banks. What does “highly leveraged” mean?  It means you are betting a small amount of your own money plus a lot of other peoples’ money on a large return.  If the return is positive, you make a handsome profit.  However if the return is negative you lose not only your stake but potentially everything you own.

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Adam Smith would have hated market fundamentalism

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[Extract from The Nature of the Beast]

Most people don’t deal much with abstract ideas and theories, yet ideas exert a powerful influence on societies and history. Societies and civilisations have come to grief because they held ill-adapted ideas. What idea was it, for example, that led the Easter Islanders to obsessively build huge stone effigies even as the ecosystem of their island was collapsing around them? Richard Dawkins, in The Selfish Gene (1976) invented the term meme for key ideas. Memes are to cultural evolution as genes are to biological evolution. A very powerful meme abroad in the world today is that free markets are the best way to organise economies. Where did this meme come from? Is it serving us?

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