A comment on “Beyond Growth: Toward a New Economic Approach”

James Galbraith

This is a document of unusual clarity and importance. It states the main challenges of our existence, the failings of the dominant theories, and the need for a new synthesis that encompasses inequality, resilience and sustainability within a framework alert to financial instability and informed by Post Keynesian macroeconomics and by institutionalist and evolutionary economics. To publish this work under the rubric of the OECD, even as an unofficial document, is an act of courage. 

The report states that “no single synthetic theory... has emerged” so far. Yet the basis for such a theory, incorporating resource costs and constraints, has been laid down in the institutionalist literature by economists seeking to align the field with physical and biological universals1 . This work is linked to the traditions of Veblen, Commons, J.K. Galbraith and to the biophysics of Georgescu-Roegen among others. The empirical relationship between inequality and financial mis-rule has been demonstrated in extensive recent work on the global macroeconomics of inequality.2 The integration of finance into macroeconomics is well advanced under the rubric of “modern monetary theory,” building on Keynes, Lerner and Minsky. An institutional analysis of financial fraud and its contribution to instability has emerged, closely allied to the new monetary economics. From the experience of Greece and other countries, we have ample material on the consequences of applying neoliberal orthodoxy to fragile societies and vulnerable nation-states. 

The challenges and critical issues are exceptionally well defined here. A key step going forward is to broaden the debate by bringing the many voices from the margins and backwaters of economics and related fields into the center of the discussion. The job will not be done by those whose work, however critical, merely orbits around the sterile and worn out “mainstream.” Indeed the test of a new synthesis is whether it will be possible to give the many economists – and those in related fields, such as law – who have worked outside of the mainstream, in many cases paying a steep professional price, the leading roles. Revolutions are, after all, made by revolutionaries. 

1 Chen, Jing and James Galbraith, “A Common Framework for Evolutionary and Institutional Economics, Journal of Economic Issues, Vol XLVI No. 2, June 2012, 419-428. DOI 10.2753/JEI0021- 3624460217. See also Chen, Jing and James Galbraith “Austerity and Fraud under Different Structures of Technology and Resource Abundance,” Cambridge Journal of Economics, Volume 36 Issue 1 January 2012, 335-343. DOI:10.1093/cje/ber027 

2 Galbraith, James K., Inequality and Instability: A study of the world economy just before the great crisis. New York: Oxford University Press, 2012. Updates at http://utip.lbj.utexas.edu