Quiggin's Zombie Economics

Zombie Economics came out last year and I flagged it then but haven't posted on it before now. One interesting feature of the book is that it is almost entirely a blog creation, spurred by comments on Quiggin's blog and motivated and encouraged by other bloggers. Quiggin made chapters available on Crooked Timber blog as he wrote them. All in all, an interesting model of writing a book.

The book is effectively five essays arguing against what Quiggin sees as being destructive economic ideas that have contributed to the global economic crisis. Chapter 1 argues that the idea of a "Great Moderation" of business cycles is absurd. Chapter 2 argues against the strong form of the efficient market hypothesis. Chapter 3 takes aim at Dynamic Stochastic General Equilibrium and real business cycle theories. Chapter 4 argues against the trickle-down theories that argue that reducing taxes for the very rich will ultimately help the poor by stimulating investment and consumption. Chapter 5 argues that attempts to privatize core government services in health and education have been a failure.

Overall, Quiggin pushes for a methodology of economics with far more emphasis on realism and empirical validation rather than theoretical rigour. He is staunchly Keynesian in his belief that the government should actively intervene to regulate business cycles and is also strong in the view that an explict focus on income and wealth distribution should be an important plank of policy. A great book full of big and bold ideas and one to be read and argued about.

Quiggin - Zombie Economics

John Quiggin's book "Zombie Economics", published by Princeton University Press, was released recently. The description is below. Looking forward to having some arguments about its contents. In the graveyard of economic ideology, dead ideas still stalk the land. The recent financial crisis laid bare many of the assumptions behind market liberalism--the theory that market-based solutions are always best, regardless of the problem. For decades, their advocates dominated mainstream economics, and their influence created a system where an unthinking faith in markets led many to view speculative investments as fundamentally safe. The crisis seemed to have killed off these ideas, but they still live on in the minds of many--members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess. In Zombie Economics, John Quiggin explains how these dead ideas still walk among us--and why we must find a way to kill them once and for all if we are to avoid an even bigger financial crisis in the future. Zombie Economics takes the reader through the origins, consequences, and implosion of a system of ideas whose time has come and gone. These beliefs--that deregulation had conquered the financial cycle, that markets were always the best judge of value, that policies designed to benefit the rich made everyone better off--brought us to the brink of disaster once before, and their persistent hold on many threatens to do so again. Because these ideas will never die unless there is an alternative, Zombie Economics also looks ahead at what could replace market liberalism, arguing that a simple return to traditional Keynesian economics and the politics of the welfare state will not be enough--either to kill dead ideas, or prevent future crises. John Quiggin is professor of economics at the University of Queensland in Australia.