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Might INET be a Trojan Horse?

by ARGeezer Mon Mar 31st, 2014 at 10:49:45 PM EST

George Soros` INET: An institute to improve the world or a Trojan horse of the financial oligarchy?    from Norbert Haering    (H/T Edward Fullbrook)

Let's assume that there is a financial oligarchy which exerts strong political influence due to the vast amounts of money it controls. Let's further assume that this financial oligarchy has succeeded in having financial markets deregulated and that this has enabled the financial industry to expand their business massively. Then, in some near or far future, their artfully constructed financial edifice breaks down, because it cannot be hidden any more that the accumulated claims cannot be serviced by the real economy That might be due, for example, to millions of people having bought overly expensive houses on credit without having the income necessary to service this debt. This is the kind of situation we are interested in.


If such a situation occurs, the leading figures of that financial oligarchy might recall that there has been a financial crisis in the 1930s of similar origin, and that during and after this crisis, laws were passed which broke the power of the financial oligarchy and taxed their profits steeply. They might remember that it took their forbearers decades to reestablish the favorable state of the late 1920s, with deregulated finance and very low taxes on incomes and estates, even huge ones. The financial oligarchy might also recollect that economics is their most important ally in shaping public opinion and policies in their favor. To prevent a loss of power as it happened hence, they might want to make sure first that economics will not challenge the notion of leaving financial markets mostly to themselves and will continue to downplay the role of money and the power of the financial oligarchy, and of power in general.

However, the economic mainstream itself will have lost credibility due to its obvious failure to promote the public good and its rather obvious alliance with the interests of the financial oligarchy. Students will not so gullibly trust their professors and their textbooks any more. Young and bright researchers, who have not yet invested too much into the old discredited theories and methods, might turn to the question of the financial industry can be made to serve the public interest. This would contribute to turning public opinion against the interest of the financial oligarchy. Thus, it will be important for the financial oligarchy to identify the brightest and most influential critics and leading figures of reform initiatives and to neutralize them.


This can best be done by putting yourself at the forefront of the movement. This requires money, notoriety and credibility. Money is available most plentifully to the financial industry. Many of their representatives are also well known to the public and command a lot of respect because of their spectacular financial success. Credibility, however, is in short supply. It can fairly easily be acquired, though. One of the more famous representatives of the financial oligarchy would have to publicly criticize economics for failing to prevent disaster and the dealings of their own breed. The failure of economics and the financial industry will have become so obvious to the public already that an industry representative who acknowledges them will gain a lot of credibility without saying much that is not widely discussed already.


After the chosen representative of the financial oligarchy has gained a big public profile in the media, he should found an institute that is dedicated to the renewal of economics. He should provide the institute with very large funds, at least relative to what other initiatives with the same goal can command. Relative to the profits of the financial oligarchs the required sums are negligible.

If the financial oligarchy can get this together, they have almost secured the power to define what will be regarded as viable new theories and methods and which ones are to be disregarded as outlandish deviations from scientific common sense. They will be able to make sure that only those kinds of new thinking can take hold which do not fundamentally challenge the supremacy of the financial oligarchy.

A definite maybe. Wait and see. Maybe it doesn't really matter. (Enough cliches?)

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by Oui on Tue Apr 1st, 2014 at 08:37:08 AM EST
I recall that introduction by Kaletski and that speech by Soros. And I also recall that Soros has funded NGOs that have been active in Ukraine and other former Soviet states, though I know little about their activities. Perry Mehrling is very active in INET and I have taken his Money and Banking course online, finding it excellent and consistent with what I know of MMT. I have also watched and/or read the text of many interviews of INET Fellows by both Perry Mehrlling and similar interviews plus speeches and papers by Robert Johnson, all of which I have found informative and helpful.

I have also read articles by Edward Fullbrook, who is associated with INET in addition to being the founder and editor of the Real-World Economics Review, a founder and executive director of the World Economics Association, and who has long published articles critical of 'Mainstream' economics, e.g. A Guide to What's Wrong with Economics (2004). What I found interesting was that it was Fullbrook who put forward Norbert Haering's article in a Facebook discussion group, where I found it.

My own view is that it is always wise to keep questions about your assumptions at least at the back of your mind. I certainly do not expect INET to be a force for violent overthrow of anything but I think Soros is sincere in his desire to change the focus and direction of economics. And, to date, I think INET has been a very positive influence on the Economics Profession.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 1st, 2014 at 11:00:12 AM EST
[ Parent ]
Reading a good review of Piketty's Capitalism:

http://mpra.ub.uni-muenchen.de/52384/1/MPRA_paper_52384.pdf

Which brings me to some thoughts on INET:

  1. My own feeling is that Soros is genuine - he wouldn't be the first wealthy person to see the value in a prosperous society, even if the economics of that are not to his individual benefit.

  2. However, he isn't a real radical. He comes to save capitalism, not to bury it. One could read Piketty and feel that this just isn't going to work...

  3. In the end, we take what we can get. If Soros pumps some money into alternative thought and dissemination, it's better than nothing. And sure he might want to ride the tiger or even muzzle it, but it's our job to solve that...
by Metatone (metatone [a|t] gmail (dot) com) on Wed Apr 2nd, 2014 at 06:37:19 AM EST
Piketty could turn out to be one of the most influential critics of capitalism.

Of course, supporters consider wealth inequality a feature, not a bug. But most ordinary folk still believe the 'work hard and you will be rewarded' lie, and don't realise the extent to which the game is rigged.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Apr 2nd, 2014 at 02:24:35 PM EST
[ Parent ]
ThatBritGuy:
But most ordinary folk still believe the 'work hard and you will be rewarded' lie, and don't realise the extent to which the game is rigged.

At this point all who haven't tumbled to it are well paid to stay in (and promote) it. May as well believe in Santa Claus!

"A fool with a tool is still a fool." - Abraham Verghese

by melo (melometa4(at)gmail.com) on Wed Apr 2nd, 2014 at 03:15:58 PM EST
[ Parent ]
Sadly, melo, we could only hope this were so. I have too many family and acquaintances who, though their station in life would indicate otherwise, still have very much of their personal sense of identity and worth tied up in the myth of 'The American Dream'. Those who have had jobs downsized and been through bankruptcy may have been chastened, but far too many of those who have held on still do not want to acknowledge the true state of affairs. In part this is because that would involve admitting that they have been wrong on many subjects.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 2nd, 2014 at 05:47:39 PM EST
[ Parent ]
That said, it is likely that the citizenry of the EU periphery are significantly further along the path to enlightenment on the exploitative nature of the current economic paradigm than is the citizenry of the USA.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Apr 4th, 2014 at 11:15:21 PM EST
[ Parent ]
Their brains are less hyper-mediated. More shiny devices needed.

"A fool with a tool is still a fool." - Abraham Verghese
by melo (melometa4(at)gmail.com) on Sat Apr 5th, 2014 at 09:17:39 AM EST
[ Parent ]
Having one's TV repossessed and/or your favorite TV station closed and other undeniable deprivations might lessen the mediation.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Apr 5th, 2014 at 11:18:12 AM EST
[ Parent ]
Their BS detectors haven't been destroyed by a million lies as many of ours have.

"A fool with a tool is still a fool." - Abraham Verghese
by melo (melometa4(at)gmail.com) on Sat Apr 5th, 2014 at 11:45:04 AM EST
[ Parent ]


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