Foundations of Real-World Economics : What Every Economics Student Needs to Know book cover
2nd Edition

Foundations of Real-World Economics
What Every Economics Student Needs to Know

ISBN 9781138296541
Published January 16, 2019 by Routledge
292 Pages - 87 B/W Illustrations

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Book Description

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

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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.

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Author - John  Komlos

John Komlos

Professor Emeritus of Economics and of Economic History, University of Munich, Germany
Munich, Bavaria, Germany

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Podcast interview with the author:

"The book is a great introduction to what is wrong with current neoclassical economics...Komlos introduces many methodological issues plaguing mainstream economics and develops them directly from the discipline’s failures in both describing the 2008 financial crisis and prescribing policies addressing its consequences. This is exactly what the book’s title promises, and it is accomplished in less than 300 pages in a manner accessible to undergraduates." Benjamin Balak, Political Studies Review

"Everyone who teaches undergraduate economics should read Foundations of Real World Economics: What Every Economics Student Needs to Know. The book provides a checklist of what is wrong with contemporary economics, especially as taught at the undergraduate level, and offers a host of interesting new directions." Michael Ash, Basic Income Studies 

"Komlos has introduced a good deal of new material in the second edition, particularly relating to recent developments in behavioral and neuro-economics, and, not surprisingly, apres Piketty, Saez, Milanovic, etc., on inequality, the reasons for it, and ways to reduce it...Heterodox economists teaching Principles might well use it as their primary text, but I believe that a potentially larger market exists among open-minded scholars of any stripe who could employ the book as an invaluable supplement/complement to conventional texts, enabling Foundations to serve as a provocative counter to standard views." Peter Coclanis, Challenge

"Komlos has a respectful following of heterodox economists who warm to two essential correctives which he provides to the outpourings of the mainstream. These are, a firm grasp of the way to approach facts, and an informative and readable critique of the daunting educational material facing the modern economics undergraduate. Both aspects of his approach are woven into this text, making it a highly accessible introduction." Alan Freeman, real world economics review

"With real and penetrating insight, in fifteen close-packed chapters, spanning microeconomics and macroeconomics, [Komlos] retraces the steps of mainstream economic textbooks...For those studying undergraduate economics, or economics professors that largely teach undergraduates, or anyone closely following economic, political and social events of the day, this book should be ‘chewed and digested'." Larry Allen, Economic Issues 

"an important and timely contribution to the economics textbook canon. Not only does it present a critical account outlining the weaknesses of oversimplified economic theory, but it also offers a compelling alternative emphasis with which to study the economy: humanistic economics." Merve Burnazoglu and Francis Ostermeijer, Journal of Economic Methodology

"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 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