Warrant Economics, Call-Put Policy Options and the Fallacies of Economic Theory
In this paper we aim to trace the roots of the ongoing economic mayhem and to unmask the chorus of the tragedy which plays on the world stage. The main thesis of our work is that, despite the triumphant rhetoric praising the merits of perfect competition, the global fields of the dysfunctional market system have mushroomed in what we call Warrant Economics for the Free-Market Aristocracy. Warrant Economics unfolds in two symbiotic tenets that constitute the subtle architecture of the neoliberal edifice: (i) the systemic creation and preservation of inequality via Call-Put policy options, and (ii) the systemic exploitation of inequality via novel and toxic forms of securitisation. In effect, the power structure of insiders’ capitalism that we describe, trough the costless appropriation of an intricate cobweb of Call-Put structures, has distorted competition and accelerated economic concentration. We view the income distribution effect, which favours the top 1%, and the business concentration effect, which gravitates competition towards oligopolistic/monopolistic industries, as the two sides of the Warrant Economics coin. We argue that the Warrant Economics state of capitalism has been legitimised by a degenerating research programme blossomed under the fallacy that economics is the “physics of society”. In this faculty of thought, we perceive the Great Recession as a symptom of Warrant Economics, rather than as a tsunami-like event.
|Date of creation:||Dec 2011|
|Publication status:||forthcoming as 'Warrant Economics, Call-Put Policy Options, and the Great Recession' in: Review of Political Economy, 2015|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McCloskey, Donald N, 1983. "The Rhetoric of Economics," Journal of Economic Literature, American Economic Association, vol. 21(2), pages 481-517, June.
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- Engelbert Stockhammer, 2004.
"Financialisation and the slowdown of accumulation,"
Cambridge Journal of Economics,
Oxford University Press, vol. 28(5), pages 719-741, September.
- Thomas Piketty & Emmanuel Saez, 2006.
"The evolution of top incomes: a historical and international perspectives,"
- Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, vol. 96(2), pages 200-205, May.
- Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," NBER Working Papers 11955, National Bureau of Economic Research, Inc.
- Biewen, Martin & Juhasz, Andos, 2010. "Understanding Rising Income Inequality in Germany," IZA Discussion Papers 5062, Institute for the Study of Labor (IZA).
- Roger Backhouse, 2002. "Don Patinkin: interpreter of the Keynesian revolution," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(2), pages 186-204.
- Jan Kregel, 2010. "Is Reregulation of the Financial System an Oxymoron?," Economics Working Paper Archive wp_585, Levy Economics Institute.
- Edlin Aaron S. & Jaffee Dwight M., 2009. "Show Me The Money," The Economists' Voice, De Gruyter, vol. 6(4), pages 1-5, March.
- Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
- Till van Treeck & Silke Tober & Achim Truger & Michael Brecht, 2010. "Squaring the circle in Euroland? Some remarks on the Stability and Convergence Programmes 2010-2013," IMK Working Paper 3-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Jesus Felipe & J. S. L. McCombie, 2005. "How Sound are the Foundations of the Aggregate Production Function?," Eastern Economic Journal, Eastern Economic Association, vol. 31(3), pages 467-488, Summer.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6251. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.