Tag Archives: jayati ghosh

UNCTAD On The Case For A Global New Deal

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The United Nations 🇺🇳 Conference On Trade And Development (UNCTAD) publishes wonderful annual reports on trade and development. These are written by heterodox authors many times. Alex Izurieta, Francis Cripps, Jayati Ghosh are a few contributors. This year’s report is here. 200 pages!

The report has detailed discussion on robots and its impact. This is quite different from what one hears normally.

From the press release:

With the United States withdrawing from its role as global consumer of last resort, recycling surpluses is a key element in rebalancing the global economy.  The report turns the spotlight on the eurozone – especially Germany – which is now running a large surplus with the rest of the world. The recent Group of 20 proposal made by Germany – a Marshall Plan for Africa – is welcome, but so far lacks the requisite financial muscle. The trillion-dollar Belt and Road Initiative of China is much bolder, even as its surplus has dropped sharply over the last two years.

The report draws lessons from 1947, when the International Monetary Fund, the World Bank, the General Agreement on Tariffs and Trade and the United Nations joined forces to rebalance the post-war global economy, and the Marshall Plan was launched. Seven decades later, an equally ambitious effort is needed to tackle the inequities of hyperglobalization to build inclusive and sustainable economies.

In response to the political slogan of yesteryear – “there is no alternative” – the report outlines a global new deal to build more inclusive and caring economies.  This would combine economic recovery with regulatory reforms and redistribution policies, and do so with speed and at the requisite scale. The successes of the New Deal of the 1930s in the United States owed much to its emphasis on counterbalancing powers and giving a voice to weaker groups in society, including consumer groups, workers’ organizations, farmers and the dispossessed poor. This is no less true today.

In today’s integrated global economy, Governments will need to act together for any one country to achieve success. UNCTAD urges them to seize the opportunity offered by the Sustainable Development Goals and put in place a global new deal for the twenty-first century.

In addition, you can see the two short videos here.

Link

Jayati Ghosh — After Neoliberalism, What Next?

Jayati Ghosh in Red Pepper: 

The question ‘what is your alternative?’ is a familiar one for most progressives, and too often we are overly defensive or self-critical about our supposed lack of alternatives. In truth, there are many economically-viable, socially-desirable alternative proposals in different contexts. The problem is not their lack of existence but their lack of political feasibility, and perhaps their lack of wider dissemination. …

While rejecting the totalising theory, it is possible to think of a broad framework around which there could be much agreement, even among people who do not necessarily identify themselves as of the ‘left’, but are nevertheless dissatisfied with current economic arrangements at both national and international levels.

…

The obsessively export-oriented model that has dominated the growth strategy for the past few decades must be reconsidered. This is not a just a desirable shift – it has become a necessity given the obvious fact that the US and the EU are no longer engines of world growth through increasing import demand in the near future. This means that both developed and developing countries must seek to redirect their exports to other countries and most of all to redirect their economies towards more domestic demand. This requires a shift towards wage-led and domestic demand-led growth, particularly in the countries with economies large enough to sustain this shift.

Jayati Ghosh On Imperialism

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Excellent Jayati Ghosh interview with The Real News Network, from earlier this week, titled Jayati Ghosh On Imperialism In The 21st Century. 

click to watch on YouTube. 

Excerpts:

… [I]mperialism is fundamentally about the struggle over economic territory. It’s not just about state control or colonial control or any specific kind of control. It’s really the struggle of large capital over different kinds of economic territory. And these could be territories defined in terms of markets, in terms of workers and labor, in terms of natural resources, in terms of new kinds of markets that are developed.

…

… [I]mperialism has gone through many different forms in the course of its evolution. There was the time when it was explicit colonial control, when it was the control by the state over other physical territories which they could then change to their own desires.

…

… [I]mperialism has had to move towards new ways of control. They are not purely military. They are not purely political. They are much more, I would call them, legal and institutional forms of control … So, the WTO, of course, several of the rules of the IMF, but much more significantly, the new trade and investment treaties that are being signed, plurilateral, bilateral, all of these mega regionals. All of these are really oriented towards limiting the power of nation states to control capital, which in turn means that imperialism is able to take new forms.

Also a good explanation of what neoliberalism is:

Neoliberalism is fundamentally the view that the role of the state is not necessarily to reduce its power but to exercise its power directly in favor of capital … People talk about it as a retreat of the state. It’s not a retreat of the state. It’s a shift of the state away from protecting the interests of society at large and particularly, therefore, the working class towards protecting the interests of capital. Because we will see that states are no less powerful. In fact, some of the most neoliberal states are often the most authoritarian. And they’re becoming more and more authoritarian.

Transcript here

Link

Jayati Ghosh: The Political Economy Of Demonetising High Value Notes

Who better to write about the recent demonetisation than Jayati Ghosh? In yesterday’s The Hindu, she writes:

The demonetisation of bank notes per se is not the problem. Indeed, it has occurred periodically in India and many other countries, both to reduce concerns about counterfeiting and to spread the use of cash-based illegal transactions. To the extent that it reduces these, it should certainly be welcomed. However, when this has been done in India in the past or in other countries, it has typically been done gradually, allowing adequate time for people to replace the old notes with new ones to prevent too much disruption of economic activity. This overnight shock, by contrast, is hugely destabilising, with likely medium-term material damage to a very large part of the population. It affects very little of the stock of ill-gotten wealth and does nothing about its generation, but it has severe impact upon ordinary people, whose lives have already been hugely disrupted.

