Mainstream bourgeois economics which is what occupies a hegemonic position in the academic world today is often criticized for being “unreal”, for proceeding on the basis of assumptions that obviously do not correspond to reality. This criticism however, though valid, does not capture its real intent, which is to serve as a means of camouflaging imperialism. The theoretical content of mainstream bourgeois economics is to advance a set of propositions about the functioning of capitalism which deny any need for, and hence any role of, imperialism in capitalist development. Since imperialism has in fact been a crucial element in the functioning of capitalism, these propositions, needless to say, are “unreal”; but simply underscoring their “unreal” character is not enough. This “unreal” character serves a purpose; and this fact must not be missed.
Prabhat Patnaik, Economics And Imperialism
Glenn Greenwald — Is China Merely A Competitor Of The U.S., Or An Adversary Or Even An Enemy?
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The topic of China in political economy brings out so many bad opinions even from the left. Lots of people write apologia for China despite its large human rights violation. Although it’s communist, CEOs of large companies in the United States, the masters of mankind, also speak positively about it and their tone is different from when they’re speaking of Latin American countries, for example, which have socialist governments.
China is mercantilist and uses all sorts of unfair economic practices to further its interests. From the United States’ viewpoint itself, China allows US companies to offshore jobs and allows exploitation. China is a huge beneficiary of the rules of the game under the WTO, at the expense of both advanced and poor countries.
The US net indebtedness is around 50% of GDP now, the result of accumulated current account imbalances in balance of payments. This implies the United States needs to do something by political economic means to reverse this dynamic.
The latest episode of Glenn Greenwald’s weekly show System Update podcast talks discusses the issue with Kishore Mahbubani and Matt Stoller.
From the write-up:
… while hawkish, pro-war political elements in both parties speak of China as an adversary that must be confronted or even punished, the interests of powerful western financial actors — the Davos crowd — are inextricably linked with China, using Chinese markets and abusive Chinese labor practices to maximize their profit margins and, in the process, stripping away labor protections, liveable wages and jobs from industrial towns in the U.S. and throughout the west.
That is why standard left-wing anti-imperialism or right-wing isolationism is an insufficient and overly simplified response to thinking about China: policy choices regarding Beijing have immense impact on workers and the economic well-being of citizens throughout the west.
Of course Glenn Greenwald is wrong that it can’t be analysed by standard left-wing anti-imperialism. It’s mainly a problem of failure of social scientists currently, not of left-wing political economy itself. There are exceptions of course. Thomas Palley has analysed it well. But otherwise Glenn Greenwald is quite sharp in his analysis.
Essays In Honour Of Marc Lavoie And Mario Seccareccia
Hassan Bougrine and Louis-Philippe Rochon have edited two volumes of essays in honour of Marc Lavoie and Mario Seccareccia!
Publisher’s pages for the books:
- Credit, Money And Crises In Post-Keynesian Economics:
- Economic Growth And Macroeconomic Stabilization Policies In Post-Keynesian Economics
Volume 1
Volume 2
The contents of the two books are available in the links to the publisher’s website above.
Cover images credits: Louis-Philippe Rochon on Twitter.
Dani Rodrik On Globalisation After COVID-19
Suppose a poor isolated country opens to business to the rest of the world. There is high risk that producers in that country file for bankruptcy because of competition from foreign producers. Hence the poor country might look at various ways of integrating, such as protection of its industries.
In Post-Keynesian theory, success and failures of nations are strongly the result of performance of corporations in world markets. Winners keep winning and those are left behind keep struggling. Free trade destroys countries.
Of globalisation isn’t just about trade but also finance. So one pet peeve of activists against globalisation is the investor rights agreements which gives corporations power over national governments. And globalisation is also about movement of people for employment and business.
Dani Rodrik is a mainstream economist but his views are on the dissenting edge of mainstream, so he is interesting despite his shortcomings.
So for example, he realises that the rules of the game of globalisation is the result of rigging by top corporations but then claims that the economics profession is innocent:
Political settlements are the joint product of vested interests and prevailing ideas. Our present system of globalisation is no different. After the Bretton Woods regime ran aground with the oil shocks of the 1970s, many developing nations proposed a new mode of integration organised through the UN agencies. But in the end the west and its allies pushed through rules that served the interests of large corporations, financial markets, and skilled professionals quite well, but did not do much for others—those who did not have the networks, skills, or assets to profit from global markets. Had there been powerful lobbies pushing for global co-operation over public health or the environment—and had those in power not bought into the misguided belief that “mainstream” economics dictated they pursue economic efficiency over every other priority, and ever-freer trade as an end in itself—then we might have erected one of the other types of globalisation I just sketched.
On “open-borders”, he rightly dissents from the mainstream view:
A complete opening of borders to foreign labour is neither feasible nor desirable.
Although Rodrik’s ideas are a break from “mainstream”, it doesn’t go too far. Post-Keynesians stress outcome based rules such as balance-of-payments targets via asymmetric protectionism where poor countries are allowed a mix of higher industrial policy and protectionism without facing retaliation and creditor countries being required to boost domestic demand, remove import restrictions and lend to poor countries at cheap interest rates. All this with a coordinated fiscal expansion which maintains economies at full employment.
