The Crisis in Economic Theory

There are many ways in which the global financial crisis of 2007-8 showed up the defects of conventional economics. One of the central claims of economic textbooks is that market prices decentralize production decisions efficiently. Since stock prices declined by 50% over the period of an year, it is immediately obvious that pre and post crash could not both have been efficient.

In order to create room for alternative pedagogical approaches, it is necessary the challenge the blind faith in conventional economic theory that seems to be widespread both among economists and also among the general public. To criticise some public policy proposal, it is enough to say that this is socialist — that means that thinking further about it, rational discussion of pros and cons, all this is no longer permissible.  Even though socialized medicine as practised in Canada and UK produces far better results at far lower costs, it simply is not viable option in USA because allergy has been induced to the name “socialized medicine” by extremely clever propaganda.

While the same propaganda exists in Pakistan, it is much less pervasive and weaker, I try to write about economic issues in local Newspapers, so as  to counter the faith in free markets, as a first step to introducing genuine alternatives. My article on The Crisis in Economic Theory was published in the News, one of the bigger English language papers in Pakistan, a few weeks ago. The title was changed to “Waiting for Keynes“. Readers are invited to read it and also to make comments on it on the newspaper website.  More importantly, we need to spread the word, by writing and publicising similar works which debunk conventional economic theories, and counter pro-capitalist prejudice. This is not too hard to do in wake of the numerous failures of capitalism and the Occupy Wall St. movement. What we need to realize is that major media is under capitalist control so the only way to counter is by working with local media, minor outlets etc.  Every little bit counts.





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