The expansion of the organization of production across different nation-states has been a reality since the middle 1950s. The existence of nation-states with different regulatory regimes in labour markets, social security, financial and fiscal regulations have created opportunities for specific strategies offered by transnationality.

“Who are the key economic actors holding the largest fraction of control? To what degree are the top economic actors interconnected with each other?”.  To answer these questions,  James Glattfelder develops an analysis of the global ownership network of TNCs in his 2012  book Decoding Complexity: Uncovering Patterns in Economic Networks (Springer Theses).  As a result of the complex analysis, the author uncovers the true organization of key global actors and novel features of complex systems of current real-world ownership networks. His effort lies at the interface between the realms of economics and the emerging field loosely referred to as complexity science.

Among his research conclusions, Glattfelder lists the top 50 corporate power-holders considering that the importance of the economic actors is related to their level of integrated control.  As a matter of fact, the top economic actors are highly interconnected and organize a global network of corporations. Another interesting observation is that most of the top power-holders are financial intermediaries.

From an economics point of view, these findings may suggest new questions because of their implications on market competition and financial instability. The global network of interactions between power-holders  requires  a  new systemic approach to the problem of financial instability in contemporary capitalism since companies have potentially wide and indirect influence – for example through control or counter-party risk – on the evolution of the levels of investment, production and employment at the local levels. Indeed, the density of the interconnections between the financial and non-financial companies in the context of the control’s network backbone exposes the global economy to systemic risks. As the interest of private companies does not generally coincide with the interests of society as a whole, these risks need to be dealt with new anti-trust practices and new rules on cross-ownerships among corporations.

As Grazia Ietto-Gillies highlights in her contribution to the 2014 WEA book The Economics Curriculum: Towards a Radical Reformulation, TNCs have very little impact on today’s economics curriculum, although an understanding of modern economies cannot be arrived at without an understanding of how TNCs operate. Indeed, the study of TNCs is relevant for both the micro and macro curriculum. At the micro level the issue of strategic behaviour and enhanced bargaining power – particularly towards labour and governments – should be considered. Among the macro issues, economists need to understand what are the effects of TNCs’ activities and what policies could be shaped to minimize the costs of their activities for economies and societies.

Indeed, as “TNCs are here to stay”, any fruitful attempt to reformulate the economics curriculum for the 21st century should consider that companies are not isolated entities but institutions with a position in a global network.


The WEA On-line Conferences format, designed by Edward Fullbrook and Grazia Ietto-Gillies, makes full use of the digital technologies in the pursuit of the commitments included in the World Economics Association Manifesto: plurality, competence, reality and relevance, diversity, openness, outreach, ethical conduct, and global democracy. The WEA On-line Conferences seek to also engage graduate and undergraduate students considering: (a) the variety of theoretical perspectives; (b) the range of human activities and issues which fall within the broad domain of economics; and (c) the study of the world’s diverse economies.

The current conference is The European crisis. It is being led by distinguished professors Victor Becker, Beniamino Moro and James Galbraith.  The purpose of the online Conference is to analyze the current crisis in the countries of the Eurozone. After the 2008 financial meltdown, the American crisis soon infected the European financial system, becoming both a sovereign debt crisis and a banking debacle in many peripheral Euro area countries.  The European crisis has shown that crisis can spread quickly among closely integrated economies. The implementation of austerity policies, prompted by the Troika (European Commission, European Central Bank and the IMF) have reinforced a spiral of economic contractions, and provoked a rising political rebellion against austerity, inspired in part (and especially in Spain, but also to a degree in Greece) by the successful exit from crisis of the South American countries in the past decade. The conference would like especially to address the questions of social stabilization, strategies for structural reform and economic growth, and monetary, financial and debt management that may be used to frame a new economic model for Europe.

The Discussion Forum is now open. The interactive format of Conferences provides an on-line forum for visitors and commentators. All participants will be able to send comments on specific papers, or to contribute to a general discussion on the conference theme.The Leaders of the conference moderate these comments prior to posting to ensure no libellous or hateful language.

