Home > Dead Ideas book > Bookblogging: new name(s), new intro (slightly updated 18/8)

Bookblogging: new name(s), new intro (slightly updated 18/8)

August 16th, 2009

The current working title for the book is Zombie Economics: Six Dead Ideas that Threaten the World Economy (suggestions for a better subtitle are welcome) and that requires a new intro.

Also, I’ve come to the view that “market liberalism”, as opposed to “economic liberalism”, is a better name for the viewpoint, based on the efficient financial markets hypothesis and other ideas criticised here, that has dominated policy thinking in recent decades.

Any thoughts on these points, or the revised intro, would be most welcome.


The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. JM Keynes

Ideas are long-lived. They often outlive their originators, and, even when they have proved themselves wrong and dangerous, they are very hard to kill.

Before the global financial crisis ideas like the Efficient Markets Hypothesis and the Great Moderation were very much alive. Their advocates dominated mainstream economics and their influence, acknowledged or not, guided the thinking of the practical men and women whose decisions created a financial system in which tens of trillions of dollars of interlinked obligations were built on a foundation of speculative, or entirely spurious investments, and a global economy in which both households and nations lived far beyond their means.

Today these ideas appear to be defunct. Commentators who were proclaiming, a year or two ago, that the business cycle had been tamed, and replaced by a Great Moderation in economic activity, have admitted their error or, more commonly, moved on to talk of other things. The claim that financial markets make the best possible use of economic information, and can never be subject to irrational bubbles, is rarely made, and usually hedged with all kinds of qualifications and escape clauses.

But habits of mind and thought are hard to change, especially when there is no ready-made alternative. The ideas that brought the global financial system to the brink of meltdown, and have already caused thousands of firms to fail and cost millions of workers their jobs, still underlie the thinking of those who are trying to respond to the crisis and, to a large extent, of the commentators and analysts who assess those responses. These ideas are neither alive nor dead; rather, they are undead, or zombie ideas. Hence the title of this book.

If we are to understand the financial crisis, and avoid the kinds of responses that set the stage for a new and even bigger crisis in a few years time, we must understand the ideas that got us to this point. This book describes six ideas that have played a role … Some of them, like the Efficient Markets Hypothesis and Micro-based macroeconomics belong to the realm of technical economic theory. Others, such as privatisation and central bank independence are specific policy prescriptions, ultimately derived from these abstract ideas. Still others like the Great Moderation and Trickle-down economics, are catchphrases that incorporate a set of claims about how the economy works, or worked in the thirty years or so before the current crisis.

Together these ideas form a package which has been given various names: : Thatcherism in the United Kingdom, Reaganism in the United State, economic rationalism in Australia, the Washington Consensus in the developing world and “neoliberalism’ in academic discussions. Most of these terms are pejorative, reflecting the fact that it is critics of a dominant theoretical or ideological framework who feel the need to define it and analyse it. Politically dominant elites don’t see themselves as acting ideologically and react with hostility when ideological labels are pinned on them. From the inside, ideology usually looks like common sense.

The most neutral term I can find for the set of ideas described by these pejoratives is ‘market liberalism’, and this is the term that will be used in this book.

The book is organised in a way that I hope will help readers to understand how market liberalism depends on ideas that have failed the test of the global financial crisis, and which, if they continue to influence policy, will ensure a repetition of the crisis. Each chapter starts with a section describing the beginnings of the idea, followed by a section on its theoretical and policy implications. The next section describes the failure of the idea. In most cases, problems were evident well before the current crisis, but those who pointed them out were dismissed or ignored. The final section, entitled “What next”, looks at alternative ideas that may point to an alternative to market liberalism. The final chapter, “Economics for the 21st Century” looks more generally at the kind of policy ideas that will be needed in the light of the failure of market liberalism. A simple return to traditional Keynesian economics and the politics of the welfare state will not be sufficient. It is necessary to develop both economic theories and policy programs that respond to the realities of the 21st century economy.

1. There’s a similar problem of terminology on the other side of the debate. The success of market liberalism was the result of a reaction against a set of ideas and policies commonly referred to as “social liberalism” or “social democracy” in Europe and simply as “liberalism” in the United States. The distinctions between the positions implied by these different labels will not matter for the purposes of this book. What matters is that all of them included a commitment to full employment, based largely on Keynesian economic management, and a major role for the state in the provision of income security and services such as health and education.

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  1. Alice
    August 16th, 2009 at 19:05 | #1

    I really like (love) the working title. Its very funny. There is a few zombies in here Prof. They keep walking into walls and bumping their heads and you cant even knock em out with the facts. Id better not say too much or the forces of darkness will get me..

  2. Kevin Cox
    August 16th, 2009 at 20:31 | #2

    JQ markets are efficient if they are given the chance so yes the efficient market hypothesis is alive and well if we allow the markets to operate they way they are meant to.

    If you have a group of buyers and sellers and if they all produce and buy similar or equivalent goods and if buyers and sellers are free to come and go and if supply can change to meet demand and when it doesn’t then you let price be the controller then markets work very well.

    If however, you do things like try to control demand with price (like the reserve bank trying to control the money supply) then the “algorithm” just does not work.

    If you have a market where an increase in demand causes supply to drop and does not let supply increase to meet demand then the market fails.

    There are many ways markets can fail but the chief one is when they are used for inappropriate things.

