Bottom up approaches seem more appropriate, in my view.

Because a blogger writing a post on an economics site is supposed to be top-down?

if it is revolutionary to point our that surplus generating countries can only continue to generate surpluses if other countries generate larger and larger deficits and that at some point this system has to become unstable - then the present economic consensus has reached a height of stupidity difficult to fathom - if I may completely mix my metaphors

B. It is indeed outside the mainstream to point that out

Therefore C. the present economic consensus has reached unfathomable heights of stupidity

Economics is politics by other means

Meh, Einstein was among his time's leading experts in electromagnetic theory. He just didn't secure an academic career but he retained his academic contacts and could publish.

Economics is politics by other means

the present economic consensus has reached a height of stupidity

That's it. And that height of stupidity is presented as there-is-no-alternative TINA. Mig's article says there-are-real-alternatives TARA. In present circumstances, that is fairly revolutionary.

Frank Schnittger:

We need a new real world approach to economics - one starting with assumptions about human rights rather than human "rationality" or greed, and one rooted in the ecosystem of the world we actually inhabit.

Certainly we do. I'd have thought these had been preoccupations of most discourse on ET since it began. But communicating through different channels in a way that's appropriate to them isn't a form of denial of that, it's taking an opportunity to challenge conventional wisdom and move ideas forward. Or must we write a Manifesto and only communicate that?

surplus generating countries can only continue to generate surpluses if other countries generate larger and larger deficits and that at some point this system has to become unstable -

i think it's hard head rational to some bundesbankers to ditch the euro now, and go it alone.

they've tapped out the peripherals' markets, the PIIGS can't afford the silverware, let alone the meal, besides it's probably indigestible.

the china market is booming, and if the BRIC gaggle keep growing apace, the common currency is a drag to the financiers, those sleek, affectless robots could give a FF about the fate of the euro social engineering project, or the euro currency even. think of all the money to be scammed off changing back 5 countries' currencies! people made out like bandits in the confusion between stools, and guarans they'd do it again in reverse, hey even repeat the sentiment-charged scam again in 20-30 years.

the more shocks, the more doctrine... all europeans except the germans are to be discarded while the ubermenschen take their prideful place as the hardest, most rigorously blinkered of profit machines, assuring a permanent risk-free ride for banksters and austerity for those too ignorant to become Fine Young Cannibals too. austerity is a orwellian newspeak for penury, they can't give us the message without semantic sugar on it.

buckminster fuller had it right, the idea that governments are the dog, and pirates the tail have it exactly backwards, true since civilisation began, possibly.

the edges are where the action is, and prates know the shoals and can play the edges in ways no-one else can.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

So you could in theory continue to have employment and growing GDP with a shrinking resource base. You just have to employ a larger fraction of the population in activities with a low resource use.

The growth of the "service" or "tertiary" sector and the "information economy" are steps in that direction. It doesn't follow that people in the service or information economies should be high earners, but that pretty much arbitrary numbers of people can be employed in them and they will need to be if 5% of the population can produce food for everyone and industrial production of material goods gets less and less labour-intensive.

Economics is politics by other means

Completely off-topic. One of these days somebody will have to explain me, very slowly, how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

Because all the Very Serious People are Hooverians. Talking about genuine post-Keynesian economics would make heads explode.

And while we certainly have a more pressing need than in Keynes' times to not strangle our industrial plant by making it overly reliant on non-replenishing resources, it is not easy to see how such improvements can be brought about if we are busy strangling our industrial plant with golden fetters.

(Incidentally, I greatly dislike the term "post-industrial society" - it is usually little more than apologia for a vision of society where we make nothing but hamburgers, create nothing but lawyers and sell nothing but tax shelters.)

- Jake

Friends come and go. Enemies accumulate.

how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

afaik, keynes had little or no clue that hubbard's curve lay ahead, but imagining he were here today, i think he may guess that we would go to war again, because it makes more money for the rentier class and kills off the youth unemployed surplus who may make trouble in the domestic arena if not safely engaged with another propangandised 'enemy' somewhere preferably far away on some steppe or similarly godforsaken place.

like libya or the falklands...

anyways some could argue that the industrial expansion to gin up for war was a (perverted) keynesian solution to a problem...who's gonna whine about deficits when the future of democracy is at stake?

basically the iraq war was about digging holes and filling them up again, but with the added bonus of the gamble on commanding some of the richest petrochem real estate. either way they win... get paid for reconstruction afterwards too.

war is the age old solution to overpopulation, and dwindling bank profits.

of course if enough people realised there is another way, even the bankers could win, once they let go of the banana in the bottle.

true visionary keynes would be something like the new deal under fdr, but global in scope. something like the blueprints of the advanced western democracies, but even better greed-proofed, and geared to fix unemployment by facing the energy issue head-on, all hands on deck, 24/7, seven days a week, 365 days a year.
return energy generation to the Commons, and half the problems are solved. thanks to certain pioneers amongst us, this idea is gestating nicely, out on the edge, while the titans clash at the centre.

victory gardens are another old idea ready to be recycled anew... so many brilliant ideas, all held back because the lead boots of the status quo are afraid more than anything of what they would lose, and utterly blind to what we all could win.

waiting till we are backs to the wall is just immature.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

One of these days somebody will have to explain me, very slowly, how Keynes is still appropriate in a post-industrial society that is going to suffer (is suffering) a rather strong shrinkage of its resource base (oil, food, water, general ecosystem, ...).

The result was that, starting in the '70s with bogus claims that Keynesian prescriptions no longer worked, while ignoring the effect of US peak oil, banking regulation was repealed and national economic policy was turned on its head to successfully halt a one hundred and forty year economic history of rising real wages in the US. The goal was to increase the "take" for holders of capital. This naturally produced economic problems which they falsely blamed on the continuing effects of Keynesian policies and self servingly prescribed tax cuts for the rich and deregulation of business as the "solution". Then, through the elimination of controls on capital flows and efforts to de-legitimate such controls by other countries, they internationalized capital and business while leaving regulation on a national level. This made the application of Keynesian prescriptions on a national level highly problematic and, simultaneously, made international corporations largely ungovernable by nation states. In fact, multinational corporations have increasingly come to regulate what states can do. We are nearing the end point of that process.

Also, bear in mind that what passes for Keynes in the USA, (Hicks-Hansen synthesis plus Samuelson), is a bastardization of Keynes that attempted to recast some of his insights on money, interest and employment into mathematical formalisms, something Keynes had deliberately avoided, and, thereby, promote a perception of precision and control that was unwarranted. Keynes always emphasized the unknowability of the future and our inability to accurately assess risk.

At Bretton Woods in 1946 Keynes proposed an international financial flow clearing system that had taxes on both trade surpluses and deficits that would have prevented most of the fiascoes we have seen in international finance, but the USA rejected it. So naturally, after bastardizing his system, rejecting outright some of his best suggestions and rendering inpossible most of his techniques for controlling national economies, when things blow up they want to blame it on Keynes. Still.

"It is not necessary to have hope in order to persevere."