Review of Radical Political Economics, Dec 1, 2007
The article considers the adjustment toward long-run equilibrium within the Duménil and Lévy macr... more The article considers the adjustment toward long-run equilibrium within the Duménil and Lévy macro model, with modifications. Findings show that long-run convergence to fully adjusted positions with normal utilization is not achieved when a more realistic reaction function is proposed. Classical equilibrium occurs when a vertical Phillips curve is substituted, but the model is isomorphic to the “new consensus” model and to features of “new” endogenous growth theory.JEL classification: E12, E40, E52, E58
The paper examines the degree and extent of independence which the European Central Bank is grant... more The paper examines the degree and extent of independence which the European Central Bank is granted by the primary and secondary law in its different roles as guarantor of price stability, as crisis manager and as financial market supervisor.
Expectations have had a prominent role in macroeconomics ever since the publication of Keynes’s G... more Expectations have had a prominent role in macroeconomics ever since the publication of Keynes’s General Theory. In that book, the word ‘expectation’ appeared in the title of two chapters, and the concept was used throughout. Expectations were central to the determination of both the interest rate and the level of investment and the trade cycle in the longer run. This is most clearly illustrated in chapter 5, ‘Expectation as determining output and employment’, where Keynes identifies the importance of expectations in determining the level of employment: ‘To-day’s employment can be correctly described as being governed by to-day’s expectations taken in conjunction with to-day’s capital equipment’ (1936 [1973], p. 50).
Abstract This paper focuses on how Keynes’s ideas were received in the intellectual community and... more Abstract This paper focuses on how Keynes’s ideas were received in the intellectual community and acted upon by governments in Australia. As Millmow points out, the most influential early advocates of Keynesian ideas were Coombs, Crawford, Giblin, Swan and Wilson, with Downing and Reddaway close behind, all putting emphasis on fiscal policy. As much has already been written about Giblin, more attention will be given to discussion of the others. One of the authors of this paper knew Coombs well and discussion relating to him puts into print some oral history. The paper gives most attention to the first 25 years after the Second World War, including the lessons that can be learnt from that period for policy issues today. The decline in the influence of Keynesianism in the early 1970s is noted – though there has been some increase in interest as a result of the global financial crisis.
As history, institutions, social and political forces specific to any economy have a profound eff... more As history, institutions, social and political forces specific to any economy have a profound effect on that economy's dynamics, it is important to understand how these have evolved with the development of capitalism. The classical economists analysed economies with labour surpluses, which kept wages at subsistence levels, encouraging profits and therefore economic growth. Lewis extended this model to developing economies, with the labour surplus coming from the agricultural sector. With growth and development, the labour surplus becomes absorbed into the labour force, eventually leading to upward pressure on wages This is associated with the Keynesian era, where the level of effective demand becomes an important determinant of employment and growth. As a result of further development, competitive capitalist economies have evolved to the monopoly capital stage, where oligopolistic corporations influence the dynamics of the economy. More recently, we have seen the increased prominence of the financial sector, which has both led to and been influenced by globalisation.
Preface and acknowledgements Introduction - G.C. Harcourt and Peter Kriesler 1. A personal view o... more Preface and acknowledgements Introduction - G.C. Harcourt and Peter Kriesler 1. A personal view of the origins of post-Keynesian ideas in the history of economics - Jan Kregel 2. Sraffa, Keynes and post-Keynesianism - Heinz Kurz 3. Sraffa, Keynes and post-Keynesians: Suggestions for a synthesis in the making - Richard Arena and Stephanie Blankenburg 4. On the notion of equilibrium or the centre of gravitation in economic theory - Ajit Sinha 5. Keynesian foundations of post-Keynesian economics - Paul Davidson 6. Money - Randall Wray 7. Post-Keynesian theories of money and credit: conflict and (some) resolutions - Victoria Chick and Sheila Dow 8. The scientific illusion of New Keynesian monetary theory - Colin Rogers 9. Single period analysis and continuation analysis of endogenous money: a revisitation of the debate between horizontalists and structuralists - Giuseppe Fontana 10. Post-Keynesian monetary economics Godley-like - Mark Lavoie 11. Hyman Minsky and the financial instability hypothesis - John King 12. Endogenous growth: A Kaldorian approach - Mark Setterfield 13. Structural economic dynamics and the Cambridge tradition - Prue Kerr and Robert Scazzieri 14. The Cambridge post-Keynesian school of income and wealth distribution - Mauro Baranzini and Amalia Mirante 15. Reinventing macroeconomics - Edward Nell 16. Long-run growth in open economies: export-led cumulative causation or a balance-of-payments constraint? - Robert Blecker 17. Post-Keynesian precepts for nonlinear, endogenous, nonstochastic, business cycle theories - K. Vela Velupillai 18. Post-Keynesian approaches to industrial pricing: a survey and critique - Ken Coutts and Neville Norman 19. Post-Keynesian price theory: from pricing to market governance to the economy as a whole - Frederic S. Lee 20. Kaleckian economics - Robert Dixon and Jan Toporowski 21. Wages policy - John King 22. Discrimination in the labour markets - Peter Riach and Judith Rich 23. Post-Keynesian perspectives on economic development and growth - Peter Kriesler 24. Keynes and economic development - Tony Thirlwall 25. Post-Keynesian economics and the role of aggregate demand in less-developed economies - Amitava Krishna Dutt
It has often been argued that providing Australian workers with rights, such as those advocated b... more It has often been argued that providing Australian workers with rights, such as those advocated by the Australian Charter of Employment Rights, would impose economic costs on the nation in terms of lost output or increased unemployment. Yet there is little theoretical or empirical evidence to support this objection, while there is indeed evidence that points to a positive relation between workers’ rights and economic performance. While there are conflicting views as to the net effect of these rights on employment and output, there is an unambiguously positive relation between the rights promoted by the Charter and equity and fairness.