    The problem is not with the efficient market hypothesis it is with the way we implement and use markets.

    In those cases where we have what we think is a market and it does not operate efficiently – and that is pretty easy to tell – then the problem is not with the efficient market hypothesis but with the implementation or the application to which we are applying it.

    Making a market that tries to buys and sells the permission to pollute is a classic case. Morally it is repugnant. It clearly is an inappropriate thing to buy and sell in the same way that “love” or “empathy” or “trust” are not appropriate commodities.

    A big problem with economics is that some people think that we can put a price on most things and that value is the all important variable to optimise. That of course is not a good idea. Just in case you have not heard them the recent ABC Big Ideas where Peter Sanders looks at morality and markets makes the point very well.

    Markets are great when they are used properly and appropriately but markets are inefficient and inappropriate when they are not allowed to operate the way they were meant to and when they are applied to things for which money spent is not the appropriate variable to optimise.

    However, the market algorithm can be used in cases where money is not the measure used for optimisation. The Market Algorithm could probably be applied to elections where votes is the currency and is used to optimise decisions.

  3. August 16th, 2009 at 20:53 | #3

    John, great to follow this work as it unfolds! The Zombie motif in the title is certainly a whimsical grasp of the zeitgeist; why hold back on the subtitle—is “Dead Ideas Consuming the World Economy” not sombre enough?

  4. Steven Hamilton
    August 16th, 2009 at 22:01 | #4

    I think Zombienomics sounds snappier than Zombie Economics. I think it will sell more books. And I much prefer the old subtitle along the lines of “The economic ideas that should be dead but aren’t” – this new one sounds as though it should apply to a textbook or something. If your desire is to sell books, then look at the way the successful pop-economics books have been spun.

  5. ennui
    August 16th, 2009 at 23:24 | #5

    Sorry John. Your proposed (main) title has an almost Dan Brown ring about it. Lightweight, populist is my instant reaction. Serious books require serious titles! If I was simply a bookshop browser I would think – unless I actually perused the book – that it belonged in the fictional novel section.

    I like the subtitle, but might I suggest some main titles eg
    Economic Relics
    Fossilised Economics
    Defunct Economics

    I think those suggested titles provide a much greater level of “gravitas” than Zombie Economics.

  6. Martin
    August 17th, 2009 at 00:47 | #6

    I’m reading Reinert’s How rich countries got rich; basically a defence of protection for infant industries. You might want at least to consider its ideas (if you haven’t already).

  7. August 17th, 2009 at 02:23 | #7

    Zombienomics sounds (IMHO) a bit too Steven Levitt.While I disagree with much of what has already been written, perhaps a different title, while still maintaining some gravitas and keeping the same meaning would be “Living Dead Economics” Subtitled “Some Economic Theories that are Alive, but should be Dead”. Amazon has nothing like that at the moment.

  8. August 17th, 2009 at 04:47 | #8

    You seem to be connecting many ideas that bear little connection to each other, and ascribing a very strong causal role from ideas -> policy. Deregulation and lower taxes under Regan (whatever their faults) had more to do with domestic politics than Efficient Markets. Europe is also suffering the consequences of the financial meltdown–did they also do so because they believed the EMH? Or did bankers just buy politicians off? Maybe you don’t think much of the distinction; but it’s important. If we did financial deregulation because of some bad ideas, we can change those. But if it happened because bankers rigged the system (Simon Johnson’s story)–then probably we’re going to see that continue for some time, no matter what people think.

    Also, if we’re going to throw away the “price is right” interpretation of the EMH, I’d like to see commentators stop using low treasury rates as a sure sign that deficits aren’t a problem.

    Is the Great Moderation so crazy? Things are bad on an absolute level, but they are much better relative to the magnitude of shocks suffered–a financial shock on the order of the Great Depression, simultaneously an oil shock on the order of 1973, and now ultimately unemployment may or may not rise as much as it did in 1981. Of course, policymakers did credit themselves with the Great Moderation, on no good evidence (the evidence does suggest that improved logistics and supply management was largely responsible for lower volatility). But this crisis actually bolsters the view that good policy can mitigate negative macroeconomic shocks–from the Fed, stimulus, etc.

    You may also want to consider Rogernomics in New Zealand, which went much further than any other country. I look forward to reading the book.

  9. Matthew Kuzma
    August 17th, 2009 at 05:12 | #9

    I’m commenting here because comments at CT seem to be broken.

    I like the new subtitle much more.

    I should probably point out that, from a pop-culture standpoint, zombies are trending down. I think the analogy is solid, and timeless, but you’re more likely to be hurt than helped by the current pop culture attitudes about zombies. They’re somewhat passé these days. Penguins are the new zombies. Of course, Penguin Economics doesn’t really lend itself to any useful analogies. Six Ideas That Are in Some Way Like Seals, Hunting from Under the Ice?

    In a more focused bit of criticism, this sentence was a wall for me: “The success of market liberalism was the result of a reaction against a set of ideas and policies commonly referred to as “social liberalism” or “social democracy” in Europe and simply as “liberalism” in the United States.”

    So, there were policies, and those policies had a bunch of names. Then there was some unnamed reaction to those policies, and the result of that reaction was that market liberalism succeeded? But the unnamed reaction was not market liberalism, just the thing that made it succeed despite itself? What’s going on here? At best this sentence tells me that there’s a lot of information you’re assuming I know that I don’t.