Within the Discussion Forum, students share thoughts, review ideas of others and explore new perspectives. The Wea leaders encourage students to submit comments to the following papers

1) Greece: Conditions and Strategies for Economic Recovery

D.B. Papadimitriou, M. Nikiforos, G. Zezza

2) Signaling imbalances in the EMU

Nicola Acocella

3) The euro, long-run convergence and the impact of the crises

Enrico Marelli and Marcello Signorelli

4) A Euro Area Government – A Dream Come True?

Tom Vleeschhouwer and Tara Koning

5) Parallel currencies, Varoufakis’ plan B and the ongoing debate on Euro

Jacques Sapir

6) Economic Policy and Political Power in European Crises

Gerson P. Lima

7) The Euro Area’s Experience with Unconventional Monetary Policy

Cristiano Boaventura Duarte, André de Melo Modenesi

8) At the Root of Economic Fluctuations: Expectations, Preferences and Innovation. Theoretical Framework and Empirical Evidences.

Carmelo Ferlito

9) Unemployment around the North Atlantic, 1948-2014

Merijn Knibbe

downloadThomas Kuhn was among the most influential philosophers of science of the 20th century. His book, The Structure of Scientific Revolutions,changed the way we think about science. Because of conflicts with received wisdom, Kuhn’s ideas initially encountered strong resistance. Now they have become the received wisdom in academia, and his book is among the most widely cited academic books of all time. Nonetheless, its central ideas remain unfamiliar to the general public.

The European Enlightenment was a revolt against all traditional ways of thinking. It attempted to replace baseless superstitions by the certainties of science. The pure, elegant and simple laws of natural science came to be seen as the measure of all human truth. Science was the sole guarantee of progress in this world. Modern thought inherited a neutral, value-free, objective image of science from the Enlightenment: “At the heart of modernity is the trust or faith in scientific reason, as the source of vast powers and authoritative guidance.” Scientists came to be regarded as heroes. They were unbiased, dispassionate and toiled selflessly for the advancement of knowledge, to lift mankind out of the depths of ignorance. Three ideas about science and scientific knowledge came to be widely believed. The first that despite occasional errors, scientific theories are true. Second, that science progresses. We start with a small foundation of basic laws and gradually build upon secure foundations to expand our knowledge, moving to greater heights of understanding. Third, that science is the only path to knowledge, and that eventually our scientific knowledge will encompass everything that is humanly possible to know. Philosophers of science poured substantial effort into proving these three ideas, but ultimately failed to do so. Nonetheless the effort continues, and these ideas remain very popular.

Kuhn’s study of the history of science led to startling discoveries which cast doubt on all three of these ideas. Kuhn found that two phases occur regularly in the history of science and scientific progress. The “normal” phase consists of widespread acceptance of a core collection of ideas, which Kuhn called a “paradigm”. Normal science creates deep commitments to a particular way of looking at the world, and often suppresses fundamental novelties which conflict with received theories. One of the main jobs of scientists is to try to explain these conflicting observations and anomalies while remaining within the existing paradigm. To put it more bluntly, scientists are dogmatically committed to a paradigm, and do their best to fit all observed facts into this paradigm — indeed this is the main activity of scientists. There are a large number of strategies that scientists use to protect their favourite theories from the assault of contrary facts. However, these exceptions and anomalies often accumulate to the extent that a few rebels begin to doubt the core theories and look for alternatives. This is called the “revolution” phase — one in which the core theories of the paradigm are called into question. A successful revolution creates a new set of core theories, which are radically different and incompatible with the previous paradigm. This is called a paradigm shift. The established scientific community strongly resists change, and new paradigms succeed only when the older generation dies out and the younger generation is attracted to the fresh research problems created by the new paradigm. Of course, this description is in strong conflict with the image of scientists as open-minded people, who change their minds about theories when confronted with contrary facts. But Kuhn’s analysis causes far more damage to the conventional view of science as the ultimate standard for truth.

A key element of the Kuhnian perspective is that science progresses by sequences of revolutions, and that this is a continuous and recurring feature of science. This means that we can never be certain of scientific theories — the next revolution may prove them to be false. It is interesting to note in this context that some of the favourite ideas of Einstein have been proven wrong. Einstein was firmly convinced that “God does not play dice with the universe”. However, the quantum theories asserting that particles move at random are now firmly established. The second problem is that Kuhn’s idea of revolution means that scientific knowledge does not accumulate and progress in a linear and continuous fashion. After some progress in the “normal” science mode, a revolution discards previous theories and starts on fresh ground. Similarly, since revolutions are continuously happening and cannot be ruled out, there is no way to say that we will eventually acquire all the knowledge that it is possible to know. Thus all three central beliefs about how science works are challenged by Kuhn.