The paper considers Keynes's major contributions before The General Theory, namely A Tract on Mon... more The paper considers Keynes's major contributions before The General Theory, namely A Tract on Monetary Reform and A Treatise on Money, and shows that they were close to the views which Friedman would later develop. However, The General Theory of Employment, Interest and Money represented a major challenge to the orthodoxy of the time, and it was to this that Friedman radically objected. We identify the main areas in which Keynes departed from the mainstream theory of the time, and show how Friedman attempted to undermine each of Keynes's major contributions and the extent to which he was successful. Friedman regarded Keynes's contributions as detrimental to, and a definitive step backward for, the economics profession.
Kalecki’s analysis of pricing and distribution underwent substantial changes from its original st... more Kalecki’s analysis of pricing and distribution underwent substantial changes from its original statement in ‘The Determinants of Distribution of National Income’ (Kalecki, 1939b) to its final version in the posthmously published ‘Class Struggle and Distribution of National Income’. (Kalecki, 1971)1. Despite these changes, Kalecki maintained certain features through all versions of the analysis. In particular, he attempted to formulate the models in such a way as to make the determination of the shares of wages and profits in the national income2 independent of the level of output, and the determination of the level of aggregate profits3 independent of both prices and relative shares. The primary purpose of the current study is to examine the reasons behind this, and to try to draw some general implications from Kalecki’s analysis of the interrelationship of micro and macro analysis, as well as to trace the development of the role which the microanalysis plays in the analysis of the determination of output. Due to the fact, mentioned above, that we are primarily concerned with understanding what Kalecki was trying to do, rather than what he succeeded in doing, we will not consider the problems with (and the limitations of) the analysis of pricing and distribution, but rather
The 29 incisive essays in this book will be of great interest not only to Australians but also to... more The 29 incisive essays in this book will be of great interest not only to Australians but also to everyone concerned with the constraints on progressive economic policy in a small, open economy. The four distinguished authors cover a wide range of topics, from unemployment and inflation to financial crises and the economics of imperialism. In an age when old truths have been forgotten, and ancient fallacies revived, the lucid post-Keynesian arguments of Halevi, Harcourt, Kriesler and Nevile deserve to reach a very wide audience.
My brief is to discuss the art and process of writing the biographies of economists. Before I sta... more My brief is to discuss the art and process of writing the biographies of economists. Before I start, I should establish my credentials. Like most historians of economics and some economists, I have been an avid consumer of biographies. From my time as a student, particularly inspired by history of thought courses, I have read some of the few biographies of economists1. In addition, as a general reader, I have read biographies of favorite writers, of contemporary political figures and of historical figures as well as of the odd football hero, musician and comedian.
Most of the literature on the growth of the Japanese economy as well as on the transformation of ... more Most of the literature on the growth of the Japanese economy as well as on the transformation of Northeast and Southeast Asia is centred on supply conditions, ignoring the fundamental role played by demand. In fact, it is possible to detect a remarkable conceptual convergence between those who claim that accumulation and growth were oriented to, and driven by, market forces (Hughes, 1988) and those who stress the role played by the State (Amsden, 1989). Both concentrate on supply factors, arguing about the sources of improved productivity in the area. However, this perspective ignores the important question of where demand for the output of the area originated. It overlooked the fact that the question of markets is a crucial one in understanding the development of the region, which is the main concern of this paper. However, as argued below, the issue of markets cannot be understood in purely economic terms, as the underlying forces are political in nature.