  10. Bob B
    August 17th, 2009 at 05:28 | #10

    Well done, John, and timely. But I don’t think the issues in current debate just boil down to whether the Efficent Market Hypothesis holds or whether contra-cyclical activist fiscal and monetary policies are appropriate to avert potential deflation and a looming global recession or the systemic instability of the financial system.

    There are several other concurrent issues:

    – A question the Queen put during a recent visit to the LSE: Why did no one see this coming?

    They did. It’s just that were ignored. Try this from Warren Buffett in 2003:

    “The rapidly growing trade in derivatives poses a ‘mega-catastrophic risk’ for the economy and most shares are still ‘too expensive’, legendary investor Warren Buffett has warned.”

    In Britain, this from 2002 about the house-price bubble:

    “CHARLES GOODHART, a former member of the Bank of England’s monetary policy committee [and economics prof at the LSE], warned yesterday that the Bank is failing to take sufficient account of the house price boom in setting interest rates.

    “His warning comes amid growing fears among economists that house prices, fuelled by the lowest interest rates for 38 years, are getting out of control. Yesterday, new figures showed that homeowners are borrowing record amounts against the rising value of their homes. . . ”

    And this news report from March 2003 on: “House-price ‘bubble’ [in Britain] may devastate economy – IMF”

    Try also Donald Campbell: Incentives (CUP 1995, rev. 2006) on the earlier Savings and Loan Association debacle in the US, a precursor if ever there was:

    “The US Savings and Loan crisis of the 1980s and 1990s was the failure of several savings and loan associations in the United States. More than 1,000 savings and loan institutions (S&Ls) failed in ‘the largest and costliest venture in public misfeasance, malfeasance and larceny of all time.’ The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government, which contributed to the large budget deficits of the early 1990s.”

    – There is also the issue of whether bridging gaps in markets between social and private can be left to private bargaining as Coase proposed in this famous paper: The Problem of Social Cost (1960):

  11. John Mashey
    August 17th, 2009 at 06:47 | #11

    A few metacomments follow. I’ve been too busy to study the past posts in detail, so ignore any that are redundant or just point me at past posts.


    a) Who is this book intended for?
    b) What level(s) of knowledge/expertise do you assume?
    c) Is there one particular level, or do you expect to structure the book that someone at one level can read along, and be warned that you’re about to go into a more detailed level that be a bit heavier? I’ve read books where I’m going along comfortably, and suddenly, it’s as though Sanskrit has been substituted for English. Worse, although the following section may come back up for air, it may refer back to the Sanskrit. An example of doing a better job is the most famous textbook in computer architecture (Hennessy & Patterson), of which one can tell people: read each chapter until it gets too hard,then skip to the last section of the chapter for the summary. This actually works for graduate EECS students, working professionals … and even financial analysts to whom I’ve recommended the book, much to their astonishment.
    d) Do you have a regular framework for modeling the above? I’ve lately been using a tentative Scale K for natural science / climate discussions, but not specific to them. I’m modeling potential writings in terms of “This is for someone whose knowledge is at level Kn, to help them get to K(n+1)”.

    2) Explanation modality: a few graphics?

    For many people, graphical representations are really helpful, even if they are just crude sketches that offer:

    a)Timelines, from left to right, with categories along the left, and maybe arrows showing influences or relationships, in “landscape” charts.

    b) Venn diagrams

    c) Graphical categories, subcategories

    Eloquent words are good and useful, but sometimes simple illustrations help people grasp a good overview of relationships in ways that are much more difficult to do with words alone.

  12. Alice
    August 17th, 2009 at 08:15 | #12

    @Steven Hamilton
    The only prob I have with zombienomics is – its too close to freakonomics. I prefer Zombie Economics.

  13. Alice
    August 17th, 2009 at 08:17 | #13

    Or walking dead economics? Peronally I still like the zombie thing..

  14. Alice
    August 17th, 2009 at 08:21 | #14

    No – Ive canvassed some ideas here…the younger gen arent over zombies. They loved Shaun of the Dead and they only just released twenty eight days later last year or so. All my sons friends watched it. Zombies are alive and well (unfortunately)…

  15. Ernestine Gross
    August 17th, 2009 at 08:38 | #15


    I like your discussion of the difficulties in choosing an appropriate label for the economic doctrine that is the subject of the book and your choice of a label.

    There is one further aspect about the era in question, which I have registered in my mind as the ‘great lie’, namely the confusion of economic liberalism for individuals (not a bad idea in my mind) with economic liberalism for corporations (a contradiction of mainstream ‘market economics’). If this confusion is not strategic then, I suggest, it is Zombie Capitalism.

    Missed your regular posts!

  16. Alice
    August 17th, 2009 at 08:57 | #16

    @Ernestine Gross
    Thats a very good point Ernestine on the “confusion”. Im not against economic liberalism for individuals either…and in fact there hasnt been much of that. Labour still isnt free to go where it chooses and has been even more subjugated in the name of “liberalist felixible labour markets” whilst executives have accorded themselves enormous liberalisms to pay themselves excessive remunerations in inside closed shop style deals. It has been a case of liberalism for the management of large organisations, not liberalism for individuals and not even sufficient liberalism for small businesses. True liberalism for small businesses these days would actually involve protection from the unfair practices carried out by large businesses. I have been horrified over the years by the retailers that turn over in my local shopping mall. It should be called the “mall of lost dreams.” Who makes planning laws that insist no small strip shopping exists in suburbs and funnels shoppers miles away, to large malls where Mr Lowy has a private helipad on the roof and insists on outrageous rents and refurbishments done by his refurbishers every four or five years at what seem outlandish costs. Liberalism for some, nicely assisted by governments. A nightmare for small business.

