The blog is not what you might have expected. We are not going to be another source of economic analysis, observation, theory, or gossip. There is plenty of that elsewhere, and no need to add more. Instead the blog will be an account of IDEA's activities and features, and it will be an important connection to the supporting community. That said, a brief introduction to the context in which we have been moved to act, and then an idea of the design.
We are not, in the main, economists. But we are intelligent people with a sense of society who have been compelled to look at the discipline to see why it is not working. With Climate Change, the Great Financial Crisis, a revision to a class society, looming poverty, it is only too obvious that markets are not only not working, but are driving society in the wrong direction. But market fundamentalists are in charge of policy. Their Mandarins are the leaders of the academic traditions. A dysfunctional Neoclassical Monetarism guides the central banks.
Orthodox economics has been wrong at every turn for some time. They did not predict the crisis. When it happened, they said recovery would be swift and steep. Five years on, it is always still just around the corner (though some see that corner as further in the future than others).
Conservative monetarists are in charge of the financial apparatus -- the central banks, the monetary authorities, and the international institutions that call the shots. This is not by virtue of their having seen the crisis coming, nor because their policies work. Quite the contrary. The build-up of the debt bubble and the increasing drumbeat of crises over the previous 25 years, which led to the 2008 collapse, was "the Great Moderation" to these authorities, a period of immense self-congratulation. Subsequently, after the panic and seat-of-the-pants response, a failure to deal with debt, on one hand, and coercion of austerity, on the other, has been their gruesome continuation of the crisis. Households and businesses, and sovereign governments and working people, in the US, in Europe and now in the emerging markets, have seen inequity, deprivation and instability grow directly out of these policies. Dangerous holes are being ripped in the political and social fabric.
For example, the IMF was kicked out of Africa by 2000 for enforcing a Neoliberal program as a condition of its loans. Now it, incredibly, along with the European Central Bank, is coercing the same failed "structural adjustments" in Europe. In the U.S., the Fed has taken on trillions in debt securities to bolster Wall Street on a hypothesis that is daily being proven false. The theory is not working except for the very wealthy.
In Academia, after a period of keeping their heads down, the old orthodoxy has returned. Some are denying anything is wrong. Others echo Margaret Thatcher "There is no alternative," Most just want to get away from the reality and back to the hypothetical economics where their arcane mathematical models actually work. Unless it is absolutely necessary, none seem to want to engage with those who were right, who predicted the crisis, who raised the alarm over austerity and debt denial.
Many of the readers here could write essentially what I have said here. To them it is, if anything, too obvious. Others may doubt the situation is so bad, or have other disagreements. We want you both. We have our view, but our overriding object is not to promote that particular view, but to return some sort of coherence and rigor to what has become a quasi-science. We are not an advocacy group that will be asking you to e-mail your congressman or support our lobbying efforts.
We are organizing to serve two constituencies in a manner that minimizes our overhead and operational costs. Those two constituencies are the concerned citizen and the economist who is already in the field. Within "concerned citizen" we include lay, media and policy-makers. By "economists in the field," we are referring to those who are developing the economics that works, predicts, explains, is not surprised, and can guide a true recovery. This second group is excluded from the debate and wide appreciation, even now, not because their ideas are illegitimate or without empirical backing, but because they threaten entrenched interests in the corporate, financial and academic worlds.
We have on our advisory board some of these: James K. Galbraith, Michael Hudson, Edward Fullbrook, Dirk Bezemer, Ann Pettifor. And we have engaged another as IDEA's chief economist -- Steve Keen. Many others doing good work. Some will be official partners, others will benefit from our efforts. The one thing these people have done is to violate the first economic law of the orthodoxy -- self interest. Were they motivated by personal career or standing, they might well be taking another line, restricting their work to trivia, applying the approved mathematics and spinning off into the endowed seats. Instead, they are driven by intellectual honesty, evidenced-tested methodology and by social responsibility.
The core activities of IDEA will be -- and already are, even prior to launch -- developing the funding sources, erecting the data platforms and tools, supporting the existing alternative journals and communities, and providing the opportunity for people like us to contribute time, talent and funding. So IDEA's purpose is to maximize the talents of ourselves and these people.
The last revolution in economics, the Keynesian Revolution, rose from a situation similar to the one we face today. The Great Depression posed a reality that could not be ignored or denied. The orthodoxy of the time said that everything was fine. That denial was its undoing, for a time at least, because it was absurd to all. The point is, it was not the willingness of the profession to apply a scientific method or abide by empirical results that gradually changed economics. It was instead the wholesale rejection of the old, and the availability of the core of a new and practical -- the New Deal and the Keynesian -- critique. That new vision of how economies actually work guided policy out of the Depression, through the World War II mobilization (a fact not sufficiently appreciated), through the return to peace and into a relative calm and prosperity. Leaving aside a lot of economic history, and fast-forwarding to today, we see that the old economics has returned. It is today in large part what it was then, no matter the perfunctory bow to Keynes or others.
Again today undeniable evidence confronts us. In climate change, we are assured the world cannot afford its own survival. In the destruction of the middle class, we are told that it is the worker's fault and a inevitable return of a class society, perhaps arising from globalization. In the financial world, the health of banks is the measure of prosperity. In the real world it is a prosperity that eludes real businesses and real people.
It is easy to wax eloquent, or at least dramatic in this, and I may be forgiven since this first post on a new blog will not be widely read. But the purpose of IDEA is not to be poetically descriptive. It is to assist by specific, effective action. Elsewhere on the website you will see what we are doing with theory -- notably in enabling Steve's forthcoming book, Finance and Economic Breakdown. In data, we are assisting Michael Hudson in resolving a bottleneck as he maps the economy in real and financial sectors for his important new analysis. Also in data, we are working to disentangle official data to display clearly what is happening in easily accessed ways that update in real time. With our support of Minsky, the dynamic modeling software being developed by Steve and Russell Standish, we are helping to bring into use a program that is two generations ahead of the archaic mathematical models of which the orthodoxy is so proud. Minsky is both truly dynamic and monetarily coherent.
So. There is a lot to be done, and we are just getting started. One thing we do not lack -- the opportunity to make a real difference.