Shop the Money & Markets Store
Are you a finance, investing, economics or accounting professional? Find books, read blog posts, and discover new authors and thought-leaders in Money & Markets, a new home for finance industry professionals on Amazon.com. > Shop now
Once in a while the world astonishes itself. Anxious incredulity replaces intellectual torpor and a puzzled public strains its antennae in every possible direction, desperately seeking explanations for the causes and nature of what just hit it. 2008 was such a moment. Not only did the financial system collapse, and send the real economy into a tailspin, but it also revealed the great gulf separating economics from a very real capitalism. Modern Political Economics has a single aim: To help readers make sense of how 2008 came about and what the post-2008 world has in store.
The book is divided into two parts. The first part delves into every major economic theory, from Aristotle to the present, with a determination to discover clues of what went wrong in 2008. The main finding is that all economic theory is inherently flawed. Any system of ideas whose purpose is to describe capitalism in mathematical or engineering terms leads to inevitable logical inconsistency; an inherent error that stands between us and a decent grasp of capitalist reality. The only scientific truth about capitalism is its radical indeterminacy, a condition which makes it impossible to use science's tools (e.g. calculus and statistics) to second-guess it. The second part casts an attentive eye on the post-war era; on the breeding ground of the Crash of 2008. It distinguishes between two major post-war phases: The Global Plan (1947-1971) and the Global Minotaur (1971-2008).
This dynamic new book delves into every major economic theory and maps out meticulously the trajectory that global capitalism followed from post-war almost centrally planned stability, to designed disintegration in the 1970s, to an intentional magnification of unsustainable imbalances in the 1980s and, finally, to the most spectacular privatisation of money in the 1990s and beyond. Modern Political Economics is essential reading for Economics students and anyone seeking a better understanding of the 2008 economic crash.
{"itemData":[{"priceBreaksMAP":null,"buyingPrice":60.88,"ASIN":"0415428882","isPreorder":0},{"priceBreaksMAP":null,"buyingPrice":66.97,"ASIN":"0415178924","isPreorder":0}],"shippingId":"0415428882::z2vJD%2FPmKtANmfHDw0RkXM4b2lelTK4N%2Fbv93vePuLH9URrKQKkOjnp5JRM70WNtAlA3OvK6Ryh%2F7iiPHW7XgHsS%2FbknXJpRmUutU2uf8Do%3D,0415178924::ZQswCj9AW2BRM9SLnLPDdk%2FoLfU7KA0vs7FOkTdI40Zp%2FaYsmDvdUaZADe8pFtZA7rkk2svpe2aqsB4ELYcgWNfo5eSQhgCIgHMzTABzuzs%3D","sprites":{"addToWishlist":["wl_one","wl_two","wl_three"],"addToCart":["s_addToCart","s_addBothToCart","s_add3ToCart"],"preorder":["s_preorderThis","s_preorderBoth","s_preorderAll3"]},"currenyCode":"USD","shippingDetails":{"xy":"same"},"tags":["x","y","z"],"strings":{"addToWishlist":["add to wishlist","Add both to Wish List","Add all three to Wish List"],"addToCart":["Add to Cart","Add both to Cart","Add all three to Cart"],"showDetailsDefault":"Show availability and shipping details","shippingError":"An error occurred, please try again","hideDetailsDefault":"Hide availability and shipping details","priceLabel":["Price:","Price for both:","Price for all three:"],"preorder":["Pre-order this item","Pre-order both items","Pre-order all three items"]}}
'an astonishing tour de force of math, metaphysics, and political economy in the grand tradition, all unfolded in fugal counterpoint'. - Brian Collins, Los Angeles Review of Books
About the Author
Yanis Varoufakis is Professor of Economic Theory at the University of Athens, Greece.
Joseph Halevi is Senior Lecturer at the University of Sydney, Australia.
Nicholas Theocarakis is Assistant Professor of Political Economy and History of Economic Thought at the University of Athens, Greece.
Let me begin with a confession: I am a Professor of Economics who has never really trained as an economist. While I may have a PhD in Economics, I do not believe I have ever attended more than a few lectures on economics! But let's take things one at a time.