Tony Benn On The EU
The Euro Area’s response to the covid-19 crisis is austere. This might lead to more dissatisfaction with the European Union project as many are predicting.
Yanis Varoufakis has been more critical of the Euro Area and the European Union in general in recent times, although he says he is in the team which wants to reform the EU from within. In a recent interview with Unherd, he makes it clear why the UK Labour lost the recent election: the push for a second referendum wasn’t liked by the voters and vote was a backlash against them.
Anyway I found a great clip from Tony Benn, the great leader of Labour, and it’s clear how the EU was hated by the left-wing but that it’s different now, unfortunately.
Tony Benn, in Parliament, 1990 (53:00 in the full video, clipped below):
Is the Prime Minister aware that what we are really discussing is not economic management, but the whole future of relations between this country and Europe? This issue is not best expressed in 19th-century patriotic language or in emotive language about which design is on the currency. The real question is whether, when the British people vote in a general election, they will be able to change the policies of the previous Government. It is already a fact, as the House knows full well, that whatever Government are in power, our agricultural policy is controlled from Brussels, our trade policy is controlled from Brussels and our industrial policy is controlled from Brussels. If we go into EMU, our financial policy will also be controlled. It is a democratic argument, not a nationalistic argument.
However, given that the right hon. Lady is a member of the Government who took us into the European Community without consulting the British people, given that she was Prime Minister in the Government who agreed to the Single European Act without consulting the British people, and given that she has now agreed to joining the exchange rate mechanism without consulting the British people, we find it hard to believe that she is really intent on preserving democracy rather than gaining political advantage by waving some national argument around on the eve of a general election. That is why we do not trust her judgment on the matter.
click to view the clip
There are many clips of Tony Benn on the EU on YouTube, but this is my favourite.
Quinn Slobodian’s Review Of Capital And Ideology
Yesterday I had recommended Ingrid Harvold Kvangraven’s review of Thomas Piketty’s book Capital And Ideology, which raised important points about the book totally ignoring the need for a rebalancing of global finance and production.
However, there’s another perspective to look at a great point missed out in the review.
Quinn Slobodian has a Twitter thread, where he points out why Piketty’s book is important. He says:
[T]he central point of piketty’s book-in-the-book is devastating: left parties have gone from being the party of the poor and less educated to the party of the highly educated, losing ever more voters to the right.
and also on the EU Referendum/Brexit:
among the most striking passages are when he concedes the “no” votes on referenda and the “leave” vote on brexit were rare moments of clear classist voting pattern: “a complete divorce between the less advantaged and the European project”
Hence the need for an egalitarian internationalist movement.
📅 Conference: The Legacy Of Wynne Godley
Levy Economics Institute has announced a virtual conference in commemoration of Wynne Godley on May 13th.
The site says that you can join by Google Meet.
Marc Lavoie’s talk is Wynne Godley And The Monetary Circuit. There’s a roundtable Godley’s Approach In The Current Crisis.
There are several new speakers who didn’t attend the conference in honour of Godley in 2011 such as Ken Coutts, Graham Gudgin, Bill Martin.
Poster from Levy Institute’s Facebook page.
Ingrid Harvold Kvangraven’s Review Of Thomas Piketty’s Capital And Ideology
Nice review of Thomas Piketty’s book Capital and Ideology:
… his [Piketty’s] policy recommendations largely on wealth transfers. For example, rather than interrogating how we as society work, produce and consume, his solutions are biased towards redistribution without changing the core of the system.
This limits his capacity to explain global phenomena. This is clear in his view on the effects of trade liberalization: rather than exploring how the removal of barriers to imports in the 1980s led to a collapse of industry in the global south, Piketty focuses on the loss of income from tariffs. In the same vein, his proposals shy away from discussing the massive rebalancing of global finance and production that is necessary; instead, he focuses on aid transfers to governments, and taxation.
Picture from Thomas Piketty’s Twitter page
Glenn Greenwald appears in one the recent episodes on the podcast Red Scare.
He talks of various things politics especially on why Bernie Sanders lost and also Jeremy Corbyn.
This at 1:10:00 caught my attention:
Everyone knew he was in favour of Brexit, like everyone knows he hates the EU but he felt like in order to just like worm his way through the Labour party kind of Blairites, he had to pretend against Brexit and be a remainer when everyone knew he wasn’t, so it was like this kind of like complete draining of his vibrancy and passion being forced into this box where he wasn’t comfortable.
Is Financial Times Socialist Now?
Few days ago, “The Editorial Board” of Financial Times published an article calling for “radical reforms”.
The article says:
Radical reforms — reversing the prevailing policy direction of the last four decades — will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.
…
The leaders who won the war did not wait for victory to plan for what would follow. Franklin D Roosevelt and Winston Churchill issued the Atlantic Charter, setting the course for the United Nations, in 1941. The UK published the Beveridge Report, its commitment to a universal welfare state, in 1942. In 1944, the Bretton Woods conference forged the postwar financial architecture. That same kind of foresight is needed today. Beyond the public health war, true leaders will mobilise now to win the peace.
So what explains this shift?
The important point is that FT which just speaks for the ruling class hasn’t become left-wing, it’s just adopting a left-wing policy. The number one point of liberalism—the ruling class ideology—is to prevent a left-wing rise. Anything for that, including the use of left-lite politics, temporarily.