The upshot of all this is rather different from what one might expect. First, the evidence for the spectacular progress of science is overwhelming and impacts our daily lives. The mistake is to conclude from this extraordinary success that scientific theories must be true. Articles in scientific journals today often show that previously believed theories are false and propose new alternatives. Experience tells us that many theories widely accepted today will be proven wrong a decade later. Thus, the search for certainty is an illusion. Pragmatic philosophy claims that an ideology or proposition is true if it works satisfactorily, that the meaning of a proposition is to be found in the practical consequences of accepting it, and that impractical ideas are to be rejected. On these grounds, science is eminently satisfactory. A second important conclusion is that the domain of science is necessarily limited. Science can teach us how to build atom bombs, but cannot teach us whether or not it is morally permissible to use them. A vast proportion of our knowledge consists of our experiences. The range of human experience is subjective, and not observable, and hence not amenable to analysis by scientific methods. Our shared human experiences of living and loving are essential to living a good life, but are outside the scope of science.

Published in The Express Tribune, November 8th, 2015.

More recently, the internet has enabled the transformation of traditional work under Fordism, to knowledge work, characteristic of post-Fordism. In knowledge work, multi-tasking workers are integrated into flat hierarchical structures, compared to the centralized large corporation, e.g., General Motors. As a result, communication channels have been re-defined with greater involvement of lower-level employees in decision-making. Knowledge work includes new employment practices, such as time flexibility, teleworking; alternative payment schemes; along with employee empowerment and autonomy; task rotation and multi-skilling, team work and team autonomy. Potential consequences include fragmentation of work, crowdsourcing and virtualization of work.

Indeed, technological change has significantly transformed the labour market as the result of the diffusion of innovative practices at the micro-level. Crowdsourcing, for example, is the outsourcing of tasks to a large, undefined group of people in an open call. Considering this background, current challenges in working conditions are also related to the emergence of a crowd of freelancers available and able to quickly do the necessary tasks. The cloud based work environment is characterized by five essential characteristics: on-demand service; broad access; resource pooling; rapid elasticity; and measured service (Ipeirotis, 2012).

Low wages, lack of rights, unprotected jobs, increasing informality are the flip side of cloud workers. On Amazon Mechanical Turk, workers are paid between a few cents to $75/hour. In one article on these new tools, The Economist (2012) points out that crowdsourcing platforms operate under no regulation and risk driving down wages.

Crowdsourcing is fundamentally associated with the virtualization of the work. Technologies such as instant messaging, teleconferencing and video calls make it less necessary for co-workers to gather together physically, which in turn allows for the creation of virtual teams, along with teleworking, co-working and the use of social media. New technologies make teleworking easier. While for some workers, teleworking fosters a better work-life balance, it might not be suited for other workers, especially those who prefer to interact with colleagues at a physical workplace. And many teleworkers complain about their inability to set a clear dividing line between work and private life.

Another major consequence of the new trends in the labour markets is the changing conceptualization of unemployment and employment. Besides, in spite of these significant changes in the nature of work, even today most statistics and theories included in the Economics Curriculum are based on the outdated conceptualization of the prototype worker in an industrial factory setting, engaged in traditional work.

Further reading suggestions


Ipeirotis, P. 2012. The (Unofficial) NIST Definition of Crowdsourcing.[Online]. Available:

Ouye., Joe .2011. Five Trends That Are Dramatically  Changing Work and the Workplace Knoll Workplace Research.

Howe, J. 2006. The Rise of Crowdsourcing. Wired, Vol. 14, No. 6,

The Economist. 2012. A clouded future, 13 March.


The vision of a government of the people, by the people and for the people is enchanting, and powerfully attractive to the masses yearning to be free. However, the title of Nobel laureate Joseph Stiglitz’s article, Of the 1%, by the 1%, and for the 1% is a far more accurate description of the reality of US democracy. Prophetically, Eisenhower had warned against the threat to democracy posed by the powerful military-industrial complex. Today the power of a tiny minority to control the US, and thence the world, exceeds his worst nightmares.