  17. Steven Hamilton
    August 17th, 2009 at 10:31 | #17


    Josh Gans has Parentonomics, Andrew Charlton had Ozonomics, Steve Levitt et al have Freakonomics. I think there’s a reason all of these authors chose this style of title – it’s easy to remember and catchy. I reiterate my previous point – if your desire is to sell books (!), then you need a snappier title. And I’m a 23 year old economics student with a marketing degree; my concern is your ability to sell books. If this isn’t your goal, and you’d rather let your own preferences (rather than those of your readership) drive your decision making, then so be it. But if your goal is to sell books, then I think you need a snappy, catchy, sexy title that will get your book out there. Following the successful pop-economics-book template, I think, will help your cause greatly.

  18. Matthew Kuzma
    August 17th, 2009 at 10:56 | #18

    Alice, I’m assuming your contention about the younger generation and zombies to be in response to my comment about zombies waning in pop culture. I didn’t mean to imply that zombies are vanishing from the public consciousness or even that they will never again be “in”, just that at this very moment they are going out of style. There is an arc to their recent popularity and that arc is now on the declining slope. And like all trends, there is of course the caveat that some people will be into a thing regardless of the zeitgeist. Some people will always like zombies just as some guys will always wear mullets.

  19. John Hardy
    August 17th, 2009 at 11:14 | #19

    Small point: Reaganism is usually better known as Reaganomics (Google results 132,000 vs 311,000. Bonus points: a Wikipedia entry http://en.wikipedia.org/wiki/Reaganomics)

  20. Alice
    August 17th, 2009 at 11:15 | #20

    What I find so odd is that the very words “liberalism” or “market liberalism” have in reality resulted in less liberalism for many and more liberalism for a few (the wealthiest). Its not really liberalism at all, I would suggest. Its almost as if while the peace love younger generation of the sixties and seventies were celebrating all sorts of new freedoms and breaking down barriers etc the OWMs in economics departments ushered in a whole new era of straighjacket economics (there is a potential title), talking the talk of liberalism but walking the walk of conservatism that promised uTopia – if everyone else would just “wait and see”…). and likely hoping for a promotion to a bank or Treasury somewhere equipped with their perfect mathematical models where most people in the economy were just delegated the status of a labour factor of production, where markets didnt “fail” …they “churned” apparently for excessively long time periods..but still we had to wait….then it blew up.

    I think we have waited long enough… could they please go back to looking at unemployment and underemployment before it gets any uglier?

    That doesnt mean letting people like Abbott tell unemployed people how 1) motivationless 2) lazy 3) lacking self reliance 4) made bad choices to have children 5) made a bad choice about a husband 6) unemployed – what unemployed? They are training (or else)

    the unemployed are.

  21. John Hardy
    August 17th, 2009 at 11:22 | #21

    I like the title, its will resonate with the economics of pop economics books which I presume is the target market. A book can still be “serious” even if it sells into the popular market, a good catchy name is critical.

  22. Trent
    August 17th, 2009 at 11:30 | #22

    @Steven Hamilton

    I have to disagree Steve. The whole idea of putting ‘onomics’ on the end of random words has been done to death. Also, I think it works best when the first word has only one syllable. For example, Ozonomics and Freakonomics are quite catchy, whilst Parentonomics… not so much. With that said, I like the title as is, and the intro sounds great.

  23. Trent
    August 17th, 2009 at 12:11 | #23

    As said, I like the title as is, but thought I may add suggestions for alternative subtitles simply for the fun of it. So here goes…

    Zombie Economics: Six Economic Ideas that Refuse to Die

    Zombie Economics: Six Dead Ideas Consuming the World Economy (suggested previously by Berian James)

    Zombie Economics: Six Dead Ideas that have Consumed our Brains (that subtitle may be a tad too confronting, but I couldn’t resist a more direct play on the Zombie theme)

  24. philip travers
    August 17th, 2009 at 12:22 | #24

    Public Librarys can cater to economic morons like myself.If Zombie economics was used as it should be used, as I see it , the late night walkers who have been watching the financial goings on in other time zones…. the meaning would be ideal.As I saw a video on how the U.S.A. Banking interests may have been using high frequency electronic processes in their preferred methods of adding value,economics seems totally dependent on matters technology and wether law has captured all the possible plays in legislation and legislation enforcement.If the legislators and enforcers are being beaten by their relationship with who they regulate and the functional matter of rapid buys and sells, etc. before other players,which may effect Government itself by revenue disappearance and inflation settings etc.Then late night walkers with fixed eyes from computer staring at matters incomprehendible and not first hand as figures rushing past….must make zombie economics a real choice of engaged headless intent.Avoid the glare..where ever possible!Eat Frankenstein Foods!

