Almog Adir and Simon Whitaker In the last few years there has been a small net overall flow of capital from advanced to emerging market economies (EMEs), in contrast to the ‘paradox’ prevailing for much of this century of capital flowing the ‘wrong’ way, uphill from poor to rich countries. In this post we show […]
Keynesian 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
James Crotty discusses some of Keynes’ key ideas on the uncertain nature of the future and how this affects investment and finance in a capitalist economy. He points out that many of Keynes’ important insights can be found in Marx, but that Keynes put financial instability centre stage.
Last week I posted several times on Modern Monetary Theory (MMT), a set of ideas which seems to have plenty of support, or at least generates plenty of debate, judging by its presence on the internet.
MMT is an offshoot of post-Keynesianism. The policies which flow from its main theses suggest that a wise and benevolent state can ‘print’ money, within certain limits, to achieve full employment and moderate inflation.
Some MMTers also support an Employer of Last Resort (ELR) function for the state too. In other words, the state should provide a job at a set wage for all those who want one, so that full employment can be sustained even when economic growth slows or the economy goes into recession. The ELR policy was supported by Hyman Minsky whose ideas have also influenced MMT. He saw it as a more productive alternative to forms of welfare which pay people while they are inactive in terms of formal employment. Continue reading
Continuing this week’s slightly eclectic series of posts on Modern Monetary Theory, here is a repost of a repost(!) of some thoughts on MMT and Marxism by blogger Scott Ferguson, via the Union for Radical Political Economy blog. The link is below.
David M. Fields has kindly asked me to expand my critique of David Harvey’s latest project for the Union for Radical Political Economics blog. The result is a brief essay titled, “Some Remarks on MMT & Marxism in Light of David Harvey’s “Marx, Capital and the Madness of Economic Reason”.
A short video featuring L. Randall Wray, one of the leading proponents of Modern Monetary Theory. He discusses the reasons why economists and politicians struggle to understand it, and why non-economists, particularly those working in financial markets, apparently do not have this problem.
Towards the end, he mentions policymakers’ fears regarding the potential for inflation, which I shall return to in the context of MMT in a future post.
There is an enormous amount of information across the internet on Modern Monetary Theory (MMT). A search in google gives around 2.6 million results, while that for post-Keynesian produces a mere 974 thousand! Marxist economics gives even fewer, at 913 thousand.
Having said that, a search for Marxism produces 13.3 million results. Of course, Marxist thought has had an influence far beyond economics, and even philosophy, politics and sociology, into such fields as anthropology and psychology.
Here is maverick economics Professor Michael Hudson on MMT, taken from his book J is for Junk Economics (p.155-7). Hudson is supportive of the theory and the economic policies which it implies.
Later in the week I will outline some ideas on money and inflation drawn from Anwar Shaikh‘s 2016 work Capitalism. Shaikh is critical of some aspects of MMT and provides extensive theoretical discussion and empirical evidence to make his case for a ‘Classical’ theory of modern money and inflation. Continue reading