FDL Book Salon Welcomes Jeff Madrick, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World
Sociopathic bankers, captured regulators, corrupt politicians, greedy real estate flippers – there are plenty of culprits to blame for the Great Recession and its antecedent speculative bubble and financial crisis. In Seven Bad Ideas, though, Jeff Madrick has skipped all these, taken a step back, and aimed his sights at a bigger target: conventional wisdom in the field of economics. Part primer on economic theory, part history of the economy and economic thought, the book meticulously describes and refutes the assumptions at the core of the free market orthodoxy that has characterized mainstream economics since the 1970’s.
Madrick calls into question the essential premises Economics 101 students come away with, the ones on which economists at virtually all the most prestigious departments routinely base their writings and teachings. The economy does not tend to self-correct when it goes into recession, prices are not so impervious to manipulation and misinformation as to naturally approaching equilibrium, “free markets” do not exist prior to or independent of government programs, low inflation is not the sole target of Central Bank policy, the federal budget deficit is not scary, markets are not fortified against speculative bubbles by natural efficiency, global economic liberalization is not the only – or even reliably a – path to growth, and economics, for all its data sets and statistical models, is not a science.
By investigating how these myths arose, why they gained traction, how to know they’re wrong, and what damage they’ve done, Madrick demands that we rethink what we imagine we know about economics, and suggests that we can prevent or, failing that, effectively solve the next Great Recession by tossing the old, bad ideas out and adopting an updated understanding of the dynamics involved in a prosperous, equitable, sustainable economy. It may take a lot to get policymakers, media, and the world to question and reject the proclamations of MIT and Harvard economists, but Madrick’s book hopes to contribute to that effort.