  25. Derek
    August 17th, 2009 at 13:32 | #25

    I much prefer ‘market liberalism’ to ‘economic liberalism’, as the former has the constant reminder that it is ot just (US-usage) ‘liberalism’ and the direction of the difference.

    I think the new title is good – striking a good balance, not too silly, not too serious.

    I’m probably in your core market for the book – non-academic, non-economist, but interested enough to buy a readable book on the issues.

    [Attempted to post this at Crooked Timber, but ther website has problems.]

  26. Alice
    August 17th, 2009 at 13:52 | #26

    Zombie Economics – Six Dead Ideas that Should Have Been Killed?

  27. Alice
    August 17th, 2009 at 13:53 | #27

    Nah – that doesnt work

  28. jquiggin
    August 17th, 2009 at 14:57 | #28

    I discussed Zombienomics with my publisher and we agreed that -nomics has been done to death.

    @Matthew Kuzma: Zombies are still on the up in my target demographic. Look at the runaway success of Pride and Prejudice and Zombies

  29. gerard
    August 17th, 2009 at 16:29 | #29

    Fine working title except for one thing. “Six Dead Ideas that Threaten the World Economy” is a contradiction: if they were actually dead than they couldn’t threaten anything. the reason Zombies are threatening is that they’re not actually dead, they’re “living-dead”.

    Maybe a better subtitle would be “Six Ideological Ghouls That Threaten the World Economy”

    Personally I think “Vampire Economics” is a better description of the prevailing Corpo-Right orthodoxy: “zombie” implies that they’re too stupid to know what they’re doing, when in fact they’re working to a very deliberate class-warfare playbook, sucking all that they can out of the poor and out of the environment.

  30. Alice
    August 17th, 2009 at 18:25 | #30

    I agree – everyone still loves to hate zombies.

    JQ – I think you need to perhaps make some comments on the teaching of economics. How did it get so mechanical? Has the advent of the computer age had something to do with it? Once technological models are purchased in Treasuries eg is there an incentive for people to continue with the same assumptions and the same non working models? Are students taught the same mathgrinds models and the same mechanical approach so that they fit in? Are they taught to question sufficiently? Are they trained to go back and analyse results in the real world for signs of failure? Or is it just next? Can you run this model? Good we will hire you.

    Poor Andy over at Ozrisk is now trying to sell me the idea that the GFC was the fault of declining labour productivity in the construction sector in the US, because two OECD economists have pulled out the multi factor productivity model and found labour productivity in construction declined a few years before the GFC (whilst house prices in the US were still rising and new housing starts were still rising and ne mortgages were gpoing through the roof).

    Of course it would have been declining – the mad building boom in the US – the builders would have had to pay more for construction workers.That doesnt escape the fact that something was driving the race to the bottom to issue loans to people who couldnt afford to pay.

    CDOs. Im just so dubious when some economists now want to suggest it wasnt a financial sector crisis but a labour productivity crisis because they ran some cute computer multifactor productivity model and work for the OECD.

    Zombies, JQ, zombies…

    Someone has to take the auto pilot models away from them..

  31. smiths
    August 17th, 2009 at 18:28 | #31

    zombies are mindless

    these ideas of which you speak have much more in common with vampires,

    vampires are semi-dead an feed on the life force of their victims, they are coherent, methodical and fight harder for their own survival,

    these economic ideas were knowingly malicious and designed to suck the wealth from the poor an middle classes to the vampires at the top, and they are not dead by any stretch of the imagination,

    goldman is doing it everyday and obama is going to make sure goldman keeps doing it,

    i noticed guy debelle explaining how reviews of the system were in progress at high level meetings in the talk he did with you and steve keen

    bulls*it i say

    Vampiros Economicos – An ode to parasitic, funereal excess

  32. Katherine
    August 17th, 2009 at 19:10 | #32

    Good introduction. Nicely explains the undead imagery – ie ideas have been shown to be wrong, but have embedded themselves into brains so much that they haven’t been killed.

  33. Lord Sir Alexander “Dolly” Downer
    August 17th, 2009 at 19:34 | #33

    I like it!

  34. August 17th, 2009 at 20:17 | #34

    You’re getting to market late. Loads of people are declaring that the GFC is over. Few ordinary people have suffered. It will all be forgotted pretty quickly.

    I think your book should be called “Sophisticated New Justifications For Good Old Fashion Socialism” because that’s ultimately where it is headed and that’s what the target audience wants you to say anyway.

  35. Alice
    August 17th, 2009 at 20:33 | #35

    @TerjeP (say tay-a)
    Sophisticated new justifications for socialism not needed here. Sophisticated apologies for liberalist market theories is whats needed.
    Like – “we stuffed up badly” and “sorry – the models werent that great” would be a good start.
    Then forget the ideologies (like socialism, market liberalism, old tired allegiances etc) and START AGAIN and have a bloody good look with open minds. Too much to ask?

  36. Alice
    August 17th, 2009 at 20:35 | #36

    Phillip T just goes right over my head…

  37. gerard
    August 17th, 2009 at 20:55 | #37

    great minds think alike smiths, although my comment remains hidden due to my constantly being put in moderation for whatever reason.

  38. gerard
    August 17th, 2009 at 20:56 | #38

    oh there it is

  39. gerard
    August 17th, 2009 at 21:02 | #39

    oh no, still in moderation. hmmm, I guess it must be the word “s u c king”! well, I meant it in Marx’s capitalism-as-a-vampire analogy type of way, not in an “adult situation” type of way, although I doubt the filter can differentiate.

