INET:

The Institute for New Economic Thinking (INET) is a New York City–based nonprofit think tank.
It was founded in October 2009 as a result of the 2007–2012 global financial crisis, and runs a
variety of affiliated programs at major universities such as the Cambridge-INET Institute at the
University of Cambridge.

Economist =====(slide)====

New Economic Thinkings:

NET describes an organized attempt to design and deliver an economy that is fits for the 21st
century.
It collects the many organizations, economicsts, and researchers around the world who:
1. Challenges the main underpinnings of neoliberalism
2. Develop new economic thought models
3. Design new governance structures
4. Advance economic policies that serve the people and the planet.
There are more than 100 organizations that actively engage in buildings new theories, models,
policy tools and governance structures.
NET is not an alternative, its direct outcome of continuing the economic thinking, debate and
progress.
It also does not replace neoliberalism but it arises from neoliberalism's failures.
This new economics thinking is not an alternative or heterodox option. Instead, it provides the
right tools for policymakers, local communities, academics, researchers, members of the public,
economists, and all other stakeholders to build something new from the ground up.

ROBERT:

Robert Johnson is a successful and initiative man with many remarkable works. He is the
President of the Institute for New Economic Thinking (INET), which he co-founded with George
Soros, William Janeway, and James Balsillie in 2009. For over a decade Johnson has come up
with global initiatives with the greatest economic minds of our time, including conferences
around the world, from Bretton Woods to Hong Kong; the Commission on Global Economic
Transformation, in partnership with academics, business leaders, policymakers, and NGOs.
Johnson received a Ph.D. and M.A. in Economics from Princeton University and a B.S. in both
Electrical Engineering and Economics from the Massachusetts Institute of Technology.
Robert Paper:

The 21st Century Capitalism and the Asian Economic Community: Focusing on Creative
Economy and New Economic Thinking

In this paper we will discuss Johnson’s discoveries, thoughts, and opinions and I quote “I will
explore where I believe economics has gotten off course in the last 100 years and left us with
the bad maps that contributed to the flaws in our social system in the West. There are numerous
rituals that economists have adopted that are not scientifically derived.”

Here, he will find reasons on why we should reexamine orthodox or traditional economics and
create a new economic thinking that is more aligned with human goals.

Economists have increasingly used the language of mathematics to express their vision of
economic experience. While mathematics does have a way of simplifying and clarifying some
interaction in the system, and it does give subtle understanding on certain interactions in the
economy, however, methods being used chooses what to neglect and chooses what to
investigate.

Johnson listen five assumptions that he would like to challenge on this paper.
● The assumption that economics and politics are distinct and mutually exclusive spheres.
● The presupposition that the desires of individuals are stable and not subject to the
influence, either via social interaction or via psychological techniques that have proven
to be effective in war propaganda and are seemingly important to business strategies to
inspire demand via marketing.
● The presupposition that the distribution of income can be explained by using a
"production function", whereby all inputs to the production process receive their just
reward as defined by their marginal product.
● Financial decisions and the value of financial assets can be understood through a
modeling methodology that propose a known future and a known and defined economic
structure into the indefinite future.
● That the information structure of the future is knowable and is known by experts and
policy makers.

The Reintegration of Politics and Economics: Economies of

Scale and Political Power.

ECONOMIC THEORY acknowledges

capital-intensive firms (more production > lower cost > more products). The so-called
economies of scale of production are cost advantages reaped by companies when production
becomes efficient or basically the efficiency of large-scale enteprises. This sounds great if you
are a seller or supplier

However, lower cost for a firm does not mean the price will be low for consumers too.

ramification: result, consequence

Here we are going to talk about the Economics, firms, and Political side of Economics.

Many and most of people focus on efficiency but social consequences of large-scale firms are
neglected leading to them neglecting their social responsibilities.

juxtaposing: comparing

The separation of politics and economics allows the possibilities of economies of scale in
isolation. Meaning firms can continuously neglect their social responsibilities.
But once politics and economics are reintegrated it might be seen in a different light.
Large companies with much wealth can invest and use public
relations, donations, etc. to distract people from real-world problems
and how it can be solved. (next slide)

With the wealth large enterprises have, they are able to invest in
political influence that creates laws and regulations. These create more
income for the firms and strengthen or gives more opportunity to invest
again and create political influences and connections.

individuals are given no choice as they can’t go against the laws created
by the government due to political influence thus leading to
disenfranchised body politic.

disenfranchised body politic: a person that is deprived of rights

the restoration of politics in economics gives a different view on

the overall impact on society embracing technologies that create
large-scale enterprises.

