Following last week’s brief introduction to Keynes, here is one for Karl Marx, along the same lines. This year is the 200th anniversary of Marx’s birth and his work remains important to an understanding of the modern world.
I found this video interesting as it contains some ideas and perspectives on Marx that I hadn’t come across before, so it is well worth viewing.
As the narrator explains, much of Marx’s writing was on capitalism rather than what should replace it, at least in any detail. His magnum opus, Capital, is hard-going but remains an extraordinary achievement, while his and Engels’ earlier work, The Communist Manifesto, is pretty short but also very much a fiery and passionate diatribe.
Marx praised capitalism’s productive powers and, remarkably, predicted that it would sweep the world. He was also its foremost critic, and the video does a good job of outlining many of the flaws he identified.
Despite a brief revival, the world economy is slowing again. A more sustained recovery will require international cooperation to reduce external imbalances in a way that reduces unemployment and maintains low inflation.
This post explores the role of the role of internal and external balance (or lack thereof) in helping us find a return to a more sustainable prosperity. These ideas form much of the theoretical content of The Leaderless Economy by Peter Temin and David Vines, which was published in 2013.
So do we need another policy scheme for restoring global prosperity? I would argue that we do. Global growth picked up in 2017 but, apart perhaps from the US, has begun to falter recently, not least in the UK, but also in continental Europe. Many economies have accumulated high levels of private and public debt, and have made little progress in reducing them. Continue reading →
More thought-provoking words from Michael Pettis on global economics and politics, particularly the relationship between the US and China, the pressures on international trading relationships and the two countries’ roles in future decades.
He describes the options open to the dominant global powers in restoring a more sustained pattern of growth and prosperity: one country can lead, or we can all get together and cooperate over economic policy.
He suggests that we are living through a period during which neither are likely. Furthermore, the experience of the 1920s and 30s demonstrate that this power vacuum could be bad for us all.
Here is a nice video introduction to the life and work of John Maynard Keynes, whom many regard as the greatest economist of the 20th century. Keynes’ goal was to save the capitalist system from its worst defects, particularly mass unemployment, through intelligent government interventions, at both the national and international level. For Keynes, it was more about economic reform than revolution.
As an economics student I was strongly influenced by leftist Keynesian ideas, which I later found out are broadly termed post-Keynesian. I often tried to make that come across in my essays. Some of my teachers didn’t like that, as such ideas tend to be outside the mainstream.
Since then, I have explored political economy more widely, including the work of Marx and modern-day Marxists. I have become a little disillusioned with Keynesian policies, or at least the prospect of our political masters coming together to put them into practice. I now see industrial and social welfare policies as equally important at the national level, both for the developed and developing nations.
As a result, I have become less of a post-Keynesian, and more aware of the limits to successful interventions under capitalism. I try to be more flexible ideologically, but I still find Keynesian ideas useful and they remain important to progressive thinking.
The BBC reported on Tuesday that government borrowing for the 2017-18 financial year fell to its lowest level in eleven years, at £42.6bn. This was lower than forecast and represents 2.1% of GDP. However much of this reduction is accounted for by reduced spending rather than increased tax revenue. This is because economic growth remains sluggish, at 0.1% in the first quarter of 2018 according to the latest figures, and is failing to generate buoyant tax receipts.
So austerity continues, while growth is faltering. The Chancellor, Philip Hammond, claimed today that “our economy is strong and we have made significant progress.” This is surely breathtaking arrogance. The deficit may be down, but the economy is struggling.
According to economist and entrepreneur John Mills, the UK economy could be doing much better and significant imbalances remain, which are constraining growth and improvements in productivity and wages. Continue reading →
I refer to the work of Michael Pettis quite often on this blog. He strikes me as a highly original thinker, combining macroeconomics, finance, development, political economy and economic history in a way which provides a deep understanding of world economic events.
He recently posted here about what he sees as the two main models of economic development which nations have used to transform their economies at certain times in history: the high wages model, and the high savings model.
Models of development can be described as a set of policies and institutions which aim to develop the economy and achieve sustained rises in productivity and output via industrialisation and the advancement of technology.
For Pettis, both models aim to raise wages and productivity, but they are distinct from one another in how they drive the investment which makes this possible. Continue reading →
A very brief interview on YouTube with Professor Mariana Mazzucato, who specialises in the economics of innovation. Admittedly she is plugging her new book The Value of Everything: Making and Taking in the Global Economy, but she makes a good case that we should have more of an appreciation for the role of the state, in partnership with the private sector, in driving innovation under capitalism. She argues that we must use that partnership to promote greater and more widely-shared prosperity.
Historically the state has often been a major player in funding, researching and developing new technologies, not least those behind the smartphone, as she describes in The Entrepreneurial State. I hope to read her new book during the next few weeks. In the meantime, a critical review by Marxist Michael Roberts can be found here.