Mason Gaffney recorded the comprehensive transition away from orthodox or classical economics to neoclassical economics coming at the behest of powerful rent-seeking interests. It was a reaction to the great popularity of the ideas of the American political economist, Henry George. The attack achieved full blossom at the Great Depression.
Meanwhile, Austrian economics had tied itself in knots about “excess money” and “increasing prices”, whilst ignoring the inflation generated by land prices and the cascading effect on all other prices from the taxing of labour and capital: these now being entirely overlooked in consumer price indices.
Therefore, it has been left to Georgists, supporters of the ideas of Henry George, to carry the mantle of the classical economists. Despite all the arguments in their favour, such as being able to call the recessions which inevitably follow the bursting of bubbles in land prices, the fundamental Georgist idea that wages and profits do poorly when land prices escalate fails to get a hearing in mainstream media. The study of economics has been captured by neoclassical and neoliberal economics; any alternative is seen to be ‘communist’.
Even in Henry George’s day, the rent-seeking uber-wealthy employed clever tactics to split supporters of his and classical economists’ ideas. When Henry George visited Ireland, they mocked the independently popular Irish land leaguer Michael Davitt for becoming ‘George’s pawn’. The classical idea of socialising publicly-generated economic rent was also useful to wedge those socialists who also wanted the means of production to be socialised.
Even modern monetary theorists or universal income supporters now overlook the need for Adam Smith’s “ground rent” to be publicly captured. This would make both MMT and UI entirely workable by abolishing the inflationary aspects of both.
It’s a big call, but maybe the emerging economic discontent that seems to have risen during the pause of the pandemic might have people revisit some of the fundamental principles of classical economics?