I was born in Athens back in the mists of 1961. Greece was, at the time, struggling to shed the post-civil war veil of totalitarianism. Alas, those hopes were dashed after a brief period of hope and promise. So, by the time I was six, in April of 1967, a military coup d' etat plunged us all into the depths of a hideous neo-Nazi dictatorship. Those bleak days remain with me. They endowed me with a sense of what it means to be both unfree and, at once, convinced that the possibilities for progress and improvement are endless. The dictatorship collapsed when I was at junior high school. This meant that the enthusiasm and political renaissance that followed the junta's collapse coincided with my coming of age. It was to prove a significant factor in the way that I resisted conversion to the ways of anglosaxon cynicism in the years to come.
When the time came to decide on my post-secondary education, around 1976, the prospect of another dictatorship haδ not been erased. Given that students were the first and foremost targets of the military and paramilitary forces, my parents determined that it was too risky for me to stay on in Greece and attend University there. So, off I went, in 1978, to study in Britain. My initial urge was to study physics but I soon came to the conclusion that the lingua franca of political discourse was economics. Thus, I enrolled at the University of Essex to study the dismal science. However, within weeks of lectures I was aghast at the content of my textbooks and the inane musings of my lecturers. Quite clearly economics was only interested in putting together simplistic mathematical models. Worse still, the mathematics utilised were third rate and, consequently, the economic thinking that emanated from it was atrocious. In short shrift I changed my enrolment from the economics to the mathematics school, thinking that if I am going to be reading maths I might as well read proper maths. After graduating from Essex, I moved to the University of Birmingham where I read toward an MSc in Mathematical Statistics. By that stage I was convinced that my escape from economics had been clean and irreversible. How deluded that conviction was! When looking for a thesis topic, I stumbled upon a piece of econometrics (a statistical test of some economic model of industrial disputes) that angered me so much with its methodological sloppiness that I set out to demolish it. That was the trap and I fell right into it. From that moment onwards, a series of anti-economic treatises followed, a Phd in... Economics and, naturally, a career in exclusively Economics Departments, in every one of which I enjoyed debunking that which my colleagues considered to be legitimate 'science'.
Between 1982 and 1988 I taught at the University of Essex, the University of East Anglia and the University of Cambridge. My break from Britain occurred in 1987 on the night of Mrs Thatcher's third election victory. It was too much to bear. Soon I started planning my escape. But where to? Continental Europe was closed to non-native academics, at that time, and Greece awaited with open arms - to enlist me into its conscript army. No, thanks, I thought to myself. Even Thatcherism is preferrable. My break came shortly after when, out of the blue, I was invited to take up a lectureship at the University of Sydney. And so the die was cast. From 1988 to 2000 I lived and worked in Sydney, with short stints at the University of Glasgow (and an even shorter one at the Université Catholique de Louvain). In 2000 a combination of nostalgia and abhorrence of the concervative turn of the land down under (under the government of that awful little man, John Howard) led me to return to Greece. Since then I have been teaching political economics at the University of Athens. Besides surviving life in a country that is very tough on those who are not used to working in an institutional setting where everything needs to be created from scratch, I feel a sense of accomplishment from having set up an innovative, progressive, pluralist, international Doctoral Program in Economics, also known as UADPhilEcon.
My next pivotal moment, and the last I shall be bothering you with, is the year 2005. For it was in that August that my extremely young daughter, Xenia, was taken away from me, leaving me behind in a state of shock (she has been living since then in Sydney, thus guaranteeing the longevity of my relationship with Sydney). As luck would have it, a few months later, I was saved from near oblivion by Danae Stratou with whom, ever since, we have been sharing life, work and a myriad of projects. An artistic-cum-political project called CUT- 7 dividing lines brought us together. That project evolved into another one called The Globalising Wall. The latest project to come out of this fortunate (for us) union is called www.vitalspace.org. Above all else, we are having fun doing the things that matter (to us).
Lastly, the Crash of 2008 and the subsequent metamorphoses of the crisis (in Europe and in the world at large) seem to have energised me no end. The very motivation behind this blog is to help in the dissemination of ideas and suggestions concerning the way we interpret and act upon our mad, sad and highly mysterious post-2008 era.
The magisterial book, Modern Political Economics (MPE), by Yanis Varoufakis, Joseph Halevy, and Nicholas Theocarakis is a tour de force. The subtitle of the book expresses its major theme: Making sense of the post-2008 world. But this is not another book about corruption on Wall Street. Or rather, it is, but it is more importantly a book that reveals how far the practice of economics has systematically strayed from the real world and how far the real world has strayed from a rational order.
