If real-estate speculation is a predictable cause of economic recessions, why aren’t most economists correctly forecasting these events with the tools at their disposal? For example, very few economists predicted the 2008 economic collapse (Fred Foldvary and Fred Harrison, however, both familiar with land economics, went on record to predict the 2008 economic depression... in 1997) . It’s because most economists are unaware of what causes economic recessions.
Mason Gaffney, Ph.D., a professor of economics at University of California, Riverside, claims in his work The Corruption of Economics, first published in 1994, (along with Fred Harrison) that industrialists toward the end of the nineteenth century intentionally created and promoted a new brand of economics to divert public attention from the monopolization of land. According to Gaffney, economists such as John B. Clark and Frank A. Fetter began promoting an economic theory that didn’t recognize the difference between land (elements of nature such as land, coal, oil, etc.) and capital (human-made goods such as machines that aid in the production of wealth); due to their influence, Clark and Fetter were able to persuade other economists to abandon the critical distinction between land and capital.
The failure to distinguish land from capital prevents most professional economists from accurately “diagnosing problems, forecasting important trends, and prescribing solutions.”
The Corruption of Economics takes a fresh look at how the original science of economics was deliberately and increasingly sidelined in favor of so-called neoclassical economics, an economic theory widely in use today that, despite its sophistication, treats nature as capital—as a resource to be exploited. According to Gaffney, this failure to distinguish land from capital prevents most professional economists from accurately “diagnosing problems, forecasting important trends, and prescribing solutions.”
For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.
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MARTIN ADAMS is a systems thinker and author. As a child, it pained him to see most people struggling while a few were living in opulence. This inspired in him a lifelong quest to co-create a fair and sustainable world in collaboration with others. As a graduate of a business school with ties to Wall Street, he opted not to pursue a career on Wall Street and chose instead to dedicate his life to community enrichment. Through his social enterprise work, he saw firsthand the extent to which the current economic system causes human and ecological strife. Consequently, Martin devoted himself to the development of a new economic paradigm that might allow humanity to thrive in harmony with nature. His book Land: A New Paradigm for a Thriving World is the fruit of his years of research into a part of this economic model; its message stands to educate policymakers and changemakers worldwide.