Simon Johnson — Saving Capitalism From Economic Science 101

All across the United States, students are settling into college – as well as coming to grips alongside “Econ 101.” This introductory course of education is typically taught alongside a broadly reassuring message: if markets are allowed to work, skillful outcomes – such every bit productivity growth, increasing wages, as well as mostly shared prosperity – volition for certain follow.

Unfortunately, every bit my co-author James Kwak points out inward his recent book, Economism: Bad Economics as well as the Rise of Inequality, Econ 101 is as well as then far from existence the whole even out that it could genuinely last considered misleading – at to the lowest degree every bit a guide to sensible policymaking. Markets tin last good, but they are likewise profoundly susceptible to abusive practices, including yesteryear prominent private-sector people. This is non a theoretical concern; it is primal to our electrical flow policy debates, including of import novel US legislation that has only been pose forward....

Fitting post on Labor Day (US vacation celebrating working people). Worth reading inward full. Unfortunately it is close saving capitalism from its excesses rather than overhauling it.

Why is capitalism inward involve of an overhaul. The term, "capitalism," explains it.

"Capitalism" is a socio-economic organization that favors uppercase (property ownership) over the other factors of production, province (environment) as well as labor (those that operate for a living). This "market-based" organization is institutionally based, as well as every bit such politically based.

Classical liberalism was close reducing regime intervention inward the economy. Neoliberalism is close regime capture through politics inward guild to favor the interests of capital.

Politics is influenced yesteryear a simplistic agreement of conventional economics, which has been called "economism" to distinguish it from economics. Econ 101 is to a greater extent than close promoting economism to a greater extent than than teaching economic science inward damage of models that are substantiated yesteryear events.

Project Syndicate
Saving Capitalism from Economics 101

Simon Johnson |  professor at MIT Sloan, former principal economist of the IMF, senior beau at the Peterson Institute for International Economics, as well as co-founder of the blog, The Baseline Scenario