  40. smiths
    August 17th, 2009 at 21:03 | #40

    sportsmans bet that you are dead wrong about that terje,

    i like the way you hedge as well, almost as though you are making a comment but its actually someone else’s,
    i suppose that sort of covers you if the market is down 50% in a months time and companies are going bust left, right and centre,

    but i have a good memory for these statements and i am going to hold you to that hedged weak backhanded comment,

    just for the record, i am with ken henry who just said on tele that a second wave ‘might’ be coming,
    he hedged a bit as well but that is understandable,

    i think this was an illusory rally made up of central bank funny money being shovelled at light speed by computers in and out of markets making it look something worthwhile was happening,
    but rreality is on its way down the dark alley to mug all you suckers who really believe,
    and i think the real downturn is only just beginning

    and i expect to be pilloried mercilessly if i am wrong

  41. Alice
    August 17th, 2009 at 21:07 | #41

    Im in agreement with you Smiths – hedging is pretty popular right now..

  42. Freelander
    August 17th, 2009 at 21:23 | #42

    Maybe you could mention Richard Dawkin’s idea of memes (from The Selfish Gene). You could discuss how ideas are transmitted and become part of the everyday linguistic fabric. As Keynes notes, practical men, without knowledge of their sources can just absorb them and become slaves to (often bastardised versions of)them. Ordinary language becomes changed and moulded by these ideas and it can become difficult to express alternatives. As you note they become ‘common sense’. An example is the way that Freudian ideas worked their way into language and the way in which people who had never read any Freud would talk of people having ‘complexes’ or ‘being anal retentive’ and so on. With dangerous ideas or dead ones, a positive effort is probably required to eradicate them.

  43. August 17th, 2009 at 23:02 | #43

    Pr Q says:

    The current working title for the book is Zombie Economics: Six Dead Ideas that Threaten the World Economy (suggestions for a better subtitle are welcome)

    Flight of the Living Dead Ideas.

  44. August 17th, 2009 at 23:06 | #44

    correction, that should read:

    Return of the Living Dead Ideas

  45. August 17th, 2009 at 23:10 | #45

    Alternative Title:

    The spell of financial voodoo

  46. August 17th, 2009 at 23:35 | #46

    Pr Q says:

    I’ve come to the view that “market liberalism”, as opposed to “economic liberalism”, is a better name for the viewpoint, based on the efficient financial markets hypothesis and other ideas criticised here, that has dominated policy thinking in recent decades.

    Surely “financial liberalism” is closer to your sought meaning?

    Market liberalism is part of the millennial the evolution of modernist liberalism.
    Financial liberalism is a mutation into post-modernist liberalism.

    “Financial liberalisation” squares with much-vaunted “financial liberalisation” so relentlessly urged on us these past few decades. The de-regulation of financial “goods” is simply a high-falutin’ term for a licence to embezzle, swindle and insider trade. Living in NYC during the early nineties and later sharing digs with an (honest) trader during the early noughties disabused me of any illusions on this matter.

    Economic liberalism, in the sense of free trade in real goods (land, labour and industrial), has not been discredited by the GFC. It is the surest route from poverty to prosperity for the large mass of people.

    Ask the Indians. The OECD reports:

    Over the past two decades, India has moved away from its former dirigiste model and become a market-based economy. This process started in the mid-1980s and gathered substantial momentum at the beginning of the 1990s…

    To varying degrees, liberalisation has touched on most aspects of economic policy including industrial policy, fiscal policy, financial market regulation, and trade and foreign investment…

    These reforms have had a major beneficial impact on the economy…

    There has been a massive increase in output, with the potential growth rate of the economy estimated to be around 8½ per cent per year in 2006. GDP per capita is now rising by 7½ per cent annually, a rate that leads to its doubling in a decade. This contrasts to annual growth of GDP per capita of just 1¼ per cent in the three decades from 1950 to 1980.

  47. August 17th, 2009 at 23:55 | #47

    Also, when will Americans cease the idiocy of calling their socialists “liberals”?
    Socialism has its merits in certain circumstances. But “liberal” is not one of them.

    Liberalism is the philosophy of individual autonomy.

    But there is not generally accepted term for the philosophy of institutional authority.

    Social-democracy is not much use since it explicitly requires a democratic polity. But pretty clearly there have been plenty of dictatorial polities that have successfully implemented progressive economic policies with spectacular success. eg Bismarkian Germany, KMT Taiwan, MITI Japan,

    Interestingly none of these policy regimes are orthodox socialism, in the Soviet sense. Instead they rely on co-option of the private sector to public objectives.

    “Illiberal”, “non-liberal” or “authoritarian” are obviously derisive or tendentious. “Fascism” is just a swear word now, with almost zero cognitive value.

    I suggest that economic “corporalism” is a more neutral term, which covers the authoritative allocation of values by more or less centralised agencies. Including, but not limited to, the state.

  48. August 18th, 2009 at 01:49 | #48

    Like – “we stuffed up badly” and “sorry – the models werent that great” would be a good start.

    It would be, if only you could bring yourself to say it.

