Avebarna Domingo: O capital no século XXI

Michael Roberts Blog 03-12-2-023, por M Roberts
https://thenextrecession.wordpress.com/2023/12/03/why-real-world-economics-matters/

(..) Real world economics should be about understanding what is happening in the world around us: what causes inflation, unemployment, poverty, inequality, climate change etc. And what are the economic policy answers. But there is a problem. What I call mainstream economics does not discuss or deal with these real world issues very well.

One example directly involving this very building springs to mind. Back in the depth of what came to be called the Great Recession of 2008-9 when all the major economies were suffering a sharp and deep fall in national output, employment and average incomes, after a humungous collapse in the banking and financial systems, Queen Elizabeth visited the London School of Economics. As she stepped into this very building, she asked the gathering of eminent economists who met her: “Why did no one see it coming?”(..)

(..) In my view, real world economics must look at the ‘big picture’. Economists should not be just doctors but social scientists, or more accurately they should develop an economics that recognises the wider social forces that drive economic models. That is called political economy, mostly not taught in universities. Let me remind you of some of the big picture economic issues that will affect us all much more than anything like whether the HS2 rail line is built or income taxes should be raised or reduced.

First, there is global warming and climate change. The international Cop28 is meeting in Dubai right now on how to reduce greenhouse gas emissions – what is needed is a 43% reduction in emissions by the end of this decade if the world is to avoid an average increase in global temperature more than 2C above pre-industrial levels.

What are the economic theories and policies that can achieve that reduction? It is worrying to know as the LSE’s own Nicholas Stern, the world’s leading climate economist, has noted: “Economics has contributed disturbingly little to discussions about climate change. As one example, the most prestigious mainstream Quarterly Journal of Economics, currently the most-cited journal in the field of economics, has never published an article on climate change!”

Then there is the issue of global poverty and rising inequality of wealth and income between nations around the world and within nations. (..)

Economics and economists should not be sucked into just being like dentists fixing teeth, but also use their skills and the scientific method to understand the big picture and so help to make a better world for all. Then perhaps we can avoid being visited by King Charles at some time in future and have him repeat what Queen Elizabeth said: “why did you not see that coming?”