Michael Hudson on the planned economy

JisforJunkEconContinuing the occasional series of excerpts from Professor Michael Hudson’s J is for Junk Economics (2017, p.178). See also my post quoting Ha-Joon Chang here on the same issue:

Planned Economy: Every economy since the Neolithic has been planned in one way or another. That is why calendar keeping and seasonal rhythms based on the weather and the harvest became the foundation of economic accounting in the Neolithic and Bronze Age for fiscal and trade policy and for land tenure.

At issue in any epoch is who will do the planning and what its aims will be. The ostensible aim of democratic planning is to design tax and regulatory systems to promote economic growth and sustainability, preferably with a fair distribution of income and wealth. For the classical economists this involved taxing or discouraging rentier income, and subsidizing socially desirable investment and basic needs.

Today’s epoch is seeing financial managers replace rulers and elected government representatives as planners of economies. Financial planning is at least as centralized as government planning, but its aims are different: namely, to concentrate income growth and asset-price gains in the hands of the One Percent.

The financial time frame is short-term and extractive. And fiscally, financial planning seeks to shift taxes off unearned income and financial returns onto wages and profits. Most fatally, it favors debt leveraging, leading ultimately to debt deflation and austerity. The main issue in today’s planning debate is thus whether democratic politics can recover the classical public steering and regulatory mechanisms that have been relinquished to the financial sector.”

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Notes and quotes on Zimbabwe and Marx’s theory of ‘so-called primitive accumulation’

Zimbabwe is in political turmoil. Now that Robert Mugabe has gone, many are wondering what will come next. Given my interest in development economics and my own ignorance of the political economy of this troubled nation, beyond the reporting of the mainstream media, I thought it would be helpful to draw on some of the ‘literature’ to further my understanding and, hopefully, that of the readers of this blog. I can’t pretend to have expertise in this area, but one of the aims here is to share useful knowledge, so here goes.

I have included a brief summary of Zimbabwe’s economic performance since the War and follow that with some quotes from political economists who have studied the country, as well as the historical emergence of capitalism through what Marx called ‘primitive accumulation’. Continue reading

Trump’s robber baron presidency – via Lars P. Syll

 

In Trump’s world, ​the rich in the US obviously are not rich enough. So he has set out to lower the corporate tax rate to 20 percent and abolish the estate tax. The working and middle classes are, of course, überjoyed …

via Trump’s robber baron presidency — LARS P. SYLL

Stiglitz and Greenwald on the learning society

In the short video below, Bruce Greenwald and Joseph Stiglitz introduce their work on the learning society and the idea of development. They argue that the most important feature of economic and social development is the creation and diffusion of knowledge, rather than capital accumulation per se, which has been the traditional focus of much economic theory.

They also argue that learning takes place mainly in institutions rather than in markets, and that markets are in general inefficient due to the presence of imperfect information. State intervention is necessary to correct such market failures.

A Keynesian case for industrial policy

DSC00234Keynesian economics emphasises the primacy of aggregate demand or expenditure in driving the growth of output and employment. More mainstream neoclassical Keynesians, and the New Keynesians, tend to argue that inadequate demand is a short run phenomenon. The more radical post-Keynesians argue that it can be a problem in the long run too.

To varying degrees, these economists make the case for demand management via some combination of monetary, fiscal and exchange rate policy. The more radically minded have also long argued for incomes policies to manage wage and price inflation, and reform to the international monetary system in order to allow national governments the space to manage demand and promote full employment while preventing excessive and destabilising current account imbalances.

While Keynesian economics focuses on demand and, traditionally, macroeconomics, industrial policy aims to impact more on the supply-side of the economy and draws on microeconomics. Continue reading