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Sunday, April 05, 2009

BOOK REVIEW: Jim Stanford, Economics for Everyone: A Short Guide to the Economics of Capitalism.

Jim Stanford is the staff economist for the Canadian Auto Workers union (CAW), and he explains economic concepts in clear, accessible language. The main points are summarized in a statement of “A Dozen Things to Remember About Economics,” available, along with further resources and study guides, at

What makes this book different from most economic texts is Stanford’s emphasis that, contrary to the claims by mainstream (neo-classical) economists, their theory and policy are very political, and very pro-employer. They assume that markets are natural when they are really socially constructed. Wages, working conditions and social programs are not determined by objective economic “laws,” they are the result of class or trade union struggle.

One function of mainstream economics is to justify the profits that capitalists reap from economic activity. Neo-classical economists claim that profit rates are determined by what capital contributes to output. However, as Stanford explains, the neo-classical model of capital actually assumes the profit rates they claim it explains. The advocates of this model were forced decades ago to admit this circularity in their reasoning, but they lack any solution to this flaw in their supposedly objective explanation for profits.

One form of capital is fixed capital, like the paper machine as long as a football field that I used to work on. Each shift, tons and tons of paper rolled off my end of the machine. It was very hard to resist the notion that it was the machine that made the paper, that the machine was productive. Stanford explains that such fixed capital is instead a kind of tool that makes labour more productive.


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