ABSTRACT This paper examines some features of The General Theory that remain relevant 75 years af... more ABSTRACT This paper examines some features of The General Theory that remain relevant 75 years after its publication. Keynes showed that even in a competitive economy with perfectly flexible prices, wages and interest rates, market prices could not guarantee full employment and that the achievement of full employment would only be a fluke. In other words, he showed that there was no natural mechanism to drive the economy to full employment, and that the level of employment was determined by effective demand rather than by the wage rate. He demonstrated this by using a method that stressed the relationship between cause and effect in determining key variables and relations in the economy. Keynes demonstrated that monetary variables affected real variables, and real variables affected monetary ones, in both the short run and long run. This can be contrasted with mainstream theory, where the long-run neutrality of money remains a key result. The paper proposes a rehabilitation of Keynes's analysis of the supply and demand for money—away from its original role in explaining domestic monetary influences and towards providing an analysis of supply and demand for international money.
The paper considers the nature that Kalecki's contributions represent a significant contribution ... more The paper considers the nature that Kalecki's contributions represent a significant contribution to the Marxist tradition. While we argue that the underlying method of both Marx and Kalecki their vision of society and its dynamicsand much of their analysis is fundamentally the same, differences arise because of the development of capitalism and the different stages of society each is analysing. For Kalecki, developed capitalist economies have reached a stage of capital accumulation where the existing capital stock is sufficient to employ all the economy's labour. Associated with this is the rise of imperfectly competitive firms. The economic dynamics of capitalism have evolved as a result, with growth and employment being determined by different factors.
Unless there is a radical reform of the global financial system, it will continue to be conducive... more Unless there is a radical reform of the global financial system, it will continue to be conducive to financial crises and the necessary reforms are looking increasingly unlikely. Government rhetoric and actions can often influence in desirable ways both the speculative actions that now determine the exchange rate and the effect of exchange rate movements on the domestic economy. Managing the exchange rate should start with Australian support for measures such as the Tobin tax which dampen speculation. In 2008 and 2009 exchange rate changes were helpful in reducing the impact of the global financial crisis Australia, largely because of a very clear commitment by the Australian government to make preservation of jobs its top priority. In 2009 a rapid rise in the exchange rate was unhelpful. In the short run little can be done about this but the longer run it is possible to offset the adverse effects.
ABSTRACT The paper examines the IS-LM framework, first considering whether it presents an adequat... more ABSTRACT The paper examines the IS-LM framework, first considering whether it presents an adequate representation of the economics of Keynes, and then its suitability for analysing modern capitalist economies, concentrating on the criticisms advanced by Victoria Chick. The "essence" of Keynes' central message is identified, and Keynes' reaction to various formulations of the IS-LM are examined . The question of whether Hicks' IS-LM framework was an important step in the eventual distortion of Keynes' message is considered. Finally, the work of Chick is used to consider the degree to which the IS-LM framework can yield insights into actual economies.
Review of Radical Political Economics, Dec 1, 2007
The article considers the adjustment toward long-run equilibrium within the Duménil and Lévy macr... more The article considers the adjustment toward long-run equilibrium within the Duménil and Lévy macro model, with modifications. Findings show that long-run convergence to fully adjusted positions with normal utilization is not achieved when a more realistic reaction function is proposed. Classical equilibrium occurs when a vertical Phillips curve is substituted, but the model is isomorphic to the “new consensus” model and to features of “new” endogenous growth theory.JEL classification: E12, E40, E52, E58
The paper examines the degree and extent of independence which the European Central Bank is grant... more The paper examines the degree and extent of independence which the European Central Bank is granted by the primary and secondary law in its different roles as guarantor of price stability, as crisis manager and as financial market supervisor.
Expectations have had a prominent role in macroeconomics ever since the publication of Keynes’s G... more Expectations have had a prominent role in macroeconomics ever since the publication of Keynes’s General Theory. In that book, the word ‘expectation’ appeared in the title of two chapters, and the concept was used throughout. Expectations were central to the determination of both the interest rate and the level of investment and the trade cycle in the longer run. This is most clearly illustrated in chapter 5, ‘Expectation as determining output and employment’, where Keynes identifies the importance of expectations in determining the level of employment: ‘To-day’s employment can be correctly described as being governed by to-day’s expectations taken in conjunction with to-day’s capital equipment’ (1936 [1973], p. 50).