  49. stuart
    August 18th, 2009 at 08:51 | #49

    Terje, the fact that the recession looks to have been mitigated (by good old fashioned Keynesianism!!) doesnt mean that the economic falsehoods that led to it dont need criticism. As I see it, thats the whole point of this book. Its to collate all the evidence that all these widely held views are rubbish, and hopefully to stop the economics profession from continuing to teach them.

  50. Alice
    August 18th, 2009 at 09:18 | #50

    @Jack Strocchi
    Jack – some good suggestions there…(didnt know you were so creative….!)
    The Living Dead Ideas that Threaten the World Economy.

    (or world economies?)

  51. Ernestine Gross
    August 18th, 2009 at 10:08 | #51

    Suggested title: Threat to the World’s Economies: Faith in six zombie ideas

  52. Chris Warren
    August 18th, 2009 at 10:15 | #52


    If the subtitle Links in with the main title: Zombie and Living dead – then it seems to work.

    But just “zombie” seems to indicate either a patronising or a populist approach.

    To actually win the debate – we need serious, profound, refutations, or at least this is what reviewers will be looking for.

    Zombie economics by itself on bookshelves could just be yet another winge about economics, that would not tempt me to buy or review given other options.

  53. smiths
    August 18th, 2009 at 11:04 | #53

    there are times when your blog readers are helpful to you john,

    i’d venture this is not one of them

  54. Alice
    August 18th, 2009 at 11:29 | #54

    Arrghhh – those 6 living dead ideas – they are Zombiecons!

  55. Alice
    August 18th, 2009 at 11:30 | #55

    I quite agree Smiths LOL

  56. charles
    August 18th, 2009 at 15:15 | #56

    The titles good, the real problem is what is the right price for an assets. Clearly it isn’t the last share market transaction price by the number of shares held on the 30th of June. As I have complained before the share market price is set by traders trading a small percentage of the stock.

    If your seriously buying assets and not placing bets on there price movement then really your trying to guess their future earning potential, and that depends on many things. For instance carbon polluters may have to start paying for the damage they do.

    Willing to make a bet on the outcome of the CPRS? Well there are lot companies that will be effected, there are lots of ways to place your bet.

    The stock market is a place to place your bets, is the stock market a casino or a place to value assets? In my view it’s a casino, the problem is economists and accountants tried to pretend it isn’t.

    When it comes to finding a better option you run into the question, how do you predict the future. Answer that and you have a solution.

  57. smiths
    August 18th, 2009 at 16:12 | #57

    terje, i have just finished my mornings readings of the financials and am stunned by how bleak they look,
    what i wondered is, what are you reading to form the viewpoint you seem to have that the GFC was a hiccup and all is positive?

    if by some chance i have misunderstood your views, could you state them clearly so as to relieve me of my false apprehensions,

    and to stay on topic, i have considered it further and i think that zombie links of any kind are flogging a dead horse,
    i think you should try to find something that is at the front of ideas about all this rather than safely in the pack,

    Six decrees of speculation: An obituary

  58. smiths
    August 18th, 2009 at 16:21 | #58

    how about

    Six imaginary habits of highly effective markets

  59. smiths
    August 18th, 2009 at 16:28 | #59

    how about

    Six imaginary habits of highly effective markets

    or making it five ideas

    The Famous Five: Five go to market

  60. Alice
    August 18th, 2009 at 18:23 | #60

    Zombie economics

    The Six dead ideas that put the financial markets six feet under

  61. Alice
    August 18th, 2009 at 18:53 | #61

    But wait it gets much worse

    The six dead ideas that put the financial markets six feet under and fired a six shooter at the worlds economy

    (Time to go).

  62. philip travers
    August 18th, 2009 at 19:03 | #62

    For Alice who has a perceptual motor problem that involves me being not in a dead reckoning eyeball to eyeball level of understandings try… Joe Saluzzi of Themis Trading ,Google that,and have a look at the videos..I think, the Prof here covered it.

  63. kiwilander
    August 18th, 2009 at 20:42 | #63

    JQ, perhaps you should review the following paper from the University of Ottawa maths department for inspiration: “MATHEMATICAL MODELLING OF AN OUTBREAK OF ZOMBIE INFECTION”

    Available at:


  64. Alice
    August 18th, 2009 at 21:42 | #64

    Just had it clarified JQ – hubby thought your title is great and said “why would anyone change it? You couldnt do better than that.”

  65. Alice
    August 18th, 2009 at 21:47 | #65

    For that model of a zombie attack – what was the conclusion? – hit hard and hit often to eradicate early!!! (doh). I am beginning to think some models are smarter than people.

  66. Donald Oats
    August 18th, 2009 at 22:17 | #66

    At the point of the DOW peak CNBC was going on about a 10 month inventory of housing in the USA, and were commenting on how more than this would be over-supply of the housing market. Perhaps the building slowed because supply was finally outstripping demand, rathern than anything to do with government, as some like to argue.

    JQ: The book title is memorable and specific enough to prompt people to leaf through it at the bookshop, I would think.

  67. ennui
    August 18th, 2009 at 22:33 | #67

    JQ The suggested title is very Dan Brown(ish) – find something more worthy! You will end up with a market of two – Alice to fawn over it and Terja to burn it. Not a particularly discerning (efficient) market in either case!!
    Perhaps of more ‘feedback’ value is the lack of political sophistication shown eg by reference to “Reaganism”. One can accept you are an economist not a political scientist – but that is no excuse for sloppiness. The term ‘Reaganism’ has always encompassed foreign policy and social policiy in addition to economic policy. “Reaganomics” would be far more appropriate in this context, not to mention correct!! Interesingly the term ‘Thatcherism’ has generally been confined to economic policy within a small goverment framework. Perhaps this is pedantic but we all tend to make broader judgments based on perceived peripheral errors!

