Foundations of Real-World Economics
What Every Economics Student Needs to Know
The 2008 financial crisis, the rise of Trumpism and the other populist movements which have followed in their wake have grown out of the frustrations of those hurt by the economic policies advocated by conventional economists for generations. Despite this, textbooks continue to praise conventional policies such as deregulation and hyperglobalization.
This textbook demonstrates how misleading it can be to apply oversimplified models of perfect competition to the real world. The math works well on college blackboards but not so well on the Main Streets of America. This volume explores the realities of oligopolies, the real impact of the minimum wage, the double-edged sword of free trade, and other ways in which powerful institutions cause distortions in the mainstream models. Bringing together the work of key scholars, such as Kahneman, Minsky, and Schumpeter, this book demonstrates how we should take into account the inefficiencies that arise due to asymmetric information, mental biases, unequal distribution of wealth and power, and the manipulation of demand. This textbook offers students a valuable introductory text with insights into the workings of real markets not just imaginary ones formulated by blackboard economists.
A must-have for students studying the principles of economics as well as micro- and macroeconomics, this textbook redresses the existing imbalance in economic teaching. Instead of clinging to an ideology that only enriched the 1%, Komlos sketches the outline of a capitalism with a human face, an economy in which people live contented lives with dignity instead of focusing on GNP.
Table of Contents
1. Welcome to Real-World Economics. 2. Markets are Neither Omniscient nor Omnipotent. 3. The Nature of Demand. 4. Homo Oeconomicus is Extinct: The Foundations of Behavioral Economics. 5. Taste Makers and Consumption. 6. Firms and Imperfect Competition. 7. Returns to the Factors of Production. 8. The Case for Oversight, Regulation, and Control of Markets. 9. Microeconomic Applications on and off the Blackboard. 10. What Is Macroeconomics?. 11. Macroeconomics Part II. 12. Macroeconomics Part III. 13. International Trade: Open Economy Macroeconomics. 14. The Financial Crisis of 2008. 15. Conclusion: The Foundations of Real World Economics
John Komlos is Professor Emeritus of Economics and of Economic History at the University of Munich, Germany. He has also taught at universities such as Harvard, Duke, UNC-Chapel Hill, University of Vienna, and Vienna School of Economics and Business. In 2003 Komlos founded the field of Economics & Human Biology with the journal of the same name, and through his research he has come to realize the limitations of conventional economic theory and has been an ardent advocate of humanistic economics.
"This is a wonderful book, which puts together different topics and perspectives to create a unique synthesis of a coherent critique on aspects of classic economics … It is written in a style that is easy to follow, so that even not very experienced students will have no difficulties in following and understanding the text.", Dieter Bögenhold, Faculty of Economics and Management, Alpen-Adria University Klagenfurt, Austria
"The 'Great Recession' which began in 2008 was not anticipated by economists, and they remain divided about the remedies … Economics requires a re-think, but this is proving hard. In this excellent book, John Komlos makes a start: he shows what parts of theory remain useful, and which ones have been falsified by experience. He highlights what the new theory will need to explain. Most importantly, he shows that it is necessary to start from current economics in order to reform it. Fluently written, accessible, and highly recommended as a corrective to standard textbooks.", Avner Offer, Emeritus Fellow of All Souls College, University of Oxford, Fellow of the British Academy
"a wonderful book … a manifesto … written in a style that is easy to follow … highly innovative and a must-read, especially but not only for students who are new to economics … John Komlos has given us a valuable tool that we can use to enrich our teaching and open the minds of our students … We owe him our thanks. More, we owe him our students’ patronage." Gerald Friedman, Professor of Economics, University of Massachusetts, Amherst.
"John Komlos has given us a very useful companion text to the standard introductory economics version. Students would do well to read the two together. In fact, anyone who has taken introductory economics and had it shape their thinking about the world would benefit from learning about the issues raised in this book." Dean Baker, Senior Economist, Center for Economic and Policy Research.
"John Komlos provides an important complement to—and corrective for—the standard Economics 101 textbook. This book clearly explains why free markets are far from perfect and, indeed, do not exist in the vast majority of the modern economy. Instead of fetishizing economic efficiency, Komlos explains why economics should focus on creating a better society and helping all of us live more fulfilling lives." James Kwak, Professor of Law, University of Connecticut, co-author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
"The real world seldom operates like the diagrams in economics textbooks. Often left out are that human beings often act irrationally, markets have rules, and models typically began with the assumption of ‘… all else being equal’. John Komlos provides a welcome and much needed real world look at the dismal science in his Critique of Pure Economics. In plain language that even high school seniors can grasp, Komlos shows the wishful thinking that infects standard economic texts and builds his case with empirical facts." David Cay Johnston, Pulitzer Prize-winning author of The Fine Print: How Big Companies Use "Plain English" to Rob You Blind and the New York Times bestseller, Perfectly Legal
"Komlos’s provocative book at once brings together and creatively synthesizes a great deal of work critical of conventional economics and lays out the broad contours of an alternative approach that the author calls humanistic economics … Komlos’s book is timely and relevant. The author includes excellent discussions of income and wealth inequality, the cultural contradictions of capitalism, and green environmental accounting, as well as an entire chapter on the financial sector (a sector often omitted entirely in introductory classes) and the sector’s role in the Great Recession." Peter Coclanis, Director of the Global Research Institute at the University of North Carolina at Chapel Hill.
"This book is a must read, not only for economic students and professors who teach economics, but for psychology, sociology, political science, history, and philosophy students and professors as well. That is, it is a must read for anyone who wishes to understand the discipline of economics and the way in which it has contributed to the conservative/neoliberal economic, social, and political policies that have guided us to the dysfunctional social and political systems we find ourselves in the midst of today." George H. Blackford, Formerly University of Michigan-Flint, Contributions to Political Economy (2019) 00, 1-2
"Komlos uses a literary style that empowers the reader with information and in-depth discussion of topics of current interest from the repercussions of the financial crisis to the rise of populism […] The book is full of creative ideas [and] the author achieves his goal of presenting a realistic approach to introductory economics." Andres F. Cantillo, Kansas City Kansas, Community College, Australasian Journal of Economics Education Volume 16, Number 1, 2019
"This book is aimed at the introductory level and grounds its presentation in a lot of helpful stylised facts to connect to the real world. It contrasts the mainstream approach with many important heterodox insights in order to help readers to get a more realistic and multifaceted picture of economic relationships." Torsten Niechoj, Rhine-Waal University of Applied Sciences, Kamp-Lintfort, Germany and FMM Fellow, European Journal of Economics and Economic Policies: Intervention, Vol. 17 No. 1, 2020
"This book explains a tremendous amount of how economies like the U.S. function in recent years. In doing so, it integrates conventional economic analysis with wide ranging socio-economic analyses and the thoughtful insights of the author on many topics related to how economies function or do not function well. At the very least, he has gone a long way in showing how economies can become a more important and different discipline than it has been. I highly recommend his text for many students of economics." John F. Tomer, Emeritus Professor of Economics, founding member of the Society for the Advancement of Behavioral Economics (SABE), Society and Economy
"John Komlos’ book […] has the sense and sensibilities for building up an economy that works for the 99%, not just 1 %." Annavajhula J.C. Bose, Shri Ram College of Commerce, India, Ecotalker blog