LETTER: Wisdom in work of heterodox economists

When orthodox economics makes misleading statements and has no new ideas for the problems SA faces, it is time to look elsewhere for clarity and hope.

Before the midterm budget last year an economist from the University of Johannesburg (UJ) wrote: “Some radical economists claim that there are few limits on government expenditure. But this is a luxury that may only be true for wealthier countries — like the US. On the other side of the spectrum, recent statements that the country could ‘run out of money’ are absurd.”

The first sentence does not accurately capture the argument being made by the heterodox (radical) economists who write about modern monetary theory. The UJ economist dismissed the ideas by referring to just one paper (by two PhD students in the US) that is critical of this heterodox position. He then correctly characterised the statement that the country is running out of money as being absurd, but without explanation.

Before his passing, Wits economist Vishnu Padayachee recommended that a job guarantee be a serious part of the conversation in SA. His past student Bradley Bordiss explained why the job guarantee is superior to the basic income grant (BIG).

Some people are starting to recognise the wisdom in the work of heterodox economists. Given the dire conditions in SA, a job guarantee is a necessary but insufficient condition for the economy to grow and function effectively for all. Only this will bring a sufficient injection of hope.

Howard Pearce
Rondebosch

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