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According to the 2012 Boston Consulting Group estimates of private financial wealth, the USA has the 7th highest per-capita share of millionaires of any country in the world, after Qatar, Switzerland, Singapore, Hong Kong, Kuwait, and Bahrain, see: http://www.bcg.de/documents/file135355.pdf. The US millionaire household share is more than twice as high as that of the only other large country in the top 15—Canada in 15th place with 2.9 %.
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“It’s been half a century since a book of economic history broke out of its academic silo with such fireworks.” Giles Whitell, The Times, May 7, 2014.
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In 2012 Walmart had 2.1 million employees worldwide, and (in 2013) 1.6 million in the USA, see: http://www.bbc.com/news/magazine-17429786 and http://www.economist.com/blogs/dailychart/2011/09/employment?fsrc=scn/tw/te/dc/defending
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The USA had the 8th lowest social spending as a share of GDP among the 35 OECD countries in 2013, see: http://www.oecd-ilibrary.org/social-issues-migration-health/government-social-spending_20743904-table1
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See report for the Democratic staff of the House Committee on Education and the Workforce, May 2013: http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/files/documents/WalMartReport-May2013.pdf
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The term “rentier” comes from the French and designates persons who derive income from “rentes” or state bonds. In political economy, it refers to persons or entities who derive income from “economic rents” or ownership of property, such as real estate or income-generating financial assets, which confers passive income for which no labor is necessary. Classical political economists, such as Smith, Ricardo, and Marx, routinely railed against rentiers, mostly landlords at the time, who were considered to be an unproductive parasitical class. Keynes similarly called for the “euthanasia” of the rentier (Keynes 1936, Chap. 24), and, at least in theory, “economic rent” is considered an undeserved and unproductive use of economic resources in both modern NC and radical economics.
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Op. cit.
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Op. cit.
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The label Neoclassical economics designates the standard economics taught today in 99 % of formal economics courses in the USA and most other parts of the world. The term is meant to differentiate the founders of this school of thought, Marshall, Jevons, Menger, Walras, Clark, Pareto, and others who came to dominate academic economics in the late nineteenth and early twentieth centuries, from the earlier eighteenth to mid-nineteenth century “classical” political economic thinking of Smith, Malthus, Ricardo, Marx, and others.
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As is discussed in detail later on in the text, the NC value neutral position assumes that the “science” of economics must eschew any concern about morality or other forms of prescriptive thinking about good or bad economic outcomes in its “core” theoretical apparatus. In their professional scientific role, economists must exclusively focus on “how” questions and these questions can be entirely separated from “ought” questions having to do with politics and values.
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Many individual NC economists are political liberals who personally oppose growing economic inequality but, as is discussed in detail in this book, the “scientific” position of NC economics is that these kinds of value judgments lie outside the proper domain of economics as a social science.
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The massive US low-wage service sector increases poverty, increases trade and public and private debt, increases trade deficits, undermines the middle-class and general prosperity, and supports parasitical and destructive rentiers (Baiman et al. 2011; Baiman 2014).
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The International Labor Organization (ILO) has estimated that 203 million people were unemployed—that is, they were in the labor force desiring a job but could not get one—in 2013: http://www.ilo.org/global/research/global-reports/global-employment-trends/2014/WCMS_234107/lang–en/index.htm. And this is undoubtedly a gross underestimate of the massive armies of unemployed workers, especially in developing countries, who have no hope of ever getting a full-time wage or salaried job in the formal sector of the economy and are not counted as officially unemployed.
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See: http://www.cpegonline.org/reports/jobs.pdf for earlier 2009 version.
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For example among 235 economics journals in the worldwide “Social Science Citation Index” (SSCI) only 8 are “heterodox,” and there are only 22 “heterodox” accredited economics PhD programs among the 359 worldwide. See: http://heterodoxnews.com/hed/graduate/ and http://www.gradschools.com/search-programs/economics.
