Sometimes referred to as the “economists’ economist,” Edward J. Nell is author, co-author or editor of almost a dozen books.  He was Malcolm B. Smith Professor of Economics at the New School for Social Research where he had taught since 1969 and is currently the chief economist for Recipco Capacity Exchange.  In his Smart Talk interview, Nell traces economic developments from feudalism to industrialization to modern times, emphasizing such concepts as surplus and capital.

In a breathtakingly concise and comprehensive summary, Nell looks at the role of surplus in fostering modern economic practices.  He begins with the manorial economy, “an obvious system of surplus production,” and explains how growing towns were supported by the surplus from the countryside, allowing craftsmen to develop the materials which led to international trade and a greatly increased use of money.  “… With the monetization of practically everything, [you] move from a system of obligations to one of property and rights.”  Add to that the Black Death of the mid 14th century, which decimated one-quarter of the population, and you see “redevelopment of the [feudal] system.”

Nell reports that as the industry develops, Ricardo gives us a full-scale model of the growth of the economy… the capitalists who employ the workers… and the landlords who collect rents.”  Nell looks next at Marx, who sees “capital as having an inherent problem:  It must exploit the worker in order to create.  But if it exploits the worker too much, it is not going to have much of a market.”  Meanwhile, in the USA, there is a struggle over whether the economy is to develop on an industrial basis or remain on a small-scale farm-and-craft basis.  Industry and the banking system win out, and, eventually “a small, powerful group of leading capitalists… controls quite a large part of the economy.”  According to Nell this is “very dangerous. And, it is a danger that is inherent in the idea of the modern financial system.”