Once it’s understood that the economy works to natural rules, certain rhythms, patterns or cycles emerge which present the ability to foresee likely outcomes. The most obvious of these patterns is the real estate cycle which builds to repetitive 18-year bubble-burst peaks, followed by financial collapses as land prices rapidly deflate. This leaves banks and borrowers exposed to impossible levels of private debt which have been leveraged off speculative land prices. At this point, either banks or people need to be bailed out. It’s usually the banks.
The neoclassical economics‘ argument must therefore become that as there are no natural rules or laws pertaining to economics; the apparent patterns are simply figments of fertile imaginations. Mainstream economists are forced to lampoon that the study of economics may be predictive in any way because “economics is an art, not a science”. Any rhythm is imaginary.
This means that economists advising businesses and governments have become high priests for a sadly misguided status quo. They must remain blind to regular patterns in speculatively bursting real estate bubbles. Everything has become reduced to a matter of supply and demand.
We have permitted economics to become this useless mystical artform because of its denial of a key natural rule kept invisible to us: That the extent of a nation’s land prices represents its level of socio-economic illness. Land prices and the taxing of earnings and purchases dispossess people and generate poverty.
If we want to establish a general prosperity, we might tax away the economic rents of the land and other natural resources, instead of allowing them to remain privatized, but we remain curiously beholden to our neoclassical high priests of the economy.
Carefully excluded from the mainstream, a relative handful of heterodox economists holds the hope of humanity in its hands. Several women are at the forefront.