Abstract This paper focuses on how Keynes’s ideas were received in the intellectual community and... more Abstract This paper focuses on how Keynes’s ideas were received in the intellectual community and acted upon by governments in Australia. As Millmow points out, the most influential early advocates of Keynesian ideas were Coombs, Crawford, Giblin, Swan and Wilson, with Downing and Reddaway close behind, all putting emphasis on fiscal policy. As much has already been written about Giblin, more attention will be given to discussion of the others. One of the authors of this paper knew Coombs well and discussion relating to him puts into print some oral history. The paper gives most attention to the first 25 years after the Second World War, including the lessons that can be learnt from that period for policy issues today. The decline in the influence of Keynesianism in the early 1970s is noted – though there has been some increase in interest as a result of the global financial crisis.
As history, institutions, social and political forces specific to any economy have a profound eff... more As history, institutions, social and political forces specific to any economy have a profound effect on that economy's dynamics, it is important to understand how these have evolved with the development of capitalism. The classical economists analysed economies with labour surpluses, which kept wages at subsistence levels, encouraging profits and therefore economic growth. Lewis extended this model to developing economies, with the labour surplus coming from the agricultural sector. With growth and development, the labour surplus becomes absorbed into the labour force, eventually leading to upward pressure on wages This is associated with the Keynesian era, where the level of effective demand becomes an important determinant of employment and growth. As a result of further development, competitive capitalist economies have evolved to the monopoly capital stage, where oligopolistic corporations influence the dynamics of the economy. More recently, we have seen the increased prominence of the financial sector, which has both led to and been influenced by globalisation.
Preface and acknowledgements Introduction - G.C. Harcourt and Peter Kriesler 1. A personal view o... more Preface and acknowledgements Introduction - G.C. Harcourt and Peter Kriesler 1. A personal view of the origins of post-Keynesian ideas in the history of economics - Jan Kregel 2. Sraffa, Keynes and post-Keynesianism - Heinz Kurz 3. Sraffa, Keynes and post-Keynesians: Suggestions for a synthesis in the making - Richard Arena and Stephanie Blankenburg 4. On the notion of equilibrium or the centre of gravitation in economic theory - Ajit Sinha 5. Keynesian foundations of post-Keynesian economics - Paul Davidson 6. Money - Randall Wray 7. Post-Keynesian theories of money and credit: conflict and (some) resolutions - Victoria Chick and Sheila Dow 8. The scientific illusion of New Keynesian monetary theory - Colin Rogers 9. Single period analysis and continuation analysis of endogenous money: a revisitation of the debate between horizontalists and structuralists - Giuseppe Fontana 10. Post-Keynesian monetary economics Godley-like - Mark Lavoie 11. Hyman Minsky and the financial instability hypothesis - John King 12. Endogenous growth: A Kaldorian approach - Mark Setterfield 13. Structural economic dynamics and the Cambridge tradition - Prue Kerr and Robert Scazzieri 14. The Cambridge post-Keynesian school of income and wealth distribution - Mauro Baranzini and Amalia Mirante 15. Reinventing macroeconomics - Edward Nell 16. Long-run growth in open economies: export-led cumulative causation or a balance-of-payments constraint? - Robert Blecker 17. Post-Keynesian precepts for nonlinear, endogenous, nonstochastic, business cycle theories - K. Vela Velupillai 18. Post-Keynesian approaches to industrial pricing: a survey and critique - Ken Coutts and Neville Norman 19. Post-Keynesian price theory: from pricing to market governance to the economy as a whole - Frederic S. Lee 20. Kaleckian economics - Robert Dixon and Jan Toporowski 21. Wages policy - John King 22. Discrimination in the labour markets - Peter Riach and Judith Rich 23. Post-Keynesian perspectives on economic development and growth - Peter Kriesler 24. Keynes and economic development - Tony Thirlwall 25. Post-Keynesian economics and the role of aggregate demand in less-developed economies - Amitava Krishna Dutt
It has often been argued that providing Australian workers with rights, such as those advocated b... more It has often been argued that providing Australian workers with rights, such as those advocated by the Australian Charter of Employment Rights, would impose economic costs on the nation in terms of lost output or increased unemployment. Yet there is little theoretical or empirical evidence to support this objection, while there is indeed evidence that points to a positive relation between workers’ rights and economic performance. While there are conflicting views as to the net effect of these rights on employment and output, there is an unambiguously positive relation between the rights promoted by the Charter and equity and fairness.
