TASC-FEPS 7th Annual Conference Friday 17th June 2016 Croke Park Conference Centre, Dublin Economics for the 99%

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1 TASC-FEPS 7th Annual Conference Friday 17th June 2016 Croke Park Conference Centre, Dublin Economics for the 99% John Weeks Professor Emeritus SOAS, University of London & Founding member Economists for Rational Economic Policies

2 Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy Anthem Press

3 For the technical version of today's presentation, see John Weeks, The Irreconcilable Inconsistencies of Neoclassical Economics: false paradigm (Routledge 2012) and John Weeks, "Euro crises and euro scams: Trade not debt and deficits tell the tale," Review of Political Economy 26, 2 (2014) (2013, forthcoming issue)

4 Lionel Robbins specifies the problem: Economics is the science which studies human behaviour as a relationship between given ends and scarce means which have alternative uses. (Robbins, An Essay on the Nature and Significance of Economic Science (London: Macmillan 1932), p16)

5 Stiglitz & Walsh, Principles of Macroeconomics "Thinking like an economist 2012 "One of the most important points on which economists agree concerns the critical role of scarcity. We can summarize this point as follows: There is no free lunch. Having more of one thing requires giving up something else. Scarcity means that trade-offs are a basic fact of life."

6 J M Keynes specifies the problem When I began to write my Treatise on Money I was still moving along the traditional lines I had made some progress towards pushing monetary theory back to becoming a theory of output as a whole. But my lack of emancipation from preconceived ideas showed itself in what now seems to me to be the outstanding fault of the theoretical parts of that work, that I failed to deal thoroughly with the effects of changes in the level of output. (Keynes, The General Theory, 1936, vi-vii, emphasis added)

7 What is the difference & why does it matter?

8 (It is for real, go to versus

9 (also for real, Versus

10 Economics Versus "Neoclassical economics" [aka Fakeconomics]

11 Resources are not scarce. Jobs are scarce (especially those that pay above poverty level)

12 Unemployment in Ireland (EU standardized rate) average

13 Scarcity is the basis of all mainstream economic theory. No important mainstream theoretical conclusion survives in the absence of scarcity (aka Full Employment of Labour)

14 Example 1: Freedom of Choice Assertion: Free markets offer people choices among where to work and goods & services. Through these choices they obtain the maximum benefit from their income. Small print: Requires full employment, otherwise no job choice for some or many, and consumption choices become selection among basic necessities.

15 In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread. - Anatole France, Le Lys Rouge 1894

16 Example 2: Austerity Assertion: Like a household, the UK government must live within its means. If not, its borrowing will discourages private investment & alarm capital markets. Small print: 1. When the economy is fully employed, more spending by the government means less by the private sector. 2. Financial markets are not dominated by a few large speculators, thus correctly price assets.

17 The alternative to austerity:

18 Austerity in action: Ireland: the EU star pupil

19 Exports, GDP, Domestic GDP & Household Income compared to Domestic GDP = (GDP-TB) -12% Household Income -14% Exports +48% GDP -2%

20 Fruits of Export-led recovery

21 Ireland may have been the star pupil of austerity, but for the sake of the 99% its government should find different teachers or drop out of school. [Social Justice Ireland]

22 What is economics? The study of the mobilization of resources to achieve full employment and maximum feasible output, in order to increase the general welfare.

23 We need an economy fit for human life