Even with economic efficiencies, it is still important to take note of

the political-economic effects of large-scale companies on society.

Corporations were created as a social machines to make generating of money

easier. It is meant to be a tool to facilitate social needs.
Johnson concludes this point saying that it is “very important to social balance in the future, how
these tensions between economic efficiency and the responsiveness of politics to people are
brought into better alignment.”

The Production Function and the Distribution of Income

posit: propose

Most standard economic textbooks prppose a production function that has inputs to create
outputs. distribution of income in society in this system makes it seem
like the salary is “fair” according to the work that they contribute
in production.
From there, tax policy can be used to recreate a new way to distribute income
IF people think that inequality creates social discord

In recent years, the notion of the scope of what the economy is, has taken on a different
meaning. the unification of large countries into the global economy has led to big shifts in
comparative changes and relocation of production (more seen in the rise of China) (next slide)

comparative advantage: advantage of a country over another (can produce more efficiently)

Using the standard model, we can see the increase in the supply of labor will increase
production but decrease income lower than prior global integration

The prediction from the standard model would suggest that declining wages, particularly for
unskilled labor in developed economies, would be accompanied by rising wages for labor in
emerging economies. increased inequality in the country and decreased inequality
between countries.

Overall, large corporate enterprises, and their compensation practices, are not well represented
by simple models that were inspired by, and more appropriate to represent, the small farmers'
market or the family farm in the 19th century

the metaphor of the marginal productivity of factors of production embodied in the textbook
production function appears to be more like a mask used to justify and rationalize unequal
outcomes rather than a meaningful investigative tool designed to provide scientific insight. (next
slide)

Consumer Desire and Economic Theory

Another profound presupposition of economic theory is the notion that the desires of humans
can be modeled as solely individual, and as immune from manipulation or being derived
interactively in the context of social interactions

This actually validates the idea of CONSUMER SOVEREIGNTY: the situation in an economy
where the desires and needs of consumers control the output of producers.
While consumer tastes in any given short period may be reasonably stable, their shaping over
time is very important to our global societal capacity to grapple with population growth and the
resulting challenges to the environment.
Consumer’s taste will be the same in the short-run but in the long-run, it will not be stable and
can change over time.

The developed economies are much larger consumers of fossil fuel energy per capita than are
emerging countries. If large-scale developing economies, notably China and India, adopt the
same methods as the West, we will not have a sustainable environment for very long. As a
result, at least for the foreseeable future, the global economy must consider how to allocate
growth, with its taxing consequences on the environment.

The thing is people tend to focus on or define their desires rather than their actual needs. But
once they receive these wants and needs, they will want something more thus consumer’s taste
changing once again. (next slide)

The Flaws in the Financial Casino and the False Romance of

Expertise

difference between equilibrium mathematical finance

and practice of most successful investors shows different
perceptions of financial processes.

However, these financial economic practices were created

and practiced in the West, how about the Asian society?

Financial crises in Asia (1990s, meltdown of the hedge fund

Long-Term Capital Management, and 2008) happened
because of the wrong approach to finance.

The financial mathematical methods suggest such cultivated results

seem appealing especially to those who worry about the future. Once faced with a real-life
problem/crisis concerning financial capitalism, the mathematical methods do not help. (next
slide)

The vision is to reexamine the unfettered free-market. policies and institutions should be
examined and re-envisioned.
Economists and policymakers that are in the financial sector are given the responsibility to
govern a system, they only focus on the good parts and do not admit or voice out the problem to
the public as it will only cause chaos. The problem in the economy is only stated when
something eventually bad happens (publicly). They only focus on one side of the economy and
neglected the other.

Like i mentioned earlier and will mention again:

Economists have increasingly used the language of mathematics to express their vision of
economic experience. While mathematics does have a way of simplifying and clarifying some
interaction in the system, and it does give subtle understanding on certain interactions in the
economy, however, methods being used chooses what to neglect and chooses what to
investigate. (next slide)

Conclusion:
Johnson suggests moving forward into the future by going back to the roots of the
enlightenment thinking and navigating through the economy in a “humanly” method by
experimenting and adapting economical methods in the pace of a human.

it is a system that maximizes the power and freedom of existing wealth.