In 2010, the US Supreme Court ruled to allow corporations to spend money on political campaigns. In 2014, the Supreme Court removed certain limits from such political spending, effectively making it legal for corporations to buy elections. It is now reported that industrialist mega-donors, the Koch brothers, are planning spend close to a billion dollars to fund their favourite candidates in the 2016 elections. Of course, these changes in the law only reflect the underlying force, which is the strong increase in the power and wealth of the top one per cent since the 1980s. Stiglitz notes that 25 years ago the richest one per cent of Americans took 12 per cent of the yearly income, whereas today the share has doubled to 25 per cent. While a full description would fill a book, we provide some illustrations of the amazing laws passed against the interests of the majority. Such laws would have had no chance in a genuine democracy.

The power of the pharmaceutical lobby ensures that the cost of drugs in the US is highest in the world. Congressman Tauzin played a key role in getting the Medicare Prescription Drug Bill passed, which is a trillion dollar give-away to drug-makers. This bill prohibits the US government from negotiating lower drug prices and bans the import of cheaper, identical drugs. Two months after getting the bill passed, Tauzin resigned from Congress and got a $2 million job with the organisation, Pharmaceutical Research and Manufacturers of America. Similar sinecures were provided to several of his congressional associates who helped get the bill passed, in an unusual congressional session at 3am. While this bill stands out as the most expensive, more than 1,500 bills favoured by the pharmaceutical lobby have passed in Congress in the past decade.

The power of small lobbies to control Congress was brought home by the recent mass shooting in Oregon. President Obama openly expressed anger and frustration that despite dozens of shootings, the tiny but well-funded National Rifles Association has blocked all possible gun control laws. Even though the majority of the nation favours such laws, congressmen consider it political suicide to oppose free access to guns. A similar holy cow status is enjoyed by Israel — many politicians and journalists have been forced to issue public apologies for simply stating facts about the Israeli occupation of Palestine. In general, the majority of the US public is opposed to foreign wars like Iraq and Afghanistan, but US foreign policy is not governed by the wishes of the majority.

In a plutocracy, money rules. Banks have the most, and often speculate with depositors’ money. If they win, that’s great for them; if they lose, then someone else pays. In wake of the Great Depression, caused by such gambles, the Glass-Steagall bill prohibited speculation by banks. In 1999, the Act was repealed, and in 2000, the Commodity Futures Modernization Act removed many restrictions on banks, and created a trillion-dollar unregulated shadow banking industry. Banks took advantage of this freedom to speculate heavily, resulting in the Global Financial Crisis in 2007. In the aftermath, the majority of the public was in favour of punishing bankers, but Congress was firmly in favour of trillion-dollar bailouts at the expense of the public. Since then, banks have gone on to enjoy massive profits, while millions remain homeless, hungry and unemployed. Consider the glaring contrast with Iceland where 26 high level bankers have been jailed, while no banker in the US has even been charged with a crime. Even Donald Trump, one of the plutocrats, has acknowledged publicly that “the system was broken” and he could buy favours from politicians by contributing to their cDeathDemocracyampaigns.

While many have commented on the death of democracy in the US, none are optimistic about the future prospects of the bottom 99 per cent. For us in Pakistan, as we struggle to plant the seeds of democracy, the lesson is to avoid blind imitation, and create greater genuine participation at the grass roots level. Only in this way can we avoid a concentration of power at the top that leads to elite capture of democracy. Ultimately, eternal vigilance is the price of freedom.   

Published in The Express Tribune, November 2nd, 2015.

