Economics and Business

Joe Earle, Cahal Moran, and Zach Ward-Perkins

This chapter makes the academic, educational, practical and political case for pluralism in economics. It uses case studies of macroeconomics, the environment and inequality, to demonstrate that academic economics must open up to new ways of thinking.

in The econocracy
Abstract only
Joe Earle, Cahal Moran, and Zach Ward-Perkins

This chapter sketches out the contours of econocracy, its relationship with the academic discipline of economics and how it has developed in the twentieth century. It then shows in more detail how democracy has been undermined and the idea of the citizen as an active participant in political discussion and collective decision making been lost.

in The econocracy
Abstract only
The perils of leaving economics to the experts

One hundred years ago the idea of ‘the economy’ didn’t exist. Now, improving ‘the economy’ has come to be seen as one of the most important tasks facing modern societies. Politics and policymaking are increasingly conducted in the language of economics and economic logic increasingly frames how political problems are defined and addressed. The result is that crucial societal functions are outsourced to economic experts. The econocracy is about how this particular way of thinking about economies and economics has come to dominate many modern societies and its damaging consequences. We have put experts in charge but those experts are not fit for purpose.

A growing movement is arguing that we should redefine the relationship between society and economics. Across the world, students, the economists of the future, are rebelling against their education. From three members of this movement comes a book that tries to open up the black box of economic decision making to public scrutiny. We show how a particular form of economics has come to dominate in universities across the UK and has thus shaped our understanding of the economy. We document the weaknesses of this form of economics and how it has failed to address many important issues such as financial stability, environmental sustainability and inequality; and we set out a vision for how we can bring economic discussion and decision making back into the public sphere to ensure the societies of the future can flourish.

Joe Earle, Cahal Moran, and Zach Ward-Perkins

This chapter uses evidence from a curriculum review of seven universities across the UK to show how the philosophy which underpins econocracy is being passed down to the next generation of economic experts. The curriculum review analyses 174 economics modules using the course outlines and exams to illustrate that economics students are taught to memorise and regurgitate a narrow body of subject matter not think independently or critically.

in The econocracy
Joe Earle, Cahal Moran, and Zach Ward-Perkins

This chapter argues that we need new political and economic institutions which are participatory, inclusive and accessible and sets out some ideas about how this can be achieved. These can be the catalyst for the development of a popular democratic culture of public participation in economic discussion and decision making.

in The econocracy
Abstract only
Joe Earle, Cahal Moran, and Zach Ward-Perkins
in The econocracy
Joe Earle, Cahal Moran, and Zach Ward-Perkins

Chapter 5 sets out a vision of a pluralist, critical and liberal economics education. However, it also shows how higher education has been reshaped in ways which makes positive reform increasingly difficult and set out a number of practical reforms which could be implemented within the current system.

in The econocracy
Joe Earle, Cahal Moran, and Zach Ward-Perkins

Chapter 4 details the history of how the discipline of economics came to be so narrow and the more recent student led movements to reform it. It also includes a critique of the new CORE syllabus.

in The econocracy
Open Access (free)
Oonagh McDonald

This chapter covers the leading theories of the markets. The dominant theory of the Efficient Market Hypothesis distracted regulators, market participants and central bankers from paying attention to market prices as signals or from recognizing the existence of bubbles in the housing market, as Alan Greenspan admitted. The behavioural theorists shift the emphasis away from examining trends in the market data and developing models to explain them, to the behaviour of investors in the market, or rather to the factors influencing their behavior. There are two building blocks of behavioural finance: one is that in an economy where rational and irrational traders interact, 'irrationality can have a substantial and long-term impact on prices'. The second building block is psychology. Swedburgh's paper is important in that it points out that trust underlies the smooth, or one might say, efficient functioning of the market.

in Lehman Brothers
Open Access (free)
Oonagh McDonald

Under its dramatic headline, 'Mayer Lehman's chaotic bankruptcy filing destroyed billions in value', the Wall Street Journal proclaimed that a 'less hurried Chapter 11 bankruptcy filing would have preserved tens of billions of dollars of value'. International derivative contracts were not the only problem. Its collapse resulted in over 75 separate and distinct bankruptcy proceedings immediately, and affected thousands of financial market participants through its wide range of contracts. It is important to focus on the procedures set out by International Swaps and Derivatives Association (ISDA) and to consider what contribution the Master Agreements were able to make to sorting out the enormous number and the wide range of derivatives, running into trillions of dollars. In the aftermath of the financial crisis, regulators turned their attention to capital, liquidity and supervision, in order to prevent the failures of what then became known as 'systemically important financial institutions' (SIFIs).

in Lehman Brothers