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Planning for Development: On the Global Financial and Economic Crisis

The Real-World Economic Review on the global financial and economic crisis 2008-2009
sanity, humanity and science
Global Financial Crisis 2008
An analysis by the
Real-World Economic Review
Formerly the post-autistic economics review
Post-autistic economics network ).

Big banks are failing, bailouts measured in hundreds of billions of dollars are not nearly enough, jobs are vanishing, mortgages and retirement savings are turning to dust. Didn’t economic theory promise us that markets would behave better than this? Even the most ardent defenders of private enterprise are embarrassed by recent events: in the words of arch-conservative columnist William Kristol, There’s nothing conservative about letting free markets degenerate into something close to Karl Marx’s vision of an atomizing, irresponsible and self-devouring capitalism.2
So what does the current wreckage of the global financial system tell us about the theoretical virtues of the market economy?

post-autistic economics review, issue no. 44
Ian Fletcher [USA] - 2007

"The global economy bubble equilibrium"
Many of the greatest deficiencies of neoclassical economics follow, logically enough, from its central concept: equilibrium. Attacks on its single-equilibrium assumptions in favor of multiple equilibria, most notably in New Trade Theory, are one response to this. Another is the growing realization23 that, in Keynes’s words, “markets can remain irrational longer than you can remain solvent,” an obvious practical fact that has resisted embodiment in theory. Neoclassical accounts of market irrationality tend to treat this irrationality as mere noise, whose systematic mechanisms are at best artifacts of behavioral psychology. But in truth, the mechanisms by which markets can remain out of equilibrium are as profound as those by which they find equilibrium, and the present global economy is a case in point.

post-autistic economics review, issue no. 44
Ian Fletcher [USA] - 2007
Frederic Lordon [Centre National de la Recherche Scientifique, France] - 2007

"High finance -- a game of risk: Subprimes, ninja loans, derivatives and other financial fantasies" -
Two centuries after Hegel deplored the chronic failure of states to learn the lessons of history, financial capital seems to be caught in a similar loop, condemned to repeat the same errors, trapped in a recurring crisis. The instruments involved may be new but the current crisis on the credit markets has enormous potential for disaster, and offers another reason to re-examine the “benefits” of capital market liberalisation.
There is something of a religious cult about finance. It sees itself as reality and insists that businesses justify themselves according to the standards of financial reporting, by their quarterly results and longer-term performances. Yet it remains stupidly ignorant of what its own recent history teaches.

post-autistic economics review, issue no. 44
Ian Fletcher [USA] - 2007
James Angresano - 2007

"Orthodox economic education, ideology and commercial interests: Relationships"
post-autistic economics review, issue no. 44
Ian Fletcher [USA] - 2007
Robert Pollin and Heidi Garrett - 2007

"The employment effects of military and domestic spending priorities"
post-autistic economics review, issue no. 44
Ian Fletcher [USA] - 2007
Dani Rodrik - 2007

"World too complex for one-size-fits-all models"
Development “big think” has always been dominated by comprehensive visions about transforming poor societies. From the so-called “Big Push” to “Balanced Growth”, from the “Washington Consensus” to “Second Generation Reforms”, the emphasis has been on wholesale change. Today’s fashion in development is no different. The prevailing obsession with the “governance” agenda entails a broad-based effort to remould institutions in developing societies as a prerequisite for economic growth. The United Nations Millennium Project involves a large-scale, co-ordinated push of investment in human capital, public infrastructure and agricultural technologies.
But there have also been iconoclastic dissenters from such comprehensive approaches, among whom Albert Hirschman was without doubt the most distinguished. Indeed, Hirschman’s seminal contributions have now been recognised by the US Social Science Research Council, which this year established a prize in his honour. When Hirschman was still involved in development debates, he would frequently remind his contemporaries that any country that had the capacity to undertake comprehensive programmes would not be underdeveloped to begin with.

post-autistic economics review, issue no. 44
Ian Fletcher [USA] - 2007
Margaret Legum, economist, author and anti-apartheid activist 1933--2007

"What is the right size?"
Popes are not necessarily the clearest communicators; but they can be worth the effort. Take Pope Pius XII: ‘It is an injustice, and at the same time a grave evil and disturbance of right order, to assign to a greater and higher association what lesser and subordinate organisations can do.’ That principle of ‘subsidiarity’ – that everything is best decided and effected closest to the people who will be affected – is widely accepted in politics: it is central to the EU principle.
The New Economic Foundation in London has a series of research documents around the appropriate size for different kinds of economic activity and sector. They make startlingly good reading – perfectly obvious in some ways and counter-culture in those where mega-size is assumed to be best. ‘Return to Scale’ is followed by ‘Public Spending for Public Benefit’ and ‘Who’se the Entrepreneur?’ about social entrepreneurship in local economic development. All offer practical, implementable tools for supplementing or replacing the global scale, based on markets that serve humanity rather than oppressing us. (Ref:




