The VoCs approach to capitalism has the potential to transform economics. It tacitly emphasizes the plasticity of economies, whereby their character and outcomes are significantly a matter of choice. This paper augments VoCs theory to include a distinction between varieties and varietals of capitalism. Drawing on biology, varieties correspond to species and varietals correspond to sub-species. The paper proposes an analytical framework that unifies VoCs theory. It adds a mesoeconomics that links macroeconomics and microeconomics. That mesoeconomics concerns the institutions, behavioral norms, rules and regulations, and policies that characterize the economy and influence its performance. The mesoeconomic structure is described using the metaphor of a box, the six sides of which correspond to the major dimensions of capitalist economies. The design of the box is the product of societal and political choices, which places politics at the center of VoCs analysis. Policy space and policy lock-in are important concerns as they impact the choice set. The fact that economies inevitably involve choice means there is an inescapable normative question regarding what type of capitalism society will have.
Archive for the ‘Uncategorized’ Category
Theorizing varieties of capitalism: economics and the fallacy that “There is no alternative (TINA)”
Wednesday, February 2nd, 20222022 Godley – Tobin Memorial Lecture: Professor Paul Krugman, “The enduring relevance of Tobinomics”
Friday, January 21st, 2022The Review of Keynesian Economics is pleased to announce that Professor Paul Krugman will give the 2022 Godley – Tobin Lecture. Professor Krugman is Distinguished Professor of Economics at the Graduate Center of the City University of New York. He has also taught at MIT, Princeton University, and Yale University. Like James Tobin, Professor Krugman was awarded the Nobel Memorial Prize in Economics (2008) and the American Economics Association’s John Bates Clark Medal (1991).
Professor Krugman’s work has focused on international economics and macroeconomics. He is a prominent American public intellectual who is widely recognized for his regular column in The New York Times.
The title of Professor Krugman’s lecture is “The enduring relevance of Tobinomics”.
The lecture will be held at Bucknell University, Lewisburg, PA on April 20, 2022, at 5.00pm and it will also be live streamed.
A crisis made in the USA: why Russia will likely invade Ukraine
Sunday, January 16th, 2022Preamble. Living in the US and writing honestly about US-Russia relations (and China too) is very difficult. That is because the US is the aggressor, but Russia is an authoritarian country. That split is used by the US establishment to shuffle discussion away from US aggression on to Russian authoritarianism. Side-by-side, anyone calling the US on its aggression is labelled pro-Russian. In that way, the US establishment cleverly inoculates itself against criticism and taints its critics.
President Vladimir Putin confronts a decisive historical moment. Talks with the US and its NATO partners have shown that the US has no intention of reversing its grinding long-running campaign against Russia. The US wants regime change in Russia. That does not mean democracy, talk of which is just camouflage for the true strategic objective of a permanently weakened Russia. All that matters is Russia be weakened, and the well-being of Russians is truly of no consequence in Washington.
That is the landscape Putin confronts. The implication is Russia’s position is unlikely to strengthen in years to come. Consequently, now may be the most favorable moment to take actions that both strategically strengthen Russia and achieve its own secondary long-term political goal of partial reunification of the historic European component of Russia (i.e., reabsorption of Belarus and Eastern Ukraine).
Implacable US antipathy
The baseline for the argument is recognition that the US has an implacable antipathy to Russia. That antipathy has a long history. In 1918 the US invaded Siberia, intervening in the Russian civil war between the Tsarist Whites and Reds. The invasion set the stage for pre-Cold War hatred of the Soviet Union.
(more…)Federal Reserve Insider Dealing? R.I.P. Central Bank Independence
Tuesday, January 11th, 2022Federal Reserve Vice-Chair Richard Clarida has shot himself in the foot with what appears to be insider trading. That comes on the heels of prior concerns about inappropriate trading by regional Federal Reserve Bank Presidents Robert Kaplan and Eric Rosengren. Albeit unintentionally, the good news is these indiscretions may have done working families a favor by helping disprove the notion of central bank independence.
For years, many of us have argued that central bank independence is a charade aimed at facilitating control over central banks by financial interests. Here is a link to an article of mine titled “Central Bank Independence: A Rigged Debate Based on False Politics and Economics”.
In that paper I wrote every central banker “inevitably brings her own preferences, views, and prejudices to the policy table (p.77)”. The implication is clear: appoint people with a Wall Street background and they will bring Wall Street policy preferences; appoint well-to-do financial economists with large stock portfolios and they will bring a personal concern with the stock market and asset prices.
Federal Reserve Presidents and Governors tend to be drawn from the banking community, Wall Street, and neoliberal academic economists. For decades, activists have requested that they be drawn from a broader political economic swathe of society to give working families better representation, but that request has been dismissed as lacking justification.
The Clarida-Kaplan-Rosengren affair argues otherwise. It is suggestive of how private interests are always in the room. It is also indicative of why handing the keys of the central bank to so-called independent bankers does not magically solve the problematic of monetary policy decision making, which is why analytical diversity is a matter of public import.
Messrs. Clarida, Kaplan, and Rosengren will survive and prosper. Wall Street will also continue to taint policymaking via its pre-pensation/post-pensation incentive model. The silver lining in the episode is the opportunity to bury the ideological doctrine of central bank independence and open the Federal Reserve to a broader set of ideas and personnel.
