Why the West is failing: failed economics and the rise of the East

Abstract

Why the west is failing is a thought-provoking book. In it, John Mills argues that western nations are growing at a slower pace than their eastern counterparts. Mills attributes this slow growth to policies that ignore the importance of industrial competitiveness. According to the author, this could be resolved if western states increased their investments to meet those of eastern states, particularly China. To keep up with China, western states should invest in activities that generate or increase productivity, and their investments should be complemented by policies that ensure competitiveness in global markets. For instance, western productivity could be increased through the revival of manufacturing industries and a competitive exchange rate. The book provides a fascinating synopsis of the development of economics, as a subject, over the last 250 years. Mills covers contributions from Adam Smith, Thomas Robert Malthus and David Ricardo, among others, and complements this overview with a nuanced explanation that illustrates the shortcomings of key thinkers and of the discipline as a whole. Mills's belief that traditional economic theories have contributed to the West's slow growth rate is noteworthy. The author argues that the discipline's focus has been on how resources and existing output have been distributed; how inflation can be reduced; and how unemployment can be avoided. As a result, economics has not been oriented towards explaining what generates new outputs. Furthermore, Mills criticizes the existing growth theories as more descriptive than prescriptive. Mills emphasizes that monetarist and neo-liberal policies are not focused on maximizing the prospects for economic growth. Instead, these policies have been geared towards providing monetary stability and maintaining a steady inflation rate.