How should the collapse of the world financial system affect economics?
Part I
- After 1929 economics changed: Will economists wake up in 2009?
by Geoffrey M. Hodgson
- The economics of collapsing markets
By Frank Ackerman
- Economics needs a scientific revolution
By JP Bouchaud

The financial crisis Part III
- Reforming the world’s international money
By Paul Davidson
- How to deal with the US financial crisis
By Claude Hillinger
- The crisis and what to do about it
By George Soros
- On being "competitive": the evolution of a word
By David George
- The state of China’s economy 2009
By James Angresano
- Hedonic man: The new economics and the pursuit of happiness
By Alan Wolfe
Click here for full texts
  issue 47  issue 46  issue 45 

Peter Dorman [Evergreen State College, USA] - 2008
What would a scientific economics look like?
Sciences are loosely characterized by an agenda to describe the mechanisms by which observable outcomes are brought about and the privileging of propositions that have been demonstrated to have negligible risk of Type I error. Economics, despite its pretensions, does neither of these and should not be regarded as scientific in its current form. Its subject matter, however, is no more recalcitrant to scientific procedures than that of many other fields, like geology and biology. The benefit of bringing economics into greater conformity with other sciences in its content and method would be twofold: we would be spared the embarrassment of unfounded dogma, and over time economics could assemble an ever larger body of knowledge capable of being accepted at a high level of confidence. A scientific economics would take Type I error far more seriously, would study mechanisms rather than a succession of states, would be more experimental and would attach greater value to primary data collection.

Sen’s economic philosophy: The revival of economics as a moral science
L. A. Duhs

New thinking on poverty
Paul Shaffer

The financial crisis
How far could the US dollar fall?
Jacques Sapir

What’s in a number? The importance of LIBOR
Donald MacKenzie

Progressive conditions for a bailout Dean Baker


Editor’s note
The paper by Helen Johns and Paul Ormerod, “The unhappy thing about happiness economics“, that appeared in the last issue of this journal has attracted an uncommonly large number of readers.In addition to downloads of the whole issue, Johns and Ormerod’s paper has to date been downloaded over 12,000 times, more than twice the average rate. Given this strength of interest and the paper’s strong and consequential thesis, a dozen leading practitioners of happiness economics have been approached, offering them a chance to reply. So far none have ventured forth.If there is any economist out there who feels capable of rebutting all or part of Johns and Ormerod’s arguments, then a space awaits them in this journal.

“A XXI-century alternative to XX-century peer review” by Grazia Ietto-Gillies in issue no. 45.
Donald W Braben, Roland Fox, Stevan Harnad, Marco Gillies, Paul Ormerod, Menakhem Ben-Yami

Rejoinder: Grazia Ietto-Gillies  
Regarding articles by Margaret Legum and Jim Stanford: "Economic freedom is negative liberty"
Joshua C. Hall, Robert A. Lawson and Will Luthermso

Rejoinder: “Economic freedom”
Jim Stanford

If it ain’t broke, don’t fix it… Post autism and political correctness
Benjamin H. Mitra-Kahn

Editor’s Note
When the going gets tough, economists go very quiet
Simon Jenkins

sanity, humanity and science
Post-autistic economics review

Issue no. 44 - 9 December 2007
You can download the whole issue as a 77 page pdf document by clicking here
download articles individually by clicking on their pdf link.
In this issue:
Frank Ackerman, "Economics for a warming world" - download pdf
Jorge Buzaglo, "Climate change, global ethics and the market" - download pdf

Issue no. 27, 9 September 2004
In this issue:
- G. C. Harcourt
What would Marx and Keynes have made of the happenings of the past 30 years and more?
- Richard D. Wolff
The Riddle of Consumption
- M. Ben-Yami
Fisheries management: Hijacked by neoliberal economics
- Deborah Campbell
Here’s what economics students in three countries are doing to put their professors on the defensive

Read full text of issues 44, 43, 42, 41, 40, 39, 38, 37, 36, 35, 34, 33, 32, 31, 30, 29, 28, 27, 26, 25, 24, 23, 22, 21, 20, 19, 18, 17, 16, 15, 14, 13, 12, 11, 10, 9, 8, 7, 6, 5, 4, 3, 2, 1.

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Puro Chile la memoria del pueblo
Proyecto para el Primer Siglo Popular
Crisis financiera mundial

Director: Róbinson Rojas


Puro Chile la mémoire du peuple
Projet pour le Premier Sičcle Populaire
Crise Economique Mondiale

Editeur: Róbinson Rojas