‘Decent work’ as a development goal

DSC00236aAre decent working conditions a luxury only achievable in rich economies? In other words, are their improvement part of economic and social development? Or could they underpin efficiency alongside social justice even in poor countries? In a paper published in the book Systems of Production (Burchell et al 2003), Gerry Rodgers considers these issues.

Rodgers answers the above by suggesting that improving working conditions are or should be part of the development process. Some basic rights should be achievable anywhere, but they should also be able to adjust upwards as an economy becomes richer, or when economic resources allow.

He defines decent work as the availability of employment, certain rights at work, a degree of security and workplace representation which promotes constructive dialogue between management and workers. Continue reading

A Marxist economics editor on tv?

According to the UK’s Independent newspaper, ITV news’ new economics editor, Noreena Hertz, is some sort of Marxist, and this has caused a stir. There is some doubt about this, and she has herself denied it. But is it a problem to be even influenced by Marx in one’s thinking?

The piece linked to above contains some errors. It names economists Joan Robinson and Michal Kalecki, as well as Andrew Glyn, as Marxists. Robinson was influenced by Marx, as well as by Kalecki, but she was critical of the work of the former, and was far more a left-wing (or post) Keynesian. In her work, she favoured a reformed capitalism, somewhere between socialism and the free market, which she hoped would achieve material prosperity and social justice in society.

Kalecki was a major influence on the post-Keynesian tradition, and was again influenced by Marx, while Glyn was perhaps more of a socialist, but even he drew on the work of Kalecki and Keynes in his thinking.

The furore over Hertz’ appointment is whether the influence of Marxism will cloud her reporting, due to its ideology. But in my view, we cannot escape from ideology in social science, and those on both the left and the right should admit it. Continue reading

America’s Protectionist Takeoff

Hudson America's Protectionist TakeoffUS industry was protected by tariffs for much of the 19th century and this helped establish it as the world’s leading economy. This is contrary to much reported history and to the current conventional wisdom regarding international trade and development.

This is the claim made by economist Michael Hudson in America’s Protectionist Takeoff 1815-1914. In this fascinating book, he tells the story of the neglected American School of Political Economy (ASPE), whose ideas and policies shaped the US economy, and its industrial sector in particular, for many years. Their economics ran against the ideas of the English classical political economists Ricardo and Malthus and was more like statecraft than pure economic theory.

The often anti-intellectual ASPE seems to have been airbrushed out of history, which makes Hudson’s book (originally published in the 1970s) all the more important to the undermining of the orthodoxy which global elites push on late developing nations which have yet to industrialise. Continue reading

Ha-Joon Chang on the importance of manufacturing to national prosperity


Cambridge economist Ha-Joon Chang

Here is a link to an article by Cambridge economist Ha-Joon Chang in the Guardian newspaper. Chang, whose ideas I admire and have discussed before on this blog, here, here and here, outlines the continued importance of manufacturing to rich countries in spite of the ‘knowledge economy’, its neglect by successive UK governments over several decades, and how this holds back the economy.

Interestingly, he confirms that in per person terms, and despite government rhetoric, the UK recovery since the 2008 financial crisis has been weak. Much of the vaunted growth has come from a rising working population, rather than productivity and wages.

Kalecki’s remarkable prediction

DSC00228Michal Kalecki was a Polish economist who arguably ‘discovered’ the principle of effective demand at the same time as Keynes in the 1930s. He was more left wing and less establishment than Keynes himself, as a relatively obscure émigré to England.

The economic ideas of Kalecki drew on Marx’s ‘schemes of reproduction’, and he also incorporated theories of imperfect competition, which contrasted with the assumption of perfect competition which Keynes used in his General Theory of 1936.

Kalecki had a strong influence on the Cambridge School of Keynesian, and latterly post-Keynesian, economics. In 1943 his article on the Political Aspects of Full Employment was published. Although brief, it was extraordinarily prescient, predicting as it did the strengthening of the working class under conditions of full employment, and the subsequent turn of business leaders, politicians and many economists against the policies which had ostensibly helped to create this situation. Continue reading

Keynes versus Marx and stagnation in the eurozone


The German Bundestag. Time for an alternative policy?

Martin Wolf of the Financial Times pens an interesting piece this week on misguided economic policy in Germany which he claims is holding back the economy of the Eurozone. As I see it, a major problem is the German government’s focus on its current account surplus as a symbol of success, particularly of its manufacturing exports. This masks a weakness in domestic demand and excessive domestic savings. In fact a current account surplus, by definition, reflects a surplus of domestic savings over investment, coming from households, firms and the government. In Germany, all three of these sectors are running a financial surplus: they are net savers. This is a problem, as it forces the Eurozone, with Germany as the dominant member, to depend on external demand for growth, helped along by a relatively weak currency. With global demand currently weakening, this source will not be consistently forthcoming. The Eurozone is still growing, but unemployment is far too high overall, which represents a huge waste of economic resources, not to mention the social cost. Continue reading

Left and right, radicals and conservatives, and economic utopias

DSC00234Since beginning my studies in economics more than twenty years ago, my attention has often been drawn to the differences between schools of thought and their various prescriptions for the economic system. Many of them seem to want to achieve some sort of utopia, or idealised society. To this end they have different and conflicting policy proposals for governments in power.

The far left and right often seek an authoritarian solution to economic problems, with forms of socialism and nationalism to the fore, although a democratic socialism is sometimes proposed by those on the left. A far-reaching transformation of society is demanded. This must stem from a deep dissatisfaction with the status quo, which may sometimes be warranted. Continue reading