Constitutional Economics shifts to the forefront, reinforced by the Real Incomes Approach
The effective separation of constitutional economics from the KM approaches to economics provides a profound and coherent explanation why the conventional approaches to policy formulation in democracies, so-called, cannot but result in ineffective economic governance on the one hand and distortion in the operation of markets to the extent of frustrating the objectives of constituents, on the other.
Theory and practice
There is nothing more powerful that testing presumptions or theories if people are prepared to contemplate what in fact is happening. If those who judge the outcomes of poor decisions by economic planners or politicians in general, are the economic planners and the politicians themselves, we know that the explanations will not be transparent, honest nor logical. Economists often wish to defend some "school of economics" largely because their own training and experience does not enable them to venture beyond the frontiers mapped out by the theory over the real world. In constitutional terms there are often administrative structures and procedures shaped by economists and politicians as mechanisms for "managing" the economy but which are confused for "reality" or parts of how the economy works. This means that the institutional constitutional structures applied in managing the economy are time-bound by economic theories which, themselves, are time-bound and never in line nor adjusted for current events. It is relatively simple to point at the main failures of KM policies. One, there is no coherent underlying theory in Keynesianism nor Monetarism concerning technology, technique nor innovation. Two the significant movement to national accountancy being measured in terms of nominal currency values and the movement from the gold standard, helped place the value of currencies in a state of free fall. The pound sterling today is worth less than 5% of a pound in 1945. The overall economic performance and productivity in the UK is consistently undermined by a floating pound where it is essential to "invest" money in order to gain a "return". Technical performance and refinement in technique, a major source of economic growth resulting from innovation, has been undermined by the inflationary impacts of finance on the relationships between investment and returns.
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