Although, the best you can read on this issue, I’d differ saying that announcement should have been a shock. But that’s a minor quibble, since the government assumption on which this is based – that people have a stock of cash notes in their water tanks itself is wrong.

[The title of this page is the link]

Endogeneity, Exogenous, Et Cetera

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Louis-Philippe Rochon and Sergio Rossi have a very interesting article Endogenous Money: The Evolutionary Versus Revolutionary Views in the Review Of Keynesian Economics. I think it was written many years back and was in an unpublished form and has been published now. It is a nice critique of views of some Post-Keynesians such as Victoria Chick and also others such as Basil Moore. For instance, the paper quotes Moore’s view from 2001:

[w]hen money was a commodity, such as gold, with an inelastic supply, the total quantity of money in existence could realistically be viewed as exogenous.

Click the image to visit the ROKE website.

roke_cover

There are also some nice articles in a recent issue of JPKE on neoliberalism and the financial crisis.

Some gossip: The JPKE was initially supposed to have been called Journal of Keynesian Economics but it didn’t make it because the acronym would have been JOKE.

Also, Jayati Ghosh has written an excellent blog article on Thatcherism – the ‘triumph of private gain over social good’ (borrowing words from her).

Matias Vernengo has a recent blog post on the persistence of poverty in the United States. Which reminds me of an interview clip of Anwar Shaikh titled “The Sin Of Our Era”:

click to watch the video on YouTube

Back to formal matters.

What does it mean when an economist says words such as “endogenous”, “exogenous”? Most of the times, economists – mainstream economists – themselves confuse these terms and hence you see a lot of usage of these words in Post-Keynesian economics.

I was reading an article on econometrics by Fischer Black (of the Black-Scholes fame) titled The Trouble with Econometric Models

An exogenous variable is supposed to be a causal variable, if the structure of a model has economic meaning. In fact, it is usually just a variable that is put on the right-hand side of equations in a model, but not on the left-hand side.

Similarly, an endogenous variable is supposed to be a caused variable. In fact, it is usually just a variable that shows up at least once on the left-hand side of an equation

which is fair but there exists another language.

There is however another usage – that is in the control sense.

In an outstanding paper Federal Reserve “Defensive” Behavior And The Reverse Causation Argument, Raymond E. Lombra and Raymond G. Torto point out the following in the footnote:

Apparently no generally accepted concept of an endogenous money stock (or monetary base) has been defined. In statistical theory a variable is endogenous if it is jointly determined with other variables in the system. However, many monetary theorists have chosen to call a variable endogenous only if its magnitude is not under the control of policymakers. Such semantic problems have undoubtedly prolonged this debate.

For the money stock measure such as M1, M2 etc., there shouldn’t be any confusion. The trouble arises for things such as interest rates. For example, some economists may say that if inflation rises, the central bank may/will raise the short-term interest rate and it is endogenous while others will say it is up to the central bank to decide how much to change the interest rate, if at all. Such things lead to a lot of debate.

I like the latter usage (the control sense) but I think it is difficult to exclusively have the same usage.

The word “control” is also misunderstood. Here is a fine article on Wynne Godley in The Times from 16 June 1978 where he details on how misunderstood the word is:

Leading Economist Insists That You Cannot Control M3

(click to expand)

Jayati Ghosh On G20

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Triple Crisis has a Spotlight-G20 series and Jayati Ghosh has an article aimed at leaders of G-20 who meet next week in Mexico: Spotlight G-20, If Not Now, Then When

She says:

… the G20 appears to have lost its way. Its original intention – to provide a relatively speedy and workable arrangement for global governance (especially economic governance) at a time when co-ordination of macroeconomic measures is seen as essential – has clearly fallen by the wayside in the past two years. Indeed, if it cannot deliver this time around, it risks sinking into irrelevance, at a time when the global economy badly needs some institutions to respond to what is more and more evident as a crisis of massive proportions

As global imbalances have reached unsustainable levels, the G-20’s role has become more and more important. It is now been forgotten by the economics profession that coordinated reflation of demand is important for growth and that the coordinated action after the crisis hit in 2008 had an important role to play in preventing a deep implosion.

James Tobin realized how shouts used to be ignored. In his article Agenda For International Coordination Of Macroeconomic Policies [1], he said:

Coordinate policies! So economists urge governments. Financiers, journalists, pundits, politicians take up the cry. Central bankers and finance ministers agree, as do presidents and prime ministers. They meet, they talk, they announce progress. It turns out to amount to very little…

With its balance of payments at critical levels, the United States is no longer in a position to reflate demand and in the process continue to drive growth in the rest of the world by acting as the importer of the last resort. Hence it is no longer possible for the rest of the world to grow on the path it had taken before the crisis – i.e., depending on the United States. A recovery for the medium-term is only possible if there is a strong reflation of worldwide demand by governments.

More importantly even this will not be sufficient as it just postpones the reversal of global imbalances. However for now  immediate action is required and a strong forum is needed to work out a plan to address the bigger challenge.

References

  1. James Tobin, Agenda For International Coordination Of Macroeconomic Policies, Ch 24, p 633, Essays In Economics, Volume 4: National And International, The MIT Press, 1996