“We must go round about to find the roots of our own beliefs. In the general mass of notions and sentiments that make up an ideology, those concerned with economic life play a large part, and economics itself (that is the subject as it is taught in universities and evening classes and pronounced upon in leading articles) has always been partly a vehicle for the ruling ideology of each period as well as partly a method of scientific investigation.”
Joan Robinson (1962), Economic Philosophy, Ch.1
These words were written twenty years ago by distinguished Cambridge economist, the late Ajit Singh, and are somewhat prophetic on the evolution of the world economy and the causes of today’s political trends.
He compares the situation in the 1990s with the ‘Golden Age’ of capitalism during the 1950s and 60s, which saw rapid growth, low unemployment, and rising wages for the majority in many countries. He puts this down to broadly Keynesian interventionism by the state in cooperation with employers and trade unions. This was more effective in some countries than others. Nevertheless, he predicts that unless such conditions are restored, and the benefits of globalization are spread more widely through deliberate policy, the liberal international order will lose its legitimacy and prove unsustainable. I could argue with some of this, as I am not a fully convinced Keynesian, but the broad theme is telling. And so it goes… Continue reading
My former tutor, SOAS Professor Mushtaq Khan, on the difficulty of industrial policies in developing countries. Political, economic and technological conditions are specific to each country and to different stages of development, and this should be borne in mind when designing and implementing such policies, if they are to have a good chance of success. Such an outcome is badly needed to help the poorest on our planet improve their situation.
This short video introduces industrial policy and argues for its importance in a capitalist economy and society. There is a plug at the end for the discussants’ book, but don’t let that put you off. They offer some refreshing ideas on why industrial policy needs to be talked about more openly in policy debates in countries both rich, poor and everything in-between.
This short interview from the Real News Network illustrates the progress of clean energy generation in the US, compared with dirtier sources. The argument is that the cost of renewables is falling fast, such that they are becoming cheaper than coal-fired generation, which Mr Trump has promised to support. Cleaner sources also have positive spillover effects on health, known in economics as a positive externality.
The logic of market forces has probably been helped along by industrial policies, from Obama’s Clean Power Plan to the Chinese government, which has promoted the development of its solar panel industry. But if clean energy becomes cheaper than dirty energy, surely a Republican president looking for a good deal can’t argue with that.
In this short video, which is (slightly annoyingly) only available directly on YouTube, development economist Ha-Joon Chang chats about a range of economic and political issues. He covers industrial policy, free-market ideology, the UN’s Millennium Development Goals (MDGs) and China.
I am a fan of Chang’s often iconoclastic work, and he has written a number of excellent non-academic books for the intelligent reader, including Bad Samaritans, 23 Things They Don’t Tell You About Capitalism, and Economics: The User’s Guide.
Oxford Professor Simon Wren-Lewis blogs here that UK households are set to lose out from the effects of the vote for Brexit over the next few years due to slowing growth in overall income. This is according to recent Bank of England forecasts for the UK economy.
While overall growth in GDP is forecast to be relatively strong compared to other rich nations, average growth in household income may be zero or even negative during this period.
This is due to the sharp fall in the value of the pound, which makes imports more expensive, and is already contributing to a rise in inflation.
Higher inflation means that a typical consumption basket is more expensive than otherwise, and this reduces real household incomes, other things being equal.
But the fall in the pound should have other effects on the economy. Continue reading