Related Articles:

Deception & Democracy: Convincing the masses to help the rich —

The Myth of U.S. Democracy and the Reality of U.S. Corporatocracy

The Shifting Battleground: (The war of the top 1% against the bottom 99%)

More than a billion people live in extreme poverty, in conditions which would be unimaginable for readers of this column. Economists say that this is due to ‘scarcity’ — there are not enough resources to feed them. The solution lies in economic growth, increased production to enable us to provide for all. This diagnosis deliberately distracts attention from the real problems. One of them is the rapidly rising inequality. In 2010, the richest 388 people owned more than half the wealth of the planet, an astonishingly skewed income distribution. Although there has been substantial growth, benefits of the growth accrue only to those who are already extremely wealthy. According to recent Oxfam reports for 2014, the richest 80 people now have more than $1.3 trillion, which is more than half of the total privately-owned planetary wealth. A tax of only 33 per cent on just these 80 would suffice to feed, clothe, house, educate and provide for the health needs of all of the extremely poor. Coincidentally, global defence budgets are of similar magnitude. We don’t have to become peaceniks; just scaling back our bloodthirstiness by 33 per cent would suffice to remove extreme poverty from the planet. Just avoiding the Iraq war would have saved sufficient money to feed the planet for 30 years.

Proposals for peace and for equality seem like pipe dreams. Even after dozens of random shootings, the president of the US does not have enough political clout to make a move towards gun control. Similarly, proposals to tax the poor to support defaulting bankers with criminal records sail through parliaments, but the reverse cannot even be contemplated. Thus, we must turn to less visionary and more prosaic ideas about how to solve the problems of extreme poverty, without interfering with political and social structures. Many standard health, education, training or credit interventions have failed to break the Ultra-Poor out of a vicious cycle of abject poverty. The success of an innovative, tailor-made approach which Targets the Ultra Poor, designed by Bangladesh Rural Advancement Committee, has attracted worldwide attention. Poverty Action Labs (JPAL) has successfully replicated the programme in six different countries spread over three contgradXtrmPovinents with more than 10,000 participants, showing that it is robust. The results support a fundamental thesis of JPAL that it is possible to significantly improve the lives of the poor without making radical changes in the overall socio-political system.

We are fortunate that Pakistan participated in the pioneering experiments, under the able and visionary leadership of Qazi
Ismat Isa of the Pakistan Poverty Alleviation Fund (PPAF).  The extraordinarily successful Livelihoods Enhancement and Protection (LEP) project, which since been refined and improved, has changed the lives of more than 300,000 households over the past few years. The programme is based on principles which seem obvious in retrospect. The key is to provide an income-producing asset: LEP builds upon local livelihood traditions with 75 per cent of the grants consisting of smaller livestock, such as goats. Meanwhile, 25 per cent of the grant interventions are for micro-enterprises in transport (donkey carts or trolleys), wood manufacturing or repairing of agricultural machines or tools, enterprises such as grocery or general stores, food vendors selling fruit, vegetables, clothes etc., or micro-enterprises making brooms, baskets, mats, tailoring, embroidery, etc. These economically diverse activities consist of the elements of a subsistence economy within a village.

But it is not enough to provide an income-producing asset. The lives of the Ultra-Poor are subject to so many urgent shocks that this asset would often be sold to cover an emergency. To protect against this, income to cover basic consumption needs is also provide
d. In addition, training in how to utilise the asset (or to care for goats and so on) is provided. Health coverage is an essential element of the programme, since health shocks are the most common cause for people to fall into poverty. Furthermore, some hand-holding and encouragement is provided by trainers, to enable the Ultra-Poor to dream of a better future, and to give them the strength to stay the course. This is a complex multi-dimensional intervention which requires coordination on many fronts. The PPAF mobilises local partner organisations, commun
ities and appropriate governments agencies. The results have been vastly superior to the current patchwork social welfare programmes, which provide partial support to special segments of the population. The difference is analogous to teaching a man to fish versus giving him a fish to eat. Well-designed, large-scale post-experimental surveys document that this programme allows people to “graduate” out of poverty, with long-term significant increases in income and savings. It is encouraging that the government is moving towards evidence-based and result-based management practices to create a more efficient bureaucracy. The dramatic results obtained from the graduation programme open the door to a new world of opportunities for the Ultra-Poor.

Published in The Express Tribune, October 26th, 2015.

The contribution by the Austrian economist Friedrich von Hayek to monetary theory stimulates a far-reaching debate on the role of the government in monetary management and the effects of alternative policies in regulating the issuance of money. Since the early 1930s Hayek had been concerned about the role of money in the theory of production. Influenced by Eugene Böhm-Bawerk’s theory of capital, Hayek deeply examined the effects of monetary policy on the process of capital accumulation. As regards investment decisions, Hayek considered that an inflationary credit expansion by the central bank can lead to capital misallocation over time caused by artificially low interest rates.

