Author: Zoe Lindesay
Roughly six months after taking on the role of Project Co-ordinator for ‘Rethinking Economics in the City,’ I thought this was a good time to provide an update on our progress.
‘RE in the City’ was a project initiated in August 2013 to help engage professionals in the debate about pluralism in economics, initially using LinkedIn as a platform. LinkedIn is the leading social networking site for professionals, with over 259 million users from over 200 countries. LinkedIn is often used for brainstorming ideas, making introductions, organizing events and can have important influences on policymakers.
The description for the Rethinking Economics LinkedIn Group is based on our mission statement:
We are a community seeking to demystify, diversify and invigorate economics
made up of imaginative citizens, students, academics, and professionals
an international network of rethinkers
The Group is small, (currently 89 members) but active in terms of the number of posts and comments. At the moment our members are largely drawn from within the Finance profession, but with interests across the spectrum of pluralist economic thought, for example we get a lot of discussions on ‘the School of Biophysical Economics.’
By design this is an open group with no moderation, so the Group is as accessible and inclusive as possible. This is quite unusual for LinkedIn, where normally there is some control over who can join and who can post. We also have some close links with other LinkedIn Groups with similar interests - ‘The Prosperity Renaissance’ (with over 1,000 members) is a good example of this.
I think LinkedIn represents a fantastic opportunity to promote and develop pluralist ideas. If anyone from the Rethinking Economics community is interested in becoming a ‘LinkedIn Ambassador for Pluralism’ you can join our Group here.
Pluralism in Action
A number of our members on LinkedIn are involved in their own projects which could be considered to be outside the mainstream. Since this is a professional network, the emphasis is much more about the practical application of ideas, and less about rigorous debate on economic theory. Here are a couple of examples from our members of what I would term ‘pluralism in action’:
Ontonix is a company which post-crash has been growing from strength to strength. Their mission is to introduce new tools for use in economic analysis, risk management and portfolio construction based on measurement of the underlying complexity and resilience of the system, instead of using statistical inference techniques. The tools for understanding complexity in economic systems have been available for a couple of years now – you can find out more from this video or by investigating the Ontonix blog. More recently, the same team have launched a new company called AssetDyne which aims to replace Modern Portfolio Theory with Complexity Portfolio Theory. You can find out more about this project here.
Another top contributor in the Group is author-researcher, Max Wong, who has been working for many years on remodelling the Basel risk capital framework. His book 'Bubble VaR' exposes the weaknesses in traditional VaR methodology and is an exciting read for anyone interested in this topic. More recently Max has been researching the use of the 'Kelly Criterion' to manage systemic risk in the banking system. He has already presented his ideas in Singapore and he is very keen to do the same in the UK, so one of my priorities is to look into sponsorship opportunities for that.
Last but not least, one of our most active members is Edward Ingram, a South African author and former Independent Financial Advisor, who is proposing a new paradigm for how financial instruments should be designed. The concept is that lending should be organised in the form of ‘Wealth Bonds’ where variable interest rates are linked to underlying earnings and not to price inflation. For example, for mortgage borrowers this would mean that if incomes were not rising as fast as inflation, then some of the pain would be taken by the banks rather than this being fully the burden of the mortgagees. The suggestion is that application of this principle should reduce volatility in financial markets and cut down on the levels of arrears. Edward has a team of senior African finance professionals who are involved in reviewing his ideas which are published in the leading South African Finance journal ‘Fin 24’ and which are also available in ‘raw form’ on his website ‘Macro-Economic Design.’
These are just a few of the ideas and projects that we have managed to connect with via the Rethinking Economics LinkedIn Group. We held the first 'RE in the City Drinks' just before Christmas which about 20 people attended. Hopefully I will get another drinks evening set up in the near future and I look forward to seeing some of you there!