Toxic Economic Theory, Fraudulent Accounting Standards, and the Bankruptcy of Economic Policy
by R.A. Rayman  (Author)

About the Author
Anthony Rayman is the author of articles on economics, accounting, and taxation in professional and academic journals and in the financial press. His books include Price Stability and Full Employment (London: Political and Economic Planning (PEP), 1975), Economics Through the Looking-Glass (London: Ashgate, 1998), and Accounting Standards: True or False? (Abingdon: Routledge, 2006).

About this book
Toxic economic theory originates from its 'schizophrenic' division into separate macro- and macro- compartments. The microeconomic market-value fallacy – by ignoring the macroeconomic repercussions – fosters the delusion that an increase in market value necessarily represents a gain in real wealth. This fallacy is responsible for fraudulent 'fair value' accounting standards and for an epidemic of 'balance-sheet myopia'. In creating an unsustainable pyramid of ever-increasing loans secured on ever-rising house-prices, it is the root cause of the current economic crisis.
The macroeconomic single-gear fallacy – by disregarding the microeconomic foundations – encourages the misconception that the economy is a single-gear machine requiring no more than the lubrication of free competition for operation at its full employment potential. This fallacy is the product of a forty-year-old consensus manufactured to cover up a theoretical schism between squabbling Keynesian and monetarist sects. By inducing misplaced confidence in structural reform as the only long-term cure for unemployment, it continues to prevent a solution to the crisis.
The legacy of toxic economic theory is the bankruptcy of economic policy. The accounting system (burdened by unhelpful and occasionally fraudulent standards) is hardly 'fit for purpose'; it is not reliable for assessing or comparing corporate performance and has become an almost overpowering incentive to 'short-termism'. The tax system has evolved (through a series of historical accidents) into a dysfunctional 'non-system' that obstructs the goals of economic policy. Single-gear macroeconomic policy, having failed to deliver full employment without inflation, now offers little more than a choice of evils: either single-gear 'austerity' – which jeopardises growth; or else single-gear 'growth' – which risks fuelling inflation.

Table of contents
Part I A Very Dismal Science
1 The Greatest Pyramid Scheme since the Time of the Pharaohs? 3
2 From Economic Miracle to Credit Crunch: Thirty Years of Self-Delusion 9
Part II The Microeconomic “Market-Value” Fallacy
3 A Mediaeval System of Accounting 25
4 Fair-Value Accounting and Balance-Sheet Myopia 37
5 The Market-Value Delusion and the Credit Crunch 47
Part III The Macroeconomic “Single-Gear” Fallacy
6 The Topsy-Turvy Wonderland of Single-Gear Economics 65
7 Traffique: The Praeheminent Studie of Princes 76
8 Capitalism and Socialism: The Fatal Conceit 84
9 A Genuine Free-Market Alternative 93
Part IV The Tax that Got Passed by Mistake
10 Income Tax: A Two-Hundred-Year-Old Myth 103
11 The Assessed Taxes 108
12 Not So Much a Tax, More an Anti-Avoidance Provision 116
13 The Growth of the Monster 126
Part V Reform of the Tax System
14 Economic Efficiency or Social Justice? 141
15 Taxation and “The Law of the Market” 149
16 Pay As You Spend 160
17 Pay As You Spend: The Social Justification 172
18 Pay As You Spend: The Economic Justification 181
Part VI The Bankruptcy of Economic Policy
19 Toxic Economic Theory and Global Recession 197
Technical Appendices: The Source of the Poison
Appendix A The Fatal Flaw in Accounting Theory: The Present-Value Fallacy 209
Appendix B The Fatal Flaw in Macroeconomic Theory: The Single-Gear Fallacy 220
References 242
Index 247

Length: 272 pages
Publisher: Palgrave Macmillan; 2013 edition (April 23, 2013)
Language: English
ISBN-10: 1137302011
ISBN-13: 978-1137302014