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Demand Side Economics: Demand Side Minds [Kindle Edition]

Alan Harvey
4.0 out of 5 stars  See all reviews (1 customer review)

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Book Description

There is an economics that works, that rescued the nation from the depths of the Great Depression, that organized the mobilization of World War II, that executed a successful transition from war to peace, that built the peace into prosperity, that explained the instability and decline, and that predicted the Great Financial Crisis. This economics was abandoned, partly for the benefit of a corporate oligarchy which now controls public policy. This economics now points the way out of stagnation and uncertainty, and it embraces the challenges of world poverty and global climate change.

This is the economics of John Maynard Keynes and the new Deal. Demand Side Economics draws the history and explains the thinking of nine great economists. This is a cogent treatment of complex events and concepts that will lead the reader to an understanding of what happened and why. The policy answers it projects are 180 degrees from the austerity, small government and bail-outs for the few that is the current path.

Massive private debt has conspired with an orthodox economics that literally ignores that debt to put the world in a financial vise. Public policy is controlled by those who must save an architecture that cannot be saved. Markets have become casinos, with chips provided by central banks, whose players keep the winnings, but shift any losses onto the taxpayer. The foundations of sturdy, stable growth are ignored or abandoned to the detriment of all. Public goods, the Commons, the long-term survival of the planet, and the needs of the world's poor are not costs which must be minimized, but opportunities to create value and organize recovery. It is ignoring the great challenges that is truly unaffordable.

History, theory, evidence, presented clearly for the reader's own conclusions. We present John Maynard Keynes, the godfather of macroeconomics and Demand Side economics; Leon Keyserling, representing the New Deal and the successful transition from war to prosperity under Harry Truman; John Kenneth Galbraith, with his unapologetic look at the character of affluence and the rise of the corporation; Hyman Minsky, exploring his financial instability hypothesis, the main line of Keynes into Finance; Joseph Stiglitz, looking at the cruel hoax of free market capitalism foisted on the developing world; James K. Galbraith, bringing insight into the capture of government by the corporation; George Soros, explaining how markets really work; Steve Keen, developing Minsky and Keynes into compelling economic models that actually predict real outcomes; Nouriel Roubini, taking apart the European debt and banking crisis, and presaging the trouble to come.

The book suggest that central bankers do not understand how money is created. Market-first economists imagine an economy that does not exist. General equilibrium forecasters propose an invisible hand that does not exist. Elaborate mathematical expressions of the workings of the economy — "models" — present an elegant description, but of an entirely hypothetical world. Whole schools of economic thought, scores of careers, thousands of academic papers and texts have been built on patently false assumptions. Models commonly used to predict, even in the aftermath of a financial crisis born in the banking system, do not include a banking sector. Massive private debt is ignored, while at the same time the public sector — government — is excoriated for somehow slipping back through time to be the cause of the financial crisis.

Jobs, physical and social infrastructure, and preparation for a looming climate crisis are all deemed too expensive to buy directly. This is exactly wrong. Direct spending on these critical needs is the route out of this Second Depression. Its template was set in the New Deal and ratified by the experiment of World War II. Substantial, disciplined, public demand can right the economy for all sectors — business, households, government — and for the future as well.

Editorial Reviews

About the Author

Alan Harvey produces the popular podcast "Demand Side Economics" available on iTunes (choose "demandside"). He is a writer and economist living in Seattle, Washington.

Product Details

  • File Size: 1089 KB
  • Print Length: 192 pages
  • Simultaneous Device Usage: Unlimited
  • Publisher: Demand Side Books (July 16, 2012)
  • Sold by: Amazon Digital Services, Inc.
  • Language: English
  • ASIN: B008M31T2A
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Not Enabled
  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #1,300,108 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Most Helpful Customer Reviews
4.0 out of 5 stars A Clarion Call for Common Sense in Economics May 7, 2014
Format:Paperback|Verified Purchase
Alan Harvey takes on the reigning ideology of Economics with clarity and eloquence through several of the great prophetic voices of the field, from Keynes to Galbraith, Stiglitz, Minsky, Keen, and Roubini. The theme is that capitalism always requires sufficient “demand”, guided by wise public policy, to produce a good, full employment economy. Left alone, capitalism is prone to destructive booms and busts, creating ever more inequality and dysfunction.

Harvey’s basic axiom is that “output is determined by effective demand” (p. 12). For a modern, growing economy, this seems to make sense. But what about the stagnant economies that predominated throughout most of human history? Or our current global economy as it encounters its limits to growth? The reality is that demand only works its miracles when the economy has the capacity to satisfy the requested demand. Otherwise we just get inflation or a shift in production and income from one part of the economy to another. So it would be good for Harvey to take a broader look at economies as they have existed historically.

The imminent peaking of net energy from fossil fuels is already stunting economic growth. When long term contraction ensues, the challenge will be the efficient management of limited resources. The role of government will be even more important, but it will require strong sticks (taxes on wealth and consumption) as well as carrots (projects focused on critical infrastructure) to be effective. Or factional conflict or warfare will lead to collapse.
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