Economics vs QAnon: who’s crazy now?
Wednesday, December 29th, 2021I’m hoping this year we will make progress getting some of the crazier stuff out of the room.
Here’s a little YouTube teaser from Down Under (give it a minute to get to the punchline):
All the best in 2022,
Tom
The US and Russia: beware of Neocons and liberals preaching democracy promotion
Wednesday, December 8th, 2021Every week my e-mail box receives a steady stream of articles aimed at cultivating public animus to Russia. The articles are always wrapped in a narrative in which Russia is a threat to democracy in Ukraine, Eastern Europe, and elsewhere. The effect is to create public support for hardline action (economic and/or military) against Russia.
(more…)Anti-China Fever in the US: a lethal contagious disease
Monday, September 20th, 2021Much of the United States (especially Washington, DC) is in the grip of a contagious lethal anti-China fever which is spreading fast.
Even people I usually admire and respect have become infected. Reason and facts have lost all capacity to inoculate.
Fortunately, I was sent a vaccine (that takes one minute to administer) which I would like to share with you:
Three points in response to China (& Russia) hawks:
(1) A mirror is a very good thing to have in these situations (probably the most valuable & cost-effective piece of equipment the Pentagon could purchase right now). When wondering about China’s naval posture in the South China Sea or Russia’s response to eastward NATO expansion, use the mirror to reflect on the Monroe doctrine & how we would react if a Chinese flagged 7th fleet were cruising the Caribbean.
(2) Ukraine & Taiwan are both special unresolved historical situations. They should each be treated as such, carved out as best possible, and not allowed to poison the entire relationship. The mortal danger is the US war lobby exploits those situations to provoke Russia and China, hoping the resulting optic will favor their ugly ambitions.
(3) In his later years, George Kennan, architect of the containment doctrine, believed the best way to deal with the Russians is to leave them to themselves (i.e. they will sabotage themselves on their own). That continues to be good advice & also has relevance for China.
Financialization revisited: the economics and political economy of the vampire squid economy
Wednesday, September 1st, 2021This paper explores the economics and political economy of financialization using Matt Taibbi’s vampire squid metaphor to characterize it. The paper makes five innovations. First, it focuses on the mechanics of the “vampire squid” process whereby financialization rotates through the economy loading sector balance sheets with debt. Second, it identifies the critical role of government budget deficits for the financialization process. Third, it identifies the critical role of central banks, which are the lynchpin of the system and now serve as de facto guarantors of the value and liquidity of private sector liabilities. Fourth, the paper argues financialization imposes a form of policy lock-in. Fifth, it argues financialization transforms popular attitudes and understandings, thereby generating political support despite poor economic outcomes. In effect, there is a politics of financialization that goes hand-in-hand with the economics. The paper concludes with some observations on why mainstream macroeconomics has no equivalent construct to financialization and discusses the disquieting unexplored terrain that the economy is now in.
Preparations for the “Next Afghanistan” have already begun
Thursday, August 19th, 2021Now that the twenty year-long US military expedition to Afghanistan has ended in catastrophe, the US Neocon establishment has already begun preparations for the “Next Afghanistan”. That process begins with blaming Joe Biden and rewriting history.
Thus, Richard Haas (President of the Council on Foreign Relations) writes in Project Syndicate: “Biden was recently asked if he harbored any regrets about his decision to withdraw all US troops from Afghanistan. He replied he did not. He should.” As part of his argument, Mr. Haas scare mongers the prospect of a “Taliban domino effect” whereby the Taliban takeover Pakistan.
The New York Times has also been busy playing the blame game and rewriting history. Two days after Kabul fell, its page one story blamed President Biden and suggested something very different was possible: “But in his speech, Mr. Biden spent more time defending his decision to depart Afghanistan than the chaotic way it was carried out.”
In similar vein, another Times story claimed: “In several cities, Afghan security forces put up a strong fight to stop the Taliban advance, with videos showing exchanges of gunfire. But much more prevalent during the Taliban’s offensive were scenes of apparent retreat by government forces left ill-equipped to secure the country after the American withdrawal.”
The reality is President Biden has nothing to apologize for and deserves our collective thanks for a decision that always stood to benefit the United States but never politically benefit him.
(more…)The economics of New Developmentalism: a critical assessment
Thursday, July 1st, 2021This paper critically assesses the economics of New Developmentalism (ND). It begins by identifying and formalizing the principal components of ND which are identified as neutralizing Dutch disease, ending growth with foreign saving, development driven by a technologically advanced and internationally competitive manufacturing private sector, and getting macroeconomic prices right. It then examines four strands of critique consisting of internal economic logic critiques, Classical Developmentalism (CD) critiques, Keynesian and Neo-Kaleckian critiques, and the fighting the last war critique. To this author, ND is best understood as a Third Way styled analysis that blends CD heterodoxy and Neoliberalism. However, ND’s substantive policy recommendations lean in the Neoliberal direction, particularly as regards budget deficits and state intervention in the development process. From a Classical Development perspective, the problematic of development cannot be solved as easily as suggested by ND.