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The interrelated capitalist world is in a state of crisis, unstable and almost out of control.  The orthodox theory behind the lunatic policies being followed has little connection to the actual world it is meant to interpret and explain. Social unrest, prejudice, racism, self-interest, lack of compassion, anarchistic or worse forces are being unleashed: all the outcome of finance capital being out of kilter with industrial and commercial capital.

What can persons of good will and humane attitudes do about this? First, we need to fashion new sensible theories which illuminate and explain our world, which recognise unbridled capitalism for what it is, a powerful organ of production and accumulation but basically irrational and cruel to those least able to protect themselves, endogenously creating inequality and unfairness. So, secondly, we need to recommit ourselves to regaining full employment and a more equal and equitable distribution of income and wealth. We need also to create green friendly infrastructure to help cope with the reality of climate change and global warming; and to design institutions that minimise the impact of greed-induced risk taking in financial and other markets to overcome the excesses of short-term behaviour, to bring to the fore again the possibilities of sane long-term development, first sensed by Adam Smith and stressed again by Maynard Keynes in his last writings and speeches before his death in 1946. We need to take on board Kalecki’s desire that standards of life would gently rise over time for all citizens, while accumulation would be guided by long-term needs as well as to sustain full employment. In this way perhaps the present madness of self destruction may be, if not tamed completely, at least brought under reasonable control.

Let this be our hope for 2012.

This post appeared originally in the World Economics Association Newsletter