“The welfare state has become the most effective way of dealing with the inevitable insecurity that capitalism creates in its pursuit of economic dynamism. Moreover, if designed well, the welfare state can make capitalist economies even more dynamic, as it reduces people’s resistance to new technologies and new working practices – the Nordic countries are the best examples of this. No wonder that the welfare state has been spreading and growing, despite the continuous attack on it by neo-liberal ideology since the 1980s.”
Ha-Joon Chang (2022), Edible Economics: A Hungry Economist Explains the World, UK: Allen Lane, p.104.
Across the world, households are to varying degrees suffering from today’s cost-of-living crisis. As so often, the poorest and most vulnerable have been hit hardest. The current solution is for independent central banks to use monetary policy to bear down on inflation in the hope that once it comes down, higher rates of economic growth will resume, to the benefit of the majority. But is that really the case, and are there alternatives? A new book by Costas Lapavitsas, James Meadway and Doug Nicholls takes a radical leftist approach to the crisis and its resolution. The Cost of Living Crisis (and how to get out of it) is a pithy read, targeted at the general reader, and aims to debunk the mainstream explanations of the crisis while proposing policy solutions. It focuses more on the UK than elsewhere, but is applicable to other advanced countries.
“I’ll start from the basics – it has to include energy. Theories of production that leave energy out are theories of fantasy, and both neoclassicals and Post-Keynesians have been guilty of that over the past two hundred years. The last school that got it right was actually the physiocrats. I’d go right back to the physiocratic foundation and see industry as being unproductive, sterile, if you can’t create energy and then convert energy into work, you’re working with a fantasy of economics, not a theory of economics. So currently virtually everything is fantasy.
The Levy Economics Institute has a published a new Policy Note on the Greek economy, “Greece: Higher GDP Growth at What Cost?”, which can be found 
“Neo-liberal policies have not worked well even in the rich countries. During the neo-liberal period since the 1980s, these countries have had slower growth, higher inequality and more frequent financial crises than they had in the preceding decades of the ‘mixed economy’, in which the government played a more active – that is, more intrusive, from the neo-liberal point of view – role in restraining and regulating market forces.
Alfredo Saad-Filho is a Professor of Political Economy and International Development at King’s College, London, and was formerly Professor of Political Economy at SOAS. He has written extensively on Marxist political economy and development. His latest book, Progressive Policies for Economic Development (2022), is a succinct call to arms for policymakers, academics and activists concerned with the developing world, in the wake of ongoing and potentially catastrophic climate change and other harmful processes generated in part by neoliberal capitalism.
“One other problem I see with the job guarantee is because I’ve got this focus on energy and the role of energy in production: what I see over time is that you need less and less labour to harness free energy. We can harness free energy more and more by increasing the complexity of the machines we use to turn that free energy into work. Now, we face a serious ecological crisis, possibly in the next decade, which is going to challenge all the certainties of how we think about production today. If we get through that crisis and survive all that, then with the trajectory we’re on, keeping with low-level artificial intelligence – I don’t believe high-level’s feasible, I could be proven wrong on that, but I’m not expecting Terminator any time soon! – but low-level AI, which is just using neural networks and other computer technologies to replace human thought in a wide range of things (for instance, medical diagnosis can be done better by neural networks than doctors) you can replace a wide range of human activity that way. Then with mechanisation going further, and particularly additive manufacturing – but it ultimately means that the people you need to control the machines that cut the metal won’t be there because you won’t be cutting the metal anymore. So, the end target is ultimately almost zero labour input to produce output.
Regular readers of this blog will know that I am in part inspired by generally progressive economic thinking that draws on the Marxist and Keynesian traditions. More accurately, I find work in the spirit of Marxist political economy, and the more radical or leftist post-Keynesian interpretation of Keynes and his contemporaries and followers to offer much that is richly rewarding when trying to understand contemporary capitalism.
“On the job guarantee, I can see the desire to lower the rate of unemployment, of course, which is one of my desires as well. But I have two reservations about the overall area – one is that part of what gives capitalism its creative thrust is what Janos Kornai calls being demand-constrained. If you look at a typical capitalist economy, he points to the desire to keep wages as low as possible, profits as high as possible, and notes that you have your usual corporations competing for market share. As part of that they produce more capacity and, in the aggregate, they have the capacity to produce more than can be bought by the demand. So, they’re fighting over market share all the time, but the only way they can fight over market share effectively is to innovate .You get all the innovation we’ve seen in every form of technology for the last fifty or sixty years – that’s an essential part of what gives capitalism its strengths. If you end up having full employment through a government policy, what do you do to the impact of demand-deficient behaviour on corporations? Do you loosen it, or do you strengthen it? My worry is that you weaken that. So, you might achieve full employment but have a lower rate of economic innovation, and that is something that I’m concerned about. I don’t think it’s been properly considered by MMT. I might be wrong, but I doubt it.”
Workers at Amazon in the US and UK have for some time been struggling to establish trade union representation in order to secure improved wages and working conditions. The retail behemoth has been resisting. Clearly management is worried that this will threaten its ability to keep prices low and ensure rapid delivery to customers. Any firm will have more customers than employees and can make the argument that the former comes first. But this falls down when one applies it to all firms, and the economy as a whole. The majority of consumers at the national level are in work and are therefore also producers in a workplace. Low wages and poor working conditions eventually impact on health and well-being and, I will argue, on productivity and workplace efficiency. There is therefore a progressive case for an economy which boasts ‘high wages’ and high quality working conditions. But this is unlikely to happen in the absence of sufficiently strong trade unions and other supportive labour market institutions and government policies. Workplace ‘culture’ is not produced naturally, and can be changed through particular policies and institutions in ways which enhance economic performance. There is thus a potential progressive win-win for society and the economy. 
The Political Economy of Development 