A debut book delivers an appraisal of what ails Western economies.
In this volume, Al-Nakeeb, an independent scholar with graduate economics training and a four-decade career in financial markets, surveys classical, Marxist, Keynesian, and neoclassical economics. He concludes that only genuine democracies employing Keynesian policies, as after World War II, have shown any effectiveness in quelling cyclical financial crises wrought by extremes of laissez faire self-interest or authoritarian societal interest. He proffers a “unified theory of macroeconomic failure.” Its précis: “A moral deficit, typically driven by plutocratic greed for wealth gathering, causes a democratic deficit, inferior public choice, immoral policies, economic inefficiency, and negative externalities, culminating in macroeconomic failure.” In other words, a greedy few use wealth to grab political power, rig the system, and enslave the debt-ridden many, à la the 2008 subprime meltdown. This view is hardly novel, as books on inequality by such economists as Joseph Stiglitz and Thomas Piketty demonstrate. But Al-Nakeeb’s emphasis on immorality plunges him deeper into negative externalities, or side effects, that econometric models cannot quantify. He lambasts corruption in corporate governance, credit-rating agencies, regulators, the media, and academia. He mentions Jesus nine times, not to proselytize but to invoke religious admonitions against usury. In the author’s view, all interest and debt are injurious; all banks Ponzi schemes; and the Federal Reserve a virtual dictatorship. He proposes replacing all debt financing with equity participation funds and taxing wealth and capital instead of income. The author dismembers with a deceptively light touch, the air of a happy warrior. His prose is crystal-clear and flows like silk. He displays command of the subject and provides rational evidence for his sweeping conclusions, with occasional lapses. For example, he paints all U.S. presidents since Jimmy Carter as neocons and at one point indulges a 9/11 conspiracy theory. Still, he accomplishes his goal to “give economics a good stir” and presents his case in language accessible to all. His confident predictions that the Eurozone will unravel and Western banks will fail to avoid another crisis look prescient following the Brexit vote.
An audacious and caustic financial work that deserves wide readership and close academic scrutiny.