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Among other things, the NC position is based on a presumption that the market will determine a single, unique equilibrium point, which, as is discussed in later chapters, is highly unlikely even under the most stringent NC initial assumptions.
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The neutral term ‘employee’ did come into general use until the full development of capitalism in the nineteenth century (Bowles and Gintis 1987, p. 72).
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To be fair, there is a strand of NC theory, initiated by Coase (1937), that recognizes that the existence of the firm is an indication that non-market intra-firm planned coordination is a key component of even the most free-market capitalist economies. But the focus of this analysis is on “transaction cost” savings and other efficiencies captured by the firm (or its owners), rather than on the internal hierarchical command structure that workers are subjected to within the firm.
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See for example this 2010 OECD report: http://www.oecd.org/tax/public-finance/chapter%205%20gfg%202010.pdf and this earlier PEW/Brookings report based on 1998–2001 data from the International Social Survey Program by Julia Isaacs: http://www.brookings.edu/~/media/research/files/reports/2008/2/economic%20mobility%20sawhill/02_economic_mobility_sawhill_ch3.pdf
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Though Marx would probably go farther and point out that the key problem with returns on wealth being higher than real economic growth (r > g) is not really that r is greater than g but the highly unequal functional distribution of income based on wealth and labor and the pretense that wealth in itself generates value and deserves a return, instead of being a surplus that ultimately comes from the work and inventions of real people that needs to be allocated for the benefit of humans and not to prior wealth. However, Piketty is correct that the extraordinarily unequal accumulation of these claims on real assets (that confer real power even if they cannot possibly all be redeemed for real goods, services, and property due to their inflated values) is a threat to the very foundations of democracy and an economy that is supposed to deliver sustainable mass prosperity. His wealth tax proposal may also be the most politically viable way to deal with this (short of simply de-legitimating the idea that wealth deserves a return). Reallocating these dangerously large concentrations of wealth to public funds would also serve to increase the power of collective (governmental) action that is critical if we are to save ourselves from planetary disaster (Klein 2014).
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See (Linder and Julius, 1977) for an earlier critique of this kind.
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The institutional history of economics departments in the USA suggests unstable cohabitation of heterodox and NC economists, as NCs in mixed departments are often able to marginalize their radical colleagues by exploiting the overall institutional power of NC economics via journal and department rankings, and in the perceptions of (non-economist) administrators, to marginalize and close down radical offerings and programs in these departments. Examples of this include the now defunct graduate political economy programs at Notre Dame and University of California Riverside (Lee 2009). The few radical departments that have survived long-term have tended to be those that are dominated by heterodox economists. See: http://heterodoxnews.com/hed/graduate/ for a complete list of Ph.D. granting heterodox economics departments in the USA and worldwide.
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Keen (2011) and Lee (1998), for example, appear to have this view.
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A paraphrasing of the well-known French revolutionary motto: “Liberté, égalité, fraternité.”
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It is not coincidental that I am now working in a business school and not in an economics department.
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Sweeny, James L. (Summer 2002). “The California Electricity Crisis: Lessons for the Future,” The Bridge 32 (2). Published by the National Academy of Engineering.
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My presentation was titled “’Three by Two’ Macroeconomics,” CNP Forum, May 4, 2004. I was part of a panel that also included Jared Bernstein from the Economic Policy Institute who spoke on other issues. The CNP by the way was also a key organizer of the public anti-war presentation at which then Illinois state senator Barak Obama came out against the Iraq war. This talk got a lot more publicity subsequently!
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The paper “Rentier-Based Finance-Led Macroeconomies: Keynesian or Classical in the Short-Run, but Unsustainably Debt Dependent and Minskyan in the Long-Run,” was also (before the crash) submitted to (and rejected by) by a number of economics journals. The presentation was entitled“Accumulation Through Dispossessing: Modeling the New U.S. Rentier Capitalism” at the URPE sessions of the American Economic Association meetings in Chicago in January 2007.
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Baiman, R.P. (2016). Introduction. In: The Morality of Radical Economics. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-45559-8_1
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