Friday, 4 April 2014

Book Review Series

Money, Blood and Revolution  by George Cooper

             Author: Isabelle Crosby


Many authors have written about the failure of economic theory but best-selling financial author, George Cooper, seems to be the first to have come up with an original solution on how to fix both economic theory and the economies of the world once and for all. He has done this by “plagiarising from the masters’ (in his own words) and taking the key ideas from the greatest scientific revolutions in history to re-imagine how our economies really work in the first place.  Once you figure that out, it is much easier to identify the flaws. Child’s play? Why, yes. In fact, it could be taught in junior school.

By illustrating how both our economic theories and our economic policies can be fixed, Cooper is setting out to present a simple idea that has the power to revolutionise how we think about our economies and how our governments set their policies – he calls the idea the circulatory growth model in his new book Money, Blood and Revolution, published by Harriman House.

The circulatory growth model could help policy makers understand what really drives economic growth. It recognises that capitalism has a tendency towards wealth and income polarisation and explains how this problem can be addressed. The model makes it very clear why the financial crisis happened in the first place and why the policies we’ve been running since then – quantitative easing for example – have not really brought our economies back onto a sustainable growth path. If the model gets an audience and becomes widely understood it should help drag the policy debate back toward the centre ground. In the last few decades, economic theory has become surprisingly extremist, in ways that not many people understand. This is doing a lot of damage to our economies. For example the model makes it immediately obvious how policies designed to promote borrowing lead directly to lower economic growth, higher income inequality and, in the end, to higher government deficits. If the model can help fix that unholy trinity then it will have done some good.

The way Cooper gets to his circulatory growth model is as fascinating as the model itself. There are no pages of dry economic arguments, no equations and even the ubiquitous economic charts are banished to just the final chapter. Instead Cooper takes his readers on a remarkable journey through the history and philosophy of scientific progress.

He starts with the scientific philosopher Thomas Kuhn’s analysis of the process of scientific revolutions. He then goes on to illustrate Kuhn’s ideas with the stories of four of the greatest scientific revolutions in history: the Copernican revolution in astronomy, which started the modern scientific age; William Harvey’s theory of blood flow, which led to the development of modern medicine; Darwin’s discovery of evolution, which turned biology into a science; and Alfred Wegener’s theory of continental drift which allowed geology to also graduate to the science faculty.
Both Kuhn’s work and the stories of Copernicus, Harvey, Darwin and Wegener are there to soften his readers up for what comes in the second section of the book.

He compares the confused state of economics today to the confusion which dogged astronomy, medicine, biology and geology prior to their respective revolutions. In doing this he builds a persuasive case that economics is long overdue its very own scientific revolution.

Cooper constructs his circulatory growth model drawing directly on the ideas of Darwin and William Harvey, the doctor of King Charles I. The connections which he sees between previous scientific revolutions and his proposed scientific revolution for the field of economics are fascinating.

The circulatory growth model has some surprising implications. It shows, for example, why some countries have prospered while others have failed. It also shows why government spending and taxation are necessary for economic growth. These conclusions fly in the face of today’s accepted mainstream economic ideas, which press always for smaller governments and lower taxation.

Few readers will emerge from Money, Blood and Revolution with their preconceptions unscathed and a few policy makers may suffer more than superficial damage to their own ideas. Personally, I was very entertained by Cooper’s ability to link Captain Kirk to Copernicus, Darwin to the Declaration of Independence and the workings of the human heart to the ideas of Karl Marx and Adam Smith.  A jolly good read and renewed hope for a better world in one. How marvellous!

See also:
Review on Money, Blood and Revolution by The Economist

No comments:

Post a Comment