Thomas Palley

Hillary Clinton does not want to talk about past economic controversies. And it is easy to understand why. There is much that is troubling. But let’s not go along with her wishes. You can learn a lot by studying recent history and even more by watching how politicians react to that history. (more…)

Club, noun. 1. An association or organization dedicated to a particular interest or activity. 2. A heavy stick with a thick end, especially one used as a weapon.

Paul Krugman’s economic analysis is always stimulating and insightful, but there is one issue on which I think he persistently falls short. That issue is his account of New Keynesianism’s theoretical originality and intellectual impact. This is illustrated in his recent reply to a note of mine on the theory of the Phillips curve in which he writes: “I do believe that Palley is on the right track here, because it’s pretty much the same track a number of us have been following for the past few years.” (more…)

This book explores the process of financialization whereby economies are increasingly dominated by finance capital. This process is characterized by rising income inequality, wage stagnation, increased indebtedness, a rising financial sector share of profits, and tendencies to generate asset price bubbles. The financial crisis of 2008 and the subsequent recession and stagnation represent the latest phase. The book provides a comprehensive treatment of these developments, beginning with a presentation of the empirical evidence. That is followed by economic theory chapters dealing with the macroeconomics of financialization; business cycle effects; microeconomic developments; tendencies toward Minsky-style economic instability; and economic growth effects. The final section of the book focuses on the political economy of financialization and policies to stabilize financial markets.

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Many countries are now debating the causes of the global economic crisis and what should be done. That debate is critical for how we explain the crisis will influence what we do.

Broadly speaking, there exist three different perspectives. Perspective # 1 is the hardcore neoliberal position, which can be labeled the “government failure hypothesis”. In the U.S. it is identified with the Republican Party and the Chicago school of economics. Perspective # 2 is the softcore neoliberal position, which can be labeled the “market failure hypothesis”. It is identified with the Obama administration, half of the Democratic Party, and the MIT economics departments. In Europe it is identified with Third Way politics. Perspective # 3 is the progressive position which can be labeled the “destruction of shared prosperity hypothesis”. It is identified with the other half of the Democratic Party and the labor movement, but it has no standing within major economics departments owing to their suppression of alternatives to orthodox theory. (more…)