The classic economic model of government versus the markets has failed. The unregulated pursuit of profits and private gain has promoted inequality and the rise of xenophobia. Financial insecurity and declining living standards have eroded community and promoted economic nationalism.
In this SFI Community Lecture, economists Wendy Carlin and Samuel Bowles critique the old economic paradigm and propose a new, more equitable model for the future.
Key message: Government, the market and community together create a new space for the innovative governance of society.
Watch some of the highlights:
13:00: The calls for a new economy: is socialism threatening the model of capitalism in the United States?
16:52: The most pressing issue that today’s economists should address. It seems to be "inequality."
19:19: The CORE Project is a global coalition of researchers working to change how economics is taught.
20:34: Following the Great Depression, economic reforms aimed at sharing prosperity ushered in the Golden Age of Capitalism.
22:20: The Golden Age should have spelled the end of laissez-faire capitalism as inequality fell and prosperity grew.
23:10: However, in 1973, falling profits provoked the emergence of neoliberalism.
25:45: The simplistic supply-and-demand paradigm of economics: unregulated markets produce efficiency.
32:40: Economic policy in the 1990s focused on a one-dimensional view of economics: more market activity – less government.
34:20: Left- and right-wing politics moved unanimously to the market side of the continuum, leading to increasing financial inequality and opposition to immigration.
40:20: December 2008, the financial crisis decimates the world economy, which the prevailing economic model could not explain.
42:00: A new paradigm of economics begins to emerge to challenge the foundations of neoliberalism, based on new precepts.
46:50: The new economics: the concept of the interaction of the labor market and the credit market replaces the concept of supply and demand.
49:08: Market failures are the norm, but economics research shows that humans can cooperate to cope with them.
51:50: There is a connection between a more egalitarian distribution of wealth and a knowledge-based economy: less unequal economies do well.
54:52: Equality, efficiency, and innovation can work together to increase wealth.
1:02:00: The new view of economic policy recognized many poles beyond just the government and the market, which can produce a much fairer and sustainable economy.
1:03:53: The Weightless Economy: most of what matters cannot be owned, neither greed nor fear can make it work, so the two-pole view of economics must include community issues like social norms and loyalty.
1:12:35: The agenda for the economic future.
Samuel Bowles is Professor at the Santa Fe Institute, where he heads the Behavioral Sciences Program. His studies on cultural and genetic evolution have challenged the conventional economic assumption that people are motivated entirely by self-interest. Recent papers have also explored how organizations, communities, and nations could be better governed in light of the fact that altruistic and ethical motives are common in most populations. Bowles is now engaged in theoretical and empirical studies of political hierarchy and wealth inequality and their evolution over the very long run. He has written several books and authored numerous publications in scholarly journals. His most recent book is The Moral Economy: Why Good Incentives Are No Substitute for Good Citizens (Yale University Press, 2016). Bowles works with Carlin on the Curriculum Open-access Resources for Economics (CORE) project, and has also served as an economic advisor to the governments of Cuba, South Africa, and Greece, U.S presidential candidates Robert F. Kennedy and Jesse Jackson, the Legislature of the State of New Mexico, the Congress of South African Trade Unions, the Pontifical Academy of Science (Rome), and South African President Nelson Mandela.
Wendy Carlin is Professor of Economics at University College London (UCL) and Research Fellow of the Centre for Economic Policy Research (CEPR). She is leading an international project — the CORE project —to reform the undergraduate economics curriculum. She has published widely on macroeconomics, institutions and economic performance, and the economics of transition. She has co-authored with David Soskice three macroeconomics books; the most recent is Macroeconomics: Institutions, Instability and the Financial System (Oxford University Press, 2015). She is a member of the Expert Advisory Panel of the UK's Office for Budget Responsibility. In 2015, she was awarded a CBE for services to economics and public finance.
Listen to the pre-show discussion with Sam Bowels, Wendy Carlin, and Mary-Charlotte Domandi on the Santa Fe New Mexican's Radio Cafe podcast (July 16, 2018)