The book has two parts: first, a major review and critique of the enterprise of political economic theory and second, an historical survey of the post-WWII world leading up to the crash of 2008. The economic theorists critiqued in Book I include Aristotle; the physiocrats; Adam Smith; David Ricardo; Karl Marx; the early marginalists, William Stanley Jevons and Alfred Marshall in England and Carl Menger, Eugene von Böhm Bawerk, and Friedrich von Weiser in Austria; the equilibrium theorists including the Frenchman Leon Walras; the dissenting marginalist John Maynard Keynes; and finally, the founders of neo-classical economics: John Nash, Gerard Debreu, and Kenneth Arrow. Along the way contributions of major figures like J. B. Say, John von Neumann, Joseph Schumpeter, Paul Sweezy, Friedrich Hayek, and Paul Samuelson are reviewed and critiqued.
Unlike most treatments of economics, however, this book is dominated by a pervasive scepticism of the very idea of successfully formulating a closed system of equations which can in any way be said to represent real economies. They show a deep appreciation for the sceptical tradition. Two out of the three authors are Greeks, of course. And while the names of Sextus Empiricus and Pyrrho are nowhere mentioned in the book, the classical Sceptic's legacy of rational critique of dogmatism pervades this book.
The second part of the book includes this historical analysis of the post-World War II world. They divide this time frame into two periods: 1) The Global Plan: the period following the Bretton Woods conference in 1944 which set up the gold-backed dollar as the world's dominant currency and 2) The Global Minotaur: the period after the breakup of the Bretton Woods system leading to the financial crash of 2008. This is the story of a march to devastating collapse. The third period would be our current time, the period of aporia following 2008. This story is also retold in a solo 2011 book by Varoufakis, The Global Minotaur (TGM).
Key original concepts of the book include:
Inherent error and lost truth Condorcet's secret Radical indeterminacy The fundamental theorem of Marxism and the mechanization of the economy The Meta Axioms The Global Plan and the Great Minotaur The rise of private money
Each one of these concepts is worth talking about. For a detailed review, visit my blog: [...]
This book was used as a compulsory textbook for one of the Political Economics courses at Sydney University in Australia. I thoroughly enjoyed this book! Its inquiry into theories is in sufficient depth for academic use. Yet it explains things in a clear writing and an imaginative way that it's easier to be understood than other textbooks.
I heard Yanis on CSPAN speaking in Seattle, I enjoyed his take on the 2008 financial crisis caused by Adam Smith back in 1776 (not really) but his humor and understanding of how financial markets (Wall Street/London) have played the "game of wealth creation" or private money spun capitalism (where's Karl Marx when you need him) several times WOW... I want to read his ideas... went to my Kindle fire and brought the most expensive book with one click $60... ok so my daughter Megan (MA Economics John Hopkins... worked for Sen Lisa Murkowski AK... on Capital hill) and I were discussing his ideas in Nome at Airport Pizza along with Jean-Paul Sartre "Being and Nothingness" it was end of 2012... Megan tweeted @yanisvaroufis just to spin his book and our enjoyment of economics and Nothingness... Well damn... he tweeted back... thanking us for Being there.
In the late 80's we accepted rubles in some of our stores in Nome when we opened the border with the Soviet Union on June 13/14 1988. We thought we could take the rubles back into Chukotka just across the Bering Strait from Nome, Ak. and expand businesses and economic development, I wrote about this idea as "Currency Integration" where local businesses decided the exchange rate and what items in their stores could be exchanged for rubles... we were thinking of talking those rubles back into the Soviet Union to pay and employ Soviet citizens in cross border trade and business... it didn't work Soviet banking reminded us that Soviet law prohibited the use of rubles outside the Soviet Union... ok we ended up selling Soviet rubles to tourist visiting Nome from the lower 48 at near 1-1 exchange rates for dollars.
I wrote Milton Freeman about the idea... he wrote me a nice letter on our risk taking to solve monetary exchanges in moving money back and forth... so Varoufakis book with his authors is worth reading... understanding where we are going in "Modern Political Economics: Making Sense of the Post-2008 World".
