The book provides a popular, engaging overview of some key ideas of ten economists, ideas that are directly or indirectly related to the causes and consequences of financial crises. Each economist is presented in a chapter. The chapters all have the same structure: "The problem", introducing a particular issue related to the 2007/2008 financial crisis, "The insight", the economist's idea, "The economist" with a short bio story including an anecdote, and "Practices" with two examples of real-world implemented alternatives. Chapter 1 is about Marx and the near-implosion of capitalism when Lehman Brothers went bankrupt and financial markets panicked. His key insight is his characterization of capitalism in two relationships: K hires L and the sequence of M - C - M' - C ' M''. The alternatives that I mention, which do not follow these principles, are cooperative firms and crowdfunding. Chapter 2 is about Minsky and explains the inherent growth of the financial sector, faster than the real economy, which destablizes the real economy due to increasing fragility. Alternatives can be found in limits to growth of banks and more caring forms of finance, as exemplified by some female fund managers, for example in Iceland. Chapter 3 is about Keynes focusing on the debt problem, showing that money is not neutral but has real economic effects. Alternatives are higher loan-to-value ratio's for mortgages and debt cancellation programs. Chapter 4 is about Knight and the fatal confusion he discovered between risk and uncertainty. Alternatives are a split between retail banking and investment banking and higher buffers for banks. Chapter 5 is about feminist economist Barbara Bergmann and the testosteron effect of financial trading, speeding up financial market value until bubbles burst and women are called in to clean up the mess (Lagarde, Yellen, CEO Icelandbanki, etc.). Another alternative is Warren Buffet's investment strategy, which some have referred to as "investing like a girl". Chapter 6 is about inequality based on Torstein Veblen and the illusion that we need the rich and inequality to have economic growth. To the contrary, many rich don't invest in the real economy but in financial assets or conspicious consumption. Alternatives are higher (wealth) taxes, as also Picketty argues. Chapter 7 is about Sen and how the lame leads the blind into the financial swamp of derivatives, high debt, and high-risk investments. Chapter 8 is about Myrdal and his cumulative causation theory of feedback loops. Here the alternatives include higher levels of socio-economic resilience for the weakest groups in society. Chapter 9 uses Adam Smith to argue that markets only function well when embedded in social values. As an example it discusses the failure of the European carbon emission trading market. Finally, chapter 10 relies on Joan Robinson warning about the danger of the dominance of only one theory in economics. It refers to the worldwide Rethinking Economics student movement as a push for economic pluralism. The book ends with a short conclusion emphasizing that we need to go back to the economic pluralism of the early days of economics, which will help us to go beyond TINA in all areas of economic activity and economic policy of today.
|Place of Publication||Amsterdam|
|Number of pages||263|
|Publication status||Published - 2016|