IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/47910.html
   My bibliography  Save this paper

Neo-classical economics: A trail of economic destruction since the 1970s

Author

Listed:
  • Reinert, Erik S.

Abstract

This paper argues that the international financial crisis is just the last in a series of economic calamities produced by a type of theory that converted the economics profession from a study of real world phenomena into what in the end became mathematized ideology. While the crises themselves started by halving real wages in many countries in the economic periphery, in Latin America in the late 1970s, their origins are found in economic theory in the 1950s when empirical reality became academically unfashionable. About half way in the destructive path of this theoretical tsunami – from its origins in the world periphery in the 1970s until today’s financial meltdowns – we find the destruction of the productive capacity of the Second World, the former Soviet Union. Now the chickens are coming home to roost: wealth and welfare destruction is increasingly hitting the First World itself: Europe and the United States. This paper argues that it is necessary to see these developments as one continuous process over more than three decades of applying neoclassical economics and neo-liberal economic policies that destroyed, rather than created, real wages and wealth. A reconstruction of widespread welfare will need to be based on the understanding that what unleashed the juggernaut of welfare destruction was not ‘market failure’; it was ‘theory failure’. Being a résumé of a larger research project, the paper includes references to more detailed studies of these processes of ‘destructive destruction’.

Suggested Citation

  • Reinert, Erik S., 2012. "Neo-classical economics: A trail of economic destruction since the 1970s," MPRA Paper 47910, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:47910
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/47910/1/MPRA_paper_47910.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Arthur F. Burns, 1954. "The Frontiers of Economic Knowledge," NBER Books, National Bureau of Economic Research, Inc, number burn54-1, July.
    2. Erik S. Reinert (ed.), 2004. "Globalization, Economic Development and Inequality," Books, Edward Elgar Publishing, number 1570, June.
    3. Erik S. Reinert & Rainer Kattel, 2009. "The Economics of Failed, Failing, and Fragile States: Productive Structure as the Missing Link," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 18, TUT Ragnar Nurkse Department of Innovation and Governance.
    4. Erik S. Reinert, 2012. "Mechanisms of Financial Crises in Growth and Collapse: Hammurabi, Schumpeter, Perez, and Minsky," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 39, TUT Ragnar Nurkse Department of Innovation and Governance.
    5. Erik S. Reinert & Rainer Kattel, 2007. "European Eastern Enlargement as Europe's Attempted Economic Suicide?," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 14, TUT Ragnar Nurkse Department of Innovation and Governance.
    6. Arthur F. Burns, 1954. "Foreword to "The Frontiers of Economic Knowledge"," NBER Chapters,in: The Frontiers of Economic Knowledge, pages -2 National Bureau of Economic Research, Inc.
    7. Rainer Kattel & Erik S. Reinert, 2010. "Modernizing Russia: Round III. Russia and the other BRIC countries: forging ahead, catching up or falling behind?," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 32, TUT Ragnar Nurkse Department of Innovation and Governance.
    8. Reinert, Sophus A., 2011. "Translating Empire: Emulation and the Origins of Political Economy," Economics Books, Harvard University Press, number 9780674061514, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mulatu, Abay, 2016. "On the concept of 'competitiveness' and its usefulness for policy," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 50-62.
    2. Ben Fine & Elisa Van Waeyenberge, 2013. "A Paradigm Shift that Never Will Be?: Justin Lin’s New Structural Economics," Working Papers 179, Department of Economics, SOAS, University of London, UK.
    3. Carlota Perez, 2014. "A Green and Socially Equitable Direction for the ICT Paradigm," Globelics Working Paper Series 2014-01, Globelics - Global Network for Economics of Learning, Innovation, and Competence Building Systems, Aalborg University, Department of Business and Management.
    4. Bukvić, Rajko, 2015. "Неоклассическая Экономическая Теория И Экономическая Действительность
      [Neoclassical Economic Theory and Economic Reality]
      ," MPRA Paper 70769, University Library of Munich, Germany, revised 2015.

    More about this item

    Keywords

    Economic theory; neoclassical economics; neoliberal economics; empirical economics; global financial crisis.;

    JEL classification:

    • B0 - Schools of Economic Thought and Methodology - - General
    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:47910. 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: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.