After the Great Financial Crisis, economic theory was fiercely criticized from both outside and inside the discipline for being incapable of explaining a crisis of such magnitude. Slowly but persistently, new strands of economic thought are developing, to replace the old-fashioned neoclassical economic theory, which have a common characteristic: they are better suited to help understand the real-world economy. This book explores the key tenets and applications of these. This book opens with an explanation of the “real world” approach to economics in which theoretical models resemble real-world situations, realistic assumptions are made, and factors such as uncertainty, coordination problems, and bounded rationality are incorporated. Additionally, this book explores the ramifications of considering the economy as both a dynamic system - with a past, present, and future - and a complex one. These theoretical precepts of the real-world economy are then applied to some of the most pressing economic issues facing the world today including ecological sustainability, the rise of corporate power, the growing dominance of the financial world, and rising unemployment, poverty, and inequality. In each case, this book reveals the insights of the shortcomings of the neoclassical approach which fails to illuminate the complexities behind each issue. It is demonstrated that, by contrast, adopting an approach grounded in the real world has the power to produce policy proposals to help tackle these problems. This book is essential reading for anyone seeking a deeper understanding of the economy, including readers from economics and across the social sciences.
1. The real-world approach 2. The economy as an evolving dynamical system 3. Complexity economics 4. Ecological sustainability 5. Firms do have market power and information matters 6. Unemployment equilibrium 7. The government as employer of last resort 8. The role of finance in the real-world economy 9. Poverty and inequality 10. From international trade to globalization and de-globalization 11. Ideology and Economics 12. Conclusions
Biography
Victor A. Beker is Professor of Economics at the University of Belgrano and the University of Buenos Aires, both in Argentina. He has several prizes for his works in Economics and is former Associate Editor of the Journal of Economic Behavior and Organization. He has authored several Economics books and papers. He is Co-author of Modern Financial Crises, Springer (2015) and Co-editor of The European Crisis (2016). He has edited Alternative Approaches to Economic Theory (2019), Routledge and authored two of its chapters. He also authored Preventing the Next Financial Crisis (2021), Routledge, and Economics, Social Science and Pluralism: a Real World Approach (2022), Routledge; Contributor to Symposium on the Work of William J. Baumol: Heterodox Inspirations and Neoclassical Models (2022), Emerald Publishing Limited.
Economic Theory for the Real World provides a valuable review of the many ways, over the years, in which prominent academic economists have tried to break free from the grip of neoclassical dogma. Their failure to produce a comprehensively evolutionary, non-equilibrium and institutional economics is testimony to the power of fantasy in the service of vested interest. It is also a clear sign that a more radical and complete departure is required.
James K. Galbraith, University of Texas at Austin, USA
This book provides a realistic approach to economic analysis, and is a must read for economics students and many others who want deeper understanding of economics. It presents alternative perspectives on the major issues confronting us, ranging from ecological sustainability, unemployment, poverty and inequality and (de)-globablization.
Malcolm Sawyer, Emeritus Professor of Economics, University of Leeds, UK
This is a very useful book particularly for those students and instructors who are dismayed by the sorrowfully wide gap that exists between academic economics and pressing real world economic issues. It exposes with considerable clarity intellectual attempts that have been made with varying degrees of success to narrow this gap on major microeconomic and macroeconomic subjects found in traditional textbooks. It is a wonderful supplementary book from that point of view to bring the subject to life.
Amit Bhaduri, Professor Emeritus, Jawaharlal Nehru University, New Delhi, India
This book is a fresh and modern take on economic theories, with a critique of the neoclassical-neoliberal mainstream and an updated reconstruction of the existing heterodox pluralism, interaction, and synergies. Beker takes a strong real-world stance, with coordination failure, fundamental uncertainty, and cooperation requirements as starting points. The book reconfigures Veblenian, Schumpeterian, and socio-economic perspectives and develops an integrative approach towards evolving dynamic systems and complexity economics. The proof of the pudding is its applications to the current real-world dramas of the ecology, financialization, unemployment, inequality, poverty and politically manufactured fragmentation of the world economy (“de-globalization”). This also is an accessible reading and the perfect reading for experienced practitioners as well as a perfect complement to any economics teaching.
Wolfram Elsner, Full Professor of Economics (retired) at University of Bremen, Germany
