Economics profession aloof, irrelevant and impotent – director of new economic think-tank

kristy Beyond GDP

Embargo: 4th February 2011.
Contact: Georgia Lee: 07748565958
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To coincide with the 75th anniversary of the publication of Keynes’s General Theory, a new think-tank is launched today: Policy Research in MacroEconomics (PRIME).
Ann Pettifor, a director and co-founder of PRIME, said:
“Current economic policy is failing society, not just in Cairo and Tunis, but also here in Kingston-upon-Hull and Tucson, Arizona. In all these cities unemployment is at record levels. Worldwide, youth unemployment has reached historically unprecedented heights.
“In the meantime the perpetrators of the financial catastrophe of 2007-09 walk away from the crisis virtually unscathed, their pockets bulging with public funds and taxpayer guarantees.
“Simultaneously society faces the historically unprecedented challenge of mobilising resources with which to tackle climate change.
“Against this backdrop of widespread economic failure, and social and political dislocation, the academic economics profession stands aloof, complacent and impotent.
“That is why a group of economists have combined to advance ideas and promote practical solutions to the severe economic, social and ecological challenges facing the world.”
Victoria Chick, Emeritus Professor of Economics at University College London and a co-founder of PRIME said:
“Conventional or ‘mainstream’ economic theory has proved of almost no relevance to the ongoing and chronic failure of the global economy. That is in part because many economists commit the fatal error of drawing macroeconomic conclusions from microeconomic reasoning – the kind of reasoning that leads politicians to compare an individual’s credit card balance to the government’s budget deficit.
“And ongoing complacency about recovery means that economists, commentators and policymakers are repeatedly embarrassed by economic outcomes – as they were last week with the announcement of a contraction in UK GDP in the final quarter of 2010.”
Michael Burke a co-founder of PRIME said:
“Policymakers have delivered 46 million people into unemployment in the OECD alone. Their abysmal perfomance has been matched by the overwhelming bulk of official or mainstream economics on which they rely.”
These circumstances have prompted the PRIME network of economists to establish a think-tank that will promote:
macroeconomic theories, practical applications and solutions to the severe economic, social and ecological problems of the world;
understanding of the nature of credit and its role in determining macroeconomic outcomes;
policies for a new global financial architecture and national and international monetary systems that are based on international justice, equity and stability;
policies for greater equality, full employment and ecologically sustainable economic activity.
The group hope to restore the use of macroeconomic theory to its proper place, i.e. the analysis of macroeconomic conditions.
Ann Pettifor said:
“Our approach seeks to restore to economics the values and ethics that have fired all the great thinkers, from Aristotle onwards, and all the great economists, from Adam Smith onwards. Equally fundamental to our approach is an implicit and explicit restoration of ethics in relation to money and credit. We hold to the values that underpin all the world’s faiths and philosophies and that have guided economic activity through the ages.”

Note to editors:
Keynes’s General Theory of Employment Interest and Money was published on 4 February 2011, seventy-five years ago (1936).
PRIME’s co-founders are: Victoria Chick, Ann Pettifor, Michael Burke and Jeremy Smith.
Professor Chick and Ann Pettifor have an article on Bloomberg’s site today: “Happy Anniversary, Mr. Keynes” in which they argue that: “ ‘bastard Keynesianism’, as Joan Robinson called it, subverted and continues to block the Keynesian revolution both in vision and in method….Keynes rejected the liberal finance model based on de-regulated international capital flows. Instead he constructed a managed finance model relying on domestic credit and restricted flows of international capital.”
PRIME economists have worked together on an informal and formal basis for a number of years. Most recently, Chick and Pettifor published ‘The Economic Consequences of Mr Osborne’, an empirical analysis showing the relation between public debt and public expenditure is the reverse of that claimed by the advocates of austerity (July 2010).
The analysis was reproduced in a shortened version on the Bloomberg site, and can be found here.
PRIME’s founders have briefed members and groups from the Labour Party, Conservative Party and Green Party, as well as Trade Unions. Michael Burke writes extensively on economic developments and provides advice to organisations, including trades unions in Ireland, with a particular focus on the detrimental impact of present austerity policies on that country.
Since joining the new economics foundation in 2001 Ann Pettifor has become a Fellow, (nef) and has worked closely with both faith and environmental groups. She is co-author of nef’s The Green New Deal (July, 2008) and is an adviser to the climate change project Operation Noah. (
The PRIME network of economists helped author a nef publication: “Where did our money go? Building a banking system fit for purpose.” (October, 2010)
Professor Chick has submitted a paper for a special edition of the Cambridge Journal of Economics on ‘Whiggish History’ dealing with the distortion of Keynes’s monetary theory.
PRIME is incorporated as a private, not-for-profit company and registered in England/Wales.

Juliet Schor
Boston College
Department of Sociology
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