Archives

Link

FT Letter To The Editor On Current Account Imbalances And War

FT has published a letter to the editor from some post-Keynesian economists arguing for regulating imbalances in the current account balance of payments, and that such imbalances make wars more likely.

One of the signatory of the letter is Dimitri Papadimitriou, who along with Wynne Godley had been warning about imbalances since the turn of the millennium.

From the letter:

…

A new international economic policy initiative is therefore required to head off the threat of further wars.

A plan is needed to regulate current account imbalances, which draws on John Maynard Keynes’s project for an international clearing union.

…

The current system of free trade has created a deflationary bias in the world economy. A further bias is introduced because the United States is now a large debtor of the world and till the crisis which started in 2007 it was acting as the driver of the world, a role which it still plays but is not as big as before. With such a deflationary bias, countries try to use beggar-thy-neighbour policies, as world output is limited. That creates tensions between countries and the desperation to raise output exacerbates the tensions. So a new international order: a system of regulated/planned trade.

Link

Ashwani Saith Discusses His Book Cambridge Economics In The Post-Keynesian Era: The Eclipse Of Heterodox Traditions

There’s a webinar for the Review Of Political Economy where Ashwani Saith discusses his new book on Cambridge economics, hosted by Louis-Philippe Rochon and with discussion from Francis Cripps, Marc Lavoie and Maria Cristina Marcuzzo.

The event was held on Feb 2, 2023.

[The title is the link to the video on YouTube]

Link

Marc Lavoie And Matias Vernengo — Thinking About Inflation

There were two talks on inflation in recent times by Marc Lavoie and Matias Vernengo on September 16th at the Fields Institute For Research In Mathematical Sciences in Canada.

Both authors highlight the shortcomings of orthodox explanations of the recent spike in inflation: the monetarist argument about expansion of the balance sheet of central banks, wage-price spiral, rise in demand etc. They also critique the argument about firms raising their markups and becoming more greedy, which many on the left seem to be putting forward. In their opinion—which I also agree with—it is mainly because of supply chains.

[The title is the link to the video]

Link

Marc Lavoie’s Lecture On Policy Response To The Pandemic From A Post-Keynesian Perspective

There’s a lecture (on Zoom) by Marc Lavoie hosted by Department of Economics at Kyungpook National University, from January this year which I only found recently.

The lecture is on some aspects of policies such as fiscal policy, large scale asset purchases by central banks (LSAP, or “QE”) during the pandemic and some comments on neochartalism or “MMT”. Basically distinguishing PKE and neochartalism.

Enjoy!

Link

UNCTAD Trade And Development Report 2021

This year’s trade and development report is out, and it says Chapters 1 and 2 only but for some reason, the full report hasn’t been released yet. Maybe it only has two chapters.

The report warns of “unfavourable conditions for most developing regions” (Section 2.C.3).

There is an interesting projection of current account balances with explanations around this scenario leading to the pessimism.

Link

The Levy Institute’s Macro-Modeling Team — The Pandemic, The Stimulus, And The Future Prospects For The US Economy

Dimitri B. Papadimitriou, Michalis Nikiforos and Gennaro Zezza have a new report on prospects for the US economy.

They argue that while the US economy would enjoy a boom in the near term because of the large fiscal stimulus, the danger is that because of the large trade imbalance because of the different growth rates of the US and its trading partners implies that the continuation would require a large fiscal deficit or the private sector becoming a net borrower.

In my opinion, soon enough when the US economy starts approaching full employment, there will be shouts to cut the fiscal stance because as Michal Kalecki argued captains of industry don’t like full employment. And/or: continuous growth would require high fiscal deficits but as the public debt will continue to rise relative to gdp, politicians will get nervous.

The US government could try to improve net exports by increasing competitiveness of US firms but such things take time. A combination of trying to improve net exports by industrial policy, tariffs and eventually removing the system of free trade is the way forward. It won’t be easy as economists are attached to dogmas.

Link

The Gatekeeper: Adam Tooze On Paul Krugman’s Evolution

Snip from a Paul Krugman article from the 90s.

Adam Tooze has a nice essay on evolution on Paul Krugman’s views. It’s decent although I would critique much more if I were to write it.

There was one part which was quite amusing to me:

The hour and a half Krugman spent laying out his new trade theory at the National Bureau of Economic Research in July 1979 was, he later wrote, ‘the best ninety minutes of my life. There’s a corny scene in the movie Coal Miner’s Daughter in which the young Loretta Lynn performs for the first time in a noisy bar, and little by little everyone gets quiet and starts to listen to her singing. Well, that’s what it felt like: I had, all at once, made it.’

Imagine being so wrong but feeling this way.

Paul Krugman has shifted his views but it’s not as if he has changed for the better to benefit mankind. He is still doing whatever as an establishment hack, trying to preserve power for top corporations.

Link

Review Of African Political Economy Issue On Samir Amin

Historically advanced countries have developed at the expense of poor countries. It doesn’t have to be that way, and that offers some optimism, but it is crucial to recognise this to make an alternative world without imperialism.

The latest issue of Review of African Political Economy has a special on Samir Amin who developed the dependency theory. For Amin, the international aspect of political economy is central to the subject, not something which needs to be added in the end as a sort of technicality.

In a laissez-faire world, there is no convergence in the fortunes of economies but polarisation. Anyone who is left-leaning in political ideology and is looking for other reasons while ignoring this to explain the world is fooling themselves.

Dependency theory is quite consistent with Post-Keynesian theory. There is an explicit framework of how this happens and that framework is Kaldorian growth theory.

A new world would work to make countries economically independent and reduce the role of the hegemon, the United States in world affairs. It would work in practice by a plan like Keynes’ plan involving significant transfers from the rich to the poor.

A lot of people simply claim that countries just need to copy the Scandinavian model. It’s true that those countries have some things better than the US, but it’s not like everything is great. For example their economic orthodoxies weren’t better than Washington wisdom after the economic and financial crisis which started in 2007. Also, in recently these countries voted against removing intellectual property protections for rich countries for vaccines. When the Scandinavian countries’ governments are themselves part of imperialism, that should raise doubts about the model. More importantly, international constraints put a barrier on trying to become like these countries minus their imperialism.

Articles free to read till March end. The title is the link.

Link

Interview With Sergio Cesaratto: Draghi And The Italian Melodrama

Mario Draghi is set to become the next Prime Minister of Italy!

From a recent interview with Sergio Cesaratto at Brave New Europe:

Will he be able to do it?

Draghi is a many-headed dragon. He is a Catholic socio-conservative. Somehow a Christian Democrat able to please almost everybody – German friends know what I mean. This is his real skill, which he has shown in running the ECB by skilfully keeping the German representatives’ hardliners at bay. Consensus is important. And he will need a heavy German endorsement (and not all Germans like him). Many in Italy fear his conservative facade. Draghi has been many things: the wretched privatiser of Italian public industry just before he went to work for Goldman Sachs; he declared that the European welfare state had had its day; but in 2014 he made it clear that Europe’s anti-Keynesian economic policy was wrong. There is something for everyone! In his tesi di laurea he even argued that the euro was a bad idea! Let’s remember, however, that in 2023 Italy must hold new elections, and although Renzi (who is a former Christian Democrat) shares Draghi’s Christian social-conservative visions (more CSU than CDU), he is unlikely to have the capacity to create a political background for him. Certainly Renzi might have had something like this in mind (recall that he comes from Tuscany, the land of Machiavelli!).

[The title is the link]