A friend recently commented that what we were facing, in NZ and the world, was not a recession, nor a depression. It was a consequence. A consequence of half a century of unbridled economic growth and environmental and resource depletion, together with development of a culture of greed, culminating in unbelievable levels of wealth for some, and dispossession for many.
Most economists, bankers and politicians did not see the current debt crisis coming. Given the claims of economics to be a predictive science, one might ask, why not? And given that it was the bankers who were largely responsible for the crisis, why is it that –in the US and UK in particular – they are being handed astronomical sums of taxpayers’ money to restart? Clearly, there is something wrong.
A clue to the problem comes from looking at the scientific fundamentals of economic thought, in particular the origins of that branch known as neoclassical economics (NCE).