Why in the pace of a human? We are living in such a fast-paced world now and everything’s
technical and we became dependent on technology and machinery. Johnson wants the Asian
economy and the rest of the world to continue navigating the world of economics without having
to rely on traditional methods and to learn to experiment. A human takes a minimum of 18 days
to form a habit or to adapt to something. It takes long and he wants the same for the sector of
economics, it may take long but this way, we learn and find ways to avoid crises and other bad
results while embracing radical uncertainties.
https://www.ineteconomics.org/
https://demoshelsinki.fi/2022/01/11/what-is-new-economic-thinking/
https://en.wikipedia.org/wiki/Institute_for_New_Economic_Thinking
Journal of Northeast Asia Development.pdf

Introduce Robert Johnson

“ He wants to inspire people that the economy is made up of human beings, this is important to
him because for him human beings are very powerful in their makeup of the system that is the
economy– w/o the economy you don't have human beings, w/o the human beings you don't
have the economy. They have to work as a cohesive unit.”
Prof paper:
The president of INET, Johnson(2013) emphasized the importance of Asian tradition for building
up the New
Economic Thinking. “It is my sense that the Asian tradition of thought and philosophical
perspective are better suited to embracing this radical uncertainty and living in the
experimentation of the adaptive complex system that our world appears to resemble than are
the Western mindsets that are the product of the Cartesian Enlightenment.” In the summary he
argues that “As the Asian societies continue to evolve the architects will be better served by an
new economics for Asia and from Asia that is based on the notions of radical uncertainty,
complex adaptive systems, mimetic desire, the inseparability of politics and economics, and a
vision of a world where policymakers are themselves less knowing and less capable of control
than we often yearn to believe is within their power.”
The main features of ‘New Economic Thinking for Asia and from Asia’ could be summarized as
follows.
1. Firstly, it would start from ‘going back to the basics, especially philosophical thoughts
common to Asia and the West. Besides instead of homo economicus, the new economic
thinking supposes another type of human-beings who have not only self-interest but also
altruism and sympathy to other people, giving more values to freedom and rights, more
focusing on the role of the gentleman.
2. Secondly, the new economic thinking expands the perspective beyond modern
mainstream economics. It embraces not only classical or modern political economy but
also interdisciplinary approach including political economy and cultural perspective.

Robert economic thinking:

Johnson claims that unemployment and underemployment (idle labor resources) have led to
lower tax revenues, which have led to a budget deficit problem for the USA government under
George W. Bush and Barack Obama.[3] He also cites the lack of a tax on richer Americans who
have inherited wealth at birth or at a young age as another reason for this, in addition to the
effects of government bailouts to large capitalist institutions in the years after 2008.
INET principles:
● Economists and their ideas must be independent from powerful interests. Otherwise,
economics is beholden to those at the very top and fails to serve all of society.
● Complexity and uncertainty are inherent in economic and financial systems. We must
question theories based upon the flawed assumption that humans always behave
rationally and predictably, and that markets always trend towards equilibrium.
● Inequality and distribution matter as much to the economy as growth and productivity.
● Heterodox models that pose alternatives to the neoclassical orthodoxy are essential to
understanding the economy and promoting a vibrant intellectual pluralism.
● History matters. We must learn the lessons of past mistakes, and also draw on roads not
taken historically to map a more equal and prosperous future.
● Diversity of race, gender, class, and other forms of identity enrich economic thought.
● An outdated economic structure is endangering our planet—but new approaches could
save it. To uncover solutions, economists must first incorporate analyses of climate
change, population growth, and stressed resources into their research.
● Multidisciplinary learning. A discipline in isolation develops harmful blind spots. We
collaborate with scholars in other social sciences, the humanities, and the natural
sciences to better understand our world.
Q&A:
Team1: Why does RObert Johnson want to go back to the roots of enlightenment thinking? Why
it was important for him?

Team7:In the slide 10- second paragraph, why the theory argued that individuals cannot go
against laws? There are many corrupted large enterprises in real life.

Team5: In production function and distribution of income, It is said to reduce inequality between
countries, but I wonder if you mean inequality between developed and developing countries or
reduce inequality between developed countries.

Team4: Consumer Sovereignty mentioned in your ppt, what was the intention of the concept
when it was first suggested?

Team 2: Do you agree with Johnson's conclusion that going back to the root(enlightenment) is
the way to move forward in the future?