Indeed, the fundamental problem in economics, for Hayek, is that of coordinating the plans of many independent individuals. The main advantage of a competitive economic order, in Hayek’s view, is that rational agents respond to price signals, which convey the relevant information available in the markets, for the purpose of economic calculus. In his view, competition, through the price market system, leads to such coordination. The underlying critique relies on arbitrary interventions related to the presence of the state in economic systems (see, for example, Hayek, 1944). After the Second World War, Hayek discussed the redefinition of the legitimacy of the state and stressed the need to defeat the growing state intrusion in a democratic framework. Besides, he privileged the analysis of the values that shape the interrelations of individuals in a free society. Assessing the practical superiority of the free market dynamics over governments’ actions, Hayek believed that no government can know enough to effectively plan the future path of the economy and society. Further, central banks do not have the relevant information to correctly manage the money supply.

Frederic von Hayek restated the relevance of concepts and ideas proposed by the classical liberal philosophy so as to rebuild the foundations of constitutional governments to face the institutional decay in contemporary societies. As a result, in the 1970s, Hayek proposed the abolition of the government’s monopoly over the issue of fiat money to prevent price instability (see Hayek, 1976). His defense of a complete privatization of money supply stemmed from his disappointment with central banks’ management, which, in his opinion, had been highly influenced by politics. He warned that political interference over monetary policy and price stability is incompatible with social cohesion. At that time, Hayek’s proposal of institutional reform relied on a denationalization of money in the framework of a free market monetary regime where only those currencies that have a stable purchasing power would survive.

In Hayek’s contribution to monetary policy, although employment and price stability are not necessarily in conflict, priority should be given to monetary stability. Aware of the price stability challenges, Hayek strongly highlighted the dangers that arise from monetary financing public spending. Considering this background, Hayek’s recommendation to policy making is the dissolution of “the unholy marriage” between monetary and fiscal policy, which, in his opinion, had formally consecrated the victory of “Keynesian” economics after the Second World War ( see Hayek, 1

Hayek strongly criticized the Keynesian transformation of the discipline of economics. As of the 1970s, he condemned the role of the economists in promoting the engineering of social change through macroeconomic modeling. Under his view, for the Keynesian income expenditure model to work, the economist must know the aggregate level of current consumption, investment, and public spending, as well as the full employment level of output and the multiplier effect. As each step of the analysis presupposes that the detailed knowledge of economic life is available and that the outcomes of each policy intervention will be precise effects on economic activity, he believed that the Keynesian macroeconomic policy was mistaken.

Why do students need to read Hayek’s books? The global crisis, that began in 2007-08–caused a re-examination of the ideas of Hayek in search of answers to the questions of what caused the crisis and how governments may get out of it. On behalf of the economic and social outcomes of the crisis, Hayek’s reading is a must in the economic curriculum in order to engage the students in a pluralist discussion around free market vs. regulation; monetary policy vs. fiscal policy, austerity vs. growth.

In truth, the absence of a deep discussion about Hayek’s ideas in the economics curriculum has reinforced the ignorance of the disastrous social consequences of austerity as a political project in contemporary capitalism.


Madi, M. A. C. Dissolving the ‘unholy marriage’: Hayek’s recommendation on monetary and fiscal policy.

Books to read

HAYEK, F. A. von (1937a) Individualism and Economic Order, Chicago: University of Chicago Press.

———- (1937b) “Economics and Knowledge”, Economica, 4, pp. 33-54.

———- (1944) The Road to Serfdom, Chicago: University of Chicago Press.

———- (1945) “The Use of Knowledge in Society”, American Economic Review, 4, pp. 519-530.

———- (1960) The Constitution of Liberty. Chicago: University of Chicago Press.

 ———- (1976) Denationalisation of Money: The Argument Refined, London: Institute of Economic Affairs.

———- (1973) Law, Legislation and Liberty, Vol. 1, Chicago: University of Chicago Press.

———- (1974) The Pretense of Knowledge, Nobel Prize Speech.

 ———- (1995) “Contra Keynes and Cambridge: essays, correspondence”, in B. Caldwell (ed.), The Collected Works of F.A. Hayek, volume 9, Chicago: University of Chicago Press.


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