A Real Incomes Approach to Economics

Welcome to the website for the Real Incomes Approach to Economics!

The Real Incomes Approach has evolved since I initiated its development in 1975, in Rio de Janeiro, into the only macroeconomic policy with a direct microeconomic foundation and that is wholly supply side. In 1976 my focus in its development moved from Brazil to the UK economy and to this day its development continues with a focus on the UK economy.

What emerged as "supply side" economics, in the late 1970s was no more than a fiscal device which, in practice, failed. The recognition of supply side being the issue to resolve slumpflation was correct at the time but the solution was moulded in the light of existing, proven-to-be-ineffective, policy instruments so this did not resolve the issue. As a result there was a good deal of suffering imposed by the policy solutions.

I was not involved in the developments of "supply side economics" and was surprised when I reviewed it in early 1980s to find that it has very little to do with supply side, so why was it has that name remains a mystery. My own view on what supply side should be is easy to understand and can be found here: What are the elements of a supply side policy?

My motivation for initiating the economic analysis, that ended up as the Real Incomes Approach, was that having studied post-graduate economics and both Cambridge and Stanford Universities I found that, in 1975, when I tried to work out a solution to slumpflation I was unable, with my understanding of the existing policy instruments, to find one that I found acceptable. All options would cause serious prejudice to segments of the economic and social constituencies. I therefore set about investigating why conventional economic theory and practice was so defective. I found it unacceptable that poorly conceived socially destructive policies could be called "essential medicine" for economic recovery. Unfortunately this blunderbuss mindset persists today in many politicians and many economists around the issues that are referred to as:

austerity
living within our means
the magic money tree

The bandying around of these terms convey little and they reflect an intellectual deficit and a worrying level of ignorance of the economic and financial options that are superior to what passes for conventional macroeconomics with its threadbare tool kit of currently available policy instruments. In reality Keynesianism, monetarism and supply side operate using different perspectives on a common but flawed Aggregate Demand Model (ADM) which I refer to as KM policies. So the electoral cycles that result in each false option coming to the fore to be applied and then, of course, failing, is wholly predictable.

I am aware that few know about the Real Incomes Approach. This development work has been largely a personal endeavour and I am not part of any department of some university so general exposure has been limited. This website should help clarify some questions and hopefully encourage feedback on this topic.

If this is your first visit to this site, I would encourage you to read the Introduction page. This provides a broad sweep of the breadth of impact that a Real Incomes Approach to policy can have and, hopefully, this will encourage you to read further or at least ask questions.

Hector McNeill
SEEL - Systems Engineering Economics Lab
Portsmouth

hector.mcneill@realincomes.org.uk

Telephone: +44 (0) 7 760 444 625