Building a Just Economy: Beyond the Free-Market Myth
by John M. Balder, Jr.
Extreme (“free-market”) capitalism over the past forty years has left us fractured and divided with increasingly shaky democratic institutions. Creating a more economically just, democratic system is not impossible. In fact, it is the only plausible solution.
About the book
This book, a 3-year effort 40 years in the making, takes a critical look at the flawed concept of the free market. It connects the dots between free-market policies (neoliberalism), unfettered finance (financialization), and extreme levels of income and wealth inequality. It compares and contrasts the neoliberal era with the New Deal era that preceded it.
The book provides an alternative approach to understanding money, banking, finance, and government deficits that is essential to understanding the impact of financialization and maximization of shareholder value. It also proposes a progressive narrative that addresses inequality by empowering labor and simplifying finance.
Our economy is shaped by human interactions. The impetus for social change periodically emerges from within civil society. Human agency matters immensely in times of crisis, in particular at times when the “radical becomes pragmatic.” We are in such a period now.
Wherever possible, the book is written in plain English that should be accessible to a broad array of readers. My hope is that we will build an inclusive, just economy that addresses multiple dimensions (e.g., class, racial and gender) of inequality.
Table of Contents
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AbstractIntroduction and an overview of book objectives.
Free-market myth and the invisible hand as described by Milton Friedman and his neoliberal colleagues at the University of Chicago.
Transition from the New Deal to neoliberalism with particular focus on economic performance and levels of inequality.
Critiques orthodox (neoclassical) economics decision to ignore money, banking and financial crises and offers a heterodox (alternative) approach. Argues that properly understanding how money and finance operate in the real world is essential to understanding inequality and financial stability.
The Depression and the New Deal response. The Glass-Steagall Act of 1933 introduced significant guardrails that helped ensure that credit creation supported productive activities. It provided more than forty years of financial stability.
Finance was freed from Depression-era constraints during the 1980s and 1990s. These structural reforms fueled explosive growth in credit and a secular asset price boom-bust cycle that resulted in the global financial crisis (GFC) of 2007-2008. Another important consequence was extreme levels of income and wealth inequality.
The Federal Reserve System should be reconstituted and truly democratized to represent ordinary Americans instead of the major banks and other financial institutions. The megabanks and shadow banks will shrink in response to proposed structural reforms. Community banks, credit unions, CDFIs, et al will continue to operate as they do today.
Median wage has been stagnant for more than forty years as a disproportionate share of income and wealth have gone to the top 10% of US households. Policies are proposed that will empower labor and address this inequitable situation.
Government spending and investment will become an ever-more important component in the future US economy, and it is important to properly distinguish government spending from that of a household.
The US economy is at a crossroads, and we face a choice as to how to move forward. Importantly, this decision must be made by all of us!
Bibliography