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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