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Saturday, 30 October 2010 12:31

Zombie Economics: How Dead Ideas Still Walk Among Us, by John Quiggin (Princeton, £16.95)

The financial crisis has disproved many cherished tenets of "market liberalism", such as the "Efficient Markets Hypothesis", yet these zombie ideas still shamble through newspapers and journals. Enter economist Quiggin, calmly wielding dual shotguns to blast them relentlessly in the face. Just as useful as these blood-spattered executions are the almost loving histories of how such ideas (eg, that "a rising tide lifts all boats"; or what glories in the name of "Dynamic Stochastic General Equilibrium") got started in the first place. (Zombies don't kill people; people who make zombies do.)

As Quiggin explains with elegance, lucidity and deadpan humour, the undead ideas here are interconnected: killing one causes it to knock over another, in a sort of zombie-dominoes effect. Once the Efficient Markets Hypothesis is headshotted, the idea that private companies will always run things better than governments goes down too. (Good luck, Royal Mail.) Quiggin is also quietly angry, eg about the "Great Risk Shift" accomplished by the zombie ideology in its pomp (risk was shifted from society to individuals), or the "widespread acceptance [.

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