‘The Institute of Enterprise and Entrepreneurs has been over 15 years in the making and exists to make sure that all those involved in enterprise are able to access the support they need, when they need it’.
Whether your interest lies in tracking SFEDI Centres of Excellence or in developing apprenticeships and wider learning in business, then Think Enterprise has something of interest for you.
Be sure to check out pages 16 & 17, with their 2016 Enterprise Awards almost upon us, if only to read of the developmental success of others can in itself an inspiring and confidence building thing as you grow your own business, whatever sector you are in.
There is a new movement afoot in the world of business, namely social finance, and a new concurrency in the ethical, diverse and empathetic way that organisations with an appropriate mission are related to, funded and supported. Both from the world view of the consumer, but also the wholesale and retail social finance sector.
There is also a stirring of new thought and sensibility in the world of economics. How it is taught, how it is understood in terms of social impact and how diversity of viewpoint, model and perception should be just as important as rigid neo-classical dogma.
In the North West of England this new thought is well expressed by the University of Manchester Post-Crash Economics Society (PCES). Their paper Economics, Education and Unlearning is at once a polemic against the orthodoxy of their present academic tutorial staff and system, but is also a proxy for how a new generation of economics graduates will come to see this diversity and system choice in framing new concepts for the future.
Much of the PCES paper is a critique of the detailed processes of tutorials and curriculum delivery at the University. However, there is also much to be gained from a reading by those interested in economic thought in the wider context.
The students argue that the sole focus on the neo-classical mode of economic thought leaves all alternative theories and approaches in the void. The students argue in their paper that to be equipped as economists in a world of variety, choice and new model start-ups, then they should be able to abandon the…
elevated economic paradigm, often called neoclassical economics, as the sole object of study. Other schools of thought such as institutional, evolutionary, Austrian, post-Keynesian, Marxist, feminist and ecological economics are almost completely absent…
In the real world it is these shades or degrees of economic thought which so often temper the real aspirations of economic players, at the local, regional, national and now often, international level.
Interestingly, the forward to the paper is delivered by Andrew Haldane of the Bank of England. In it he describes how the Adam Smith concept of the ‘invisible hand’ in Smith’s 1776 book The Wealth of Nations gave us the prime mover of neo-classical economics.That the ‘…pursuit of self interest, at the level of the household or firm, resulted in aggregate outcomes which could be optimal for society as a whole’. The thesis that greed is good, that competition triumphs all.
Haldane’s argument is that for the 21st Century, for a social finance environment, built on an ethical and socially responsible framework, it is Smith’s earlier work, The Theory of Moral Sentiments, published in 1759 that should now become our principal text, ‘…it places centre stage concepts such as reciprocity and fairness, values rather than value’.
Whatever your originating position on economics, from neo-con to Marxist- feminist and all hues in between, we hope you can be persuaded that the students of Manchester, and other centres of learning, have marshalled a compelling set of arguments to amend and redirect the teaching of economics in the U.K. It bodes well, we would argue, to have a new generation of economic thinkers unafraid to mould theory and practice into a many headed fiscal hydra, in order to eat into the economic disenfranchisement and unfair distribution of so much of the world’s population.
We were uplifted.
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Put simply money illusion is the propensity to respond to changes in money magnitudes as if you were were responding to changes in real magnitudes.
For example, if we increased your income by 100% from now, but also increased the cost of all the goods and services you used or purchased by 100%, and you were already buying the optimum goods or services for your needs, then you could go on acquiring these at previous rates of consumption. (Any goods or services that you previously couldn’t buy, you still could not afford).
However, the money illusion, in essence, is when your income rises and you ‘feel’ richer, consequently you purchase more luxury or non-standard goods or services because of that feeling and purchase less of the staples you previously bought.
Individuals fail to grasp that their real income has not risen. (Your real income is measured by dividing your money income by an appropriate and consistent index of prices…see below…).
You can see therefore in mainstream economic practice that the banks ability to quite literally print money, to increase it’s own money magnitude at will – remote from real lives and economic behaviour, or for an individual to regularly value and revalue their property portfolio on a rising market, can lead to financial disaster for the individual.
The economist Irving Fisher deliberated long and hard about the high value of stocks immediately before the 1929 Wall Street crash, ands produced many of the indices of value that we still use to measure, or second guess, market ‘fluctuations’ today. This thinking has not prevented economic juddering in recent decades either.
We would wish to argue that a rational social economy, based on business outputs that are focused on social outcome, not individual wealth or shareholder value as a predominant driver, are one way to counterbalance the money illusion.
Taking out the thirst for dis-proportionate personal wealth and dedicate outputs to a wider social good – replacing the feeling of ‘riches’ for the feeling of ‘community’ – is a perfect way to achieve a new economic equilibrium.
Boost the social business market, starve the illusion!
Explanations is an occasional Mining the SEEM piece to explain economic and financial thinking in a clear and understandable way. If you have a term to be explained, or even to tell us when we haven’t been clear, then contact the Editor at Mining the SEEM and let us know.
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