My most original thinking pertains to the foundations of political economy. My approach is critical of the “myth of the market” that dominates textbook economics and finance theory. Markets are only one way of organizing business life. Much of it is structured by negotiated deals and private power relationships that receive scant attention in either economics or business school curricula because they do not conform to the “free market” stereotype. Even worse, non-market exercises of strategic private power are shoe-horned into a market theory as if the were instances of a perfectly free market. Today there is a vast gulf between the free market theory taught in textbooks and the free market ideology in conservative politics that basically says that anything powerful corporations want or do is by definition “the free market.” My three-year weekly blog and forthcoming book are called “Polarizing Political Economy” for two reasons: first, I argue against conventional ways of teaching economics and second, I argue for political economy that recognizes private power and strategy, including how a credit-driven financial system necessarily polarizes interests between bears and bulls and related creditors and debtors. The business cycle is a necessary consequence of this polarization. Capitalism is at root an unstable two-party system, not a unified efficient system of fair and efficient production for sovereign consumers, as taught in textbooks worldwide. I call my approach corporatism. Though I coined this use of the term and many concepts of this approach, it is rooted in the history of political economy, including often neglected elements of otherwise famous political economists of the past. You can preview my approach in the blogs here and in my book International Political Economy: The Business of War and Peace.
The Myth of the Money Supply
If you take standard economics courses, such as macroeconomics or money and banking, you will be taught that prices are regulated by government-controlled central banks […]