Economics Through the Looking-Glass: Reflections on a Perverted Science - Hardcover

Rayman, R.A.

Hardcover

ISBN 10: 184014419X ISBN 13: 9781840144192

Publisher: Routledge, 1998

Synopsis

In spite of spectacular improvements in market flexibility, the characteristics of the past twenty years are slow growth and high unemployment. Economics Through the Looking-Glass exposes the theoretical fallacy at the heart of the New Economic Orthodoxy. The fallacy lies in treating the economy as a "single-gear" machine guaranteed to operate at its full employment potential as long as it benefits from the lubricant of perfectly flexible markets (in a Walrasian Utopia of continuous market-clearing equilibrium). Unemployment is thereby reduced to a structural problem of market imperfection. As a cure for unemployment, market flexibility is presumed to be adequate; as a cure for inflation, monetary restriction is presumed to be safe. The flaw in Orthodox logic is exposed by a demonstration that a monetary economy operates as a 'multi-gear' machine. Unless it is in 'top-gear', market flexibility (even of Utopian perfection) is not sufficient for full employment. 'Single-gear' Economic Orthodoxy is shown to have developed, not as a science, but as a religion beginning with Adam Smith's revelation of the Law of Competition. A Looking-Glass journey backwards in time from Adam Smith uncovers his suppression of the Law of Circulation and exposes the dangerous delusion of Orthodox economic policy. As a weapon against unemployment, market flexibility is inadequate; as a weapon against inflation, monetary restriction is unsafe. The 'multi-gear' alternative heralds the final stage of economic liberalisation: deregulation of the market for money. The rescue of interest rates from political or central bank interference and the control of inflation by a mechanism triggered by market forces would put an end to the Orthodox policy of maintaining unemployment above its natural market rate by misguided monetary intervention.

About this title

Synopsis

This an examination of the flaws in the single-gear theory of the New Economic Orthodoxy, focusing particularly on Britain. The consequences of the New Economic Orthodoxy are described, along with a chronicle of the development of economics, not as a science, but as a religion devoted to the false doctrine of the economy as a single-gear machine. The third part of the text explores (without the aid of complex mathematics) the microeconomic foundations of macroeconomic theory, and shows that a monetary economy is a multi-gear machine. The text goes on to ask the question, what's wrong with economic theory? It identifies the various errors in Classical, Keynesian and Monetarist economics, and attempts to unravel the mythology from modern monetarism all the way back to Adam Smith. Finally, the book journeys back in time to demonstrate that greater progress can be made by going back to the multi-gear economic realism of the 17th century, than by travelling forwards to the single-gear fallacies of the 20th century.

Edition details

• Publisher: Routledge
• Publication date: 1998
• Language: English
• ISBN 10: 184014419X
• ISBN 13: 9781840144192
• Binding: Hardcover
• Edition number: 1
• Number of pages: 352