  68. stockingrate
    August 18th, 2009 at 23:08 | #68

    1.Perhaps a bit anglo?:
    – “Thatcherism in the United Kingdom, Reaganism in the United State, economic rationalism in Australia, the Washington Consensus in the developing world and “neoliberalism’ in academic discussions.”
    – “a global economy in which both households and nations lived far beyond their means.”-not in Singapore or France or China or Chile or Norway

    2″Commentators who were proclaiming, a year or two ago, that the business cycle had been tamed, and replaced by a Great Moderation in economic activity, have admitted their error”- I can’t help seeing a parallel between the Maestro Greenspan and the recent Rudd smugness over GDP in Australia to date.

  69. Ubiquity
    August 18th, 2009 at 23:09 | #69

    The EMH, IMHO, is flawed as a economic model that explains the actions of global markets. Such a model may be more relevant within the context of a family unit or the life of an individual were the decision maker is a single person or entity. Of course it may be the case that this individual entity is irrational in the global context but the decision of this entity clearly reflect the best decision for that entity at that point of time.

    So, when your into developing a one world global economic theory for everything I think a leaning to a mixed economy (with all sorts of hedging) is probably the best bet. One world economic management policies, in our largely irrational world is a tough call and one personally I think is unachievable without allowing the significant expression of indviduals choices.

    I personally don’t support one world economic management. It is destined to fail on the basis that our democratic bureaucracys lack sufficient mechanisms to express our indvidual choices in the most efficient way. I also oppose reduced freedoms in exchange for more autonomy and control under the banner of saving ourselves from ourselves.

    I think your choice of title is relevant. Our eonomic managers of the past behaved like zombies (dangerous, brainless twits in government/bureaucratic corporations), and that includes there economic ideas. But make sure your cure, the the social democratic model doesn’t end up a zombie as well, stifled by bureaucracy. It needs to be a fluid model capable of changing, this is difficult without the social/economic expression of individual choices. My views are clearly, largely libeterian and sometimes I come to the same conclusions as the social democrats do but for different reasons.

    I have noticed frequently on this blog heavy citicism (by some self proclaimed Social Democrat bloggers),of politicians and there politics. So i pose the question why support more of the same. Surely less government, wisely implemented limited governement role must be a better choice. More of the same just creates a bigger mess. Just reflect on your life experiences and you will notice the more you indulge anything, the more complicated and risky its consequences become.

    The proposed book title, from this capitalists point of view will work well. I assume your target audience is as many people as you can persuade to buy your book from all walks of life, you maximise your returns and in return inpart economic wisdom on the masses.I am looking forward to it. I’m sure I will cringe on some issues and agree on others, nevertheless its message is important for it critiques six economic ideas, that desperately need to be re-assessed hopefully by a wider and eventually more informed audience.

  70. Michael of Summer Hill
    August 19th, 2009 at 06:51 | #70

    John, think around the ‘butterfly effect’. I believe you know what I mean.

  71. Alice
    August 19th, 2009 at 09:33 | #71

    “””Alice to fawn over it and Terja to burn it. Not a particularly discerning (efficient) market in either case!!”””

    Speak for yourself Ennui…!!

  72. Alice
    August 19th, 2009 at 18:03 | #72

    Frankly – if JQ wants to sell books it shouldnt be too “academic” = ie it needs to appeal to people who are at the airport on their way to holidays, who dont want to buy a Patricia Cornwallor whatever is the latest fiction bestseller – who are a notch above that, interested in markets and educating themselves, but are not academic economists….

    It needs to appeal to a broader marketn ie its economics but needs to be able to communicate to a wider readership. JQs title and headings ARE JUST FINE for that.

    Id buy the book at the airport just as I usually buy books just like this at the airport. I want some depth bit not some prescriptive fiction. Nothing better for the sun lounge in Hawaii or anywhere else…a bit of stimulation in readable terms.

    A book for the chattering classes eh Terje?

    I reckon despite what Ennui says, I am right…!

  73. James Farrell
    August 20th, 2009 at 09:17 | #73

    The subtitle elucidates the title perfectly. It can’t be improved on much, but using the word economics/economy twice is a bit inelegant. What about ‘Six Dead Ideas on the Rampage’.

    Having said this, I’m inclined to agree with Chris Warren. The whole title comes across as a bit tribal and dismissive — guaranteed to appeal to people of anti-market prejudice, but likely to deter readers of a laisser-faire bent who would otherwise give you a fair hearing. To give a reverse example: I might have learnt something from reading Coleman and Hagger’s ‘Exasperating Calculators’ book, but I was turned off by the subtitle — I felt as though I was being called names even before I’d opened the book. A more conciliatory title just might increase the average intelligence of the readership, if not the size.

  74. August 23rd, 2009 at 10:19 | #74

    In this blog, I forget my usual habit and I post things here!

  75. August 25th, 2009 at 18:07 | #75

    Your effort does help me a lot, thank you.

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