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November 15, 2019 04:20 pm PST

Why are we still treating economics as if it were an empirical science that makes reliable predictions?

Robert Skidelsky is an eccentric British economist: trained at Oxford, author of a definitive three-volume biography of Keynes, a Lord who sat with the Tories as their economics critic during the Blair regime, who now sits as an independent who is aligned with Labour's left wing. Back in September, Yale University Press published Skidelsky's latest book, Money and Government: The Past and Future of Economics, a retelling of the history of economics as a discipline that seeks to uncover how economics' failings created the 2008 crisis and have only made things worse since.

David "Debt" Graeber (previously) has written a fascinating and important review of Money and Government for the New York Review of Books, describing how, for decades, mainstream economists have claimed hold over the empirical truth of where money comes from and how it works, despite the catastrophic failure of their theories to perform as predicted in the real world, and how "Britains notoriously independent civil service" created a parallel theory of money -- one that does work -- and use that to operate quietly in parallel to the mainstream monetarist orthodoxy.

After the 2008 crisis, the Queen of England famously demanded to know why no one saw the crash coming. Skidelsky (and Graeber) have an answer: because everyone who was in a position to do something about the coming crash refused to adapt their dogma to reflect the facts, and everyone else, who could see the crash coming, was sidelined because they refused to buy into the dogma. Read the rest


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