Review

(My review on goodreads)

Hudson is a leader among a group of heterodox economists who oppose the marginalist, model-based, antiempirical mainstream arm of economics - opposed, that is, to the economists who routinely guide public policy, write columns in the New York Times, and win Nobel prizes. J is for Junk Economics explains this opposition.

The book itself is poorly edited and repetitive, and really should have been condensed. And for those of us who have been reading Hudson’s essays or following along with nakedcapitalism.com, there is not much new here. But from talking to lots of people I know that Hudson’s approach is not widely known, and most people simply accept mainstream economic pronouncements as given. So for that reason this is a valuable book.

The key points of Hudson’s approach are:

1. Economic theories typically work backward from a set of desired conclusions to models that will result in those conclusions.

2. Mainstream economic theory starts with the conclusion that the “free market” is self-stabilizing and leads to optimum outcomes.

3. The economic measures chosen by an economic theory are part of the design of that theory. Mainstream economics uses coarse-grained measures such as GDP, and ignore - or, rather, deride - measures of distribution of income and wealth.

4. Mainstream economic metrics, as well as mainstream economic theory, do not make a distinction between productive economic activity and parasitic economic rent - in the form of land and housing rents, monopoly pricing based on patent rights, privatized provision of basic services such as water and electricity, and monopoly pricing of health care. All such forms of income are treated as earned income.

5. Mainstream economic theories and metrics ignore asset prices as a form of wealth formation. This despite the fact that asset price increases are the primary source of wealth in modern economies.

6. Asset price increases in real estate are a significant driver of the ever increasing share of interest payments on debt - payments that go almost exclusively to the 1 percent.

7. Asset price increases are generally exogenous to the productive economy, and in fact act as a brake on growth of the productive economy.

I could go on, and Hudson does. But the main point is to understand that any eonomic theory has a class basis. Banker/1% friendly mainstream economics has gained intellectual hegemony, and has even managed to convince ordinary 99 percenters that the system we have - one in which gains go primarily to the 1 percent - is good for everyone; that all government services and assets are a drain on the economy; that taxes are a drain on the economy; that regulation is a brake on economic growth. Every one of these ideas is wrong, and every one of these ideas is repeated daily by the news media and by economists.

So Hudson (and William Black and a few others) has been fighting against the established orthooxy for decades. This book is part of that fight.

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