The paper considers Keynes's major contributions before The General Theory, namely A Tract on Mon... more The paper considers Keynes's major contributions before The General Theory, namely A Tract on Monetary Reform and A Treatise on Money, and shows that they were close to the views which Friedman would later develop. However, The General Theory of Employment, Interest and Money represented a major challenge to the orthodoxy of the time, and it was to this that Friedman radically objected. We identify the main areas in which Keynes departed from the mainstream theory of the time, and show how Friedman attempted to undermine each of Keynes's major contributions and the extent to which he was successful. Friedman regarded Keynes's contributions as detrimental to, and a definitive step backward for, the economics profession.
Kalecki’s analysis of pricing and distribution underwent substantial changes from its original st... more Kalecki’s analysis of pricing and distribution underwent substantial changes from its original statement in ‘The Determinants of Distribution of National Income’ (Kalecki, 1939b) to its final version in the posthmously published ‘Class Struggle and Distribution of National Income’. (Kalecki, 1971)1. Despite these changes, Kalecki maintained certain features through all versions of the analysis. In particular, he attempted to formulate the models in such a way as to make the determination of the shares of wages and profits in the national income2 independent of the level of output, and the determination of the level of aggregate profits3 independent of both prices and relative shares. The primary purpose of the current study is to examine the reasons behind this, and to try to draw some general implications from Kalecki’s analysis of the interrelationship of micro and macro analysis, as well as to trace the development of the role which the microanalysis plays in the analysis of the determination of output. Due to the fact, mentioned above, that we are primarily concerned with understanding what Kalecki was trying to do, rather than what he succeeded in doing, we will not consider the problems with (and the limitations of) the analysis of pricing and distribution, but rather
The 29 incisive essays in this book will be of great interest not only to Australians but also to... more The 29 incisive essays in this book will be of great interest not only to Australians but also to everyone concerned with the constraints on progressive economic policy in a small, open economy. The four distinguished authors cover a wide range of topics, from unemployment and inflation to financial crises and the economics of imperialism. In an age when old truths have been forgotten, and ancient fallacies revived, the lucid post-Keynesian arguments of Halevi, Harcourt, Kriesler and Nevile deserve to reach a very wide audience.
My brief is to discuss the art and process of writing the biographies of economists. Before I sta... more My brief is to discuss the art and process of writing the biographies of economists. Before I start, I should establish my credentials. Like most historians of economics and some economists, I have been an avid consumer of biographies. From my time as a student, particularly inspired by history of thought courses, I have read some of the few biographies of economists1. In addition, as a general reader, I have read biographies of favorite writers, of contemporary political figures and of historical figures as well as of the odd football hero, musician and comedian.
Most of the literature on the growth of the Japanese economy as well as on the transformation of ... more Most of the literature on the growth of the Japanese economy as well as on the transformation of Northeast and Southeast Asia is centred on supply conditions, ignoring the fundamental role played by demand. In fact, it is possible to detect a remarkable conceptual convergence between those who claim that accumulation and growth were oriented to, and driven by, market forces (Hughes, 1988) and those who stress the role played by the State (Amsden, 1989). Both concentrate on supply factors, arguing about the sources of improved productivity in the area. However, this perspective ignores the important question of where demand for the output of the area originated. It overlooked the fact that the question of markets is a crucial one in understanding the development of the region, which is the main concern of this paper. However, as argued below, the issue of markets cannot be understood in purely economic terms, as the underlying forces are political in nature.
ABSTRACT This paper examines some features of The General Theory that remain relevant 75 years af... more ABSTRACT This paper examines some features of The General Theory that remain relevant 75 years after its publication. Keynes showed that even in a competitive economy with perfectly flexible prices, wages and interest rates, market prices could not guarantee full employment and that the achievement of full employment would only be a fluke. In other words, he showed that there was no natural mechanism to drive the economy to full employment, and that the level of employment was determined by effective demand rather than by the wage rate. He demonstrated this by using a method that stressed the relationship between cause and effect in determining key variables and relations in the economy. Keynes demonstrated that monetary variables affected real variables, and real variables affected monetary ones, in both the short run and long run. This can be contrasted with mainstream theory, where the long-run neutrality of money remains a key result. The paper proposes a rehabilitation of Keynes's analysis of the supply and demand for money—away from its original role in explaining domestic monetary influences and towards providing an analysis of supply and demand for international money.
The paper considers the nature that Kalecki's contributions represent a significant contribution ... more The paper considers the nature that Kalecki's contributions represent a significant contribution to the Marxist tradition. While we argue that the underlying method of both Marx and Kalecki their vision of society and its dynamicsand much of their analysis is fundamentally the same, differences arise because of the development of capitalism and the different stages of society each is analysing. For Kalecki, developed capitalist economies have reached a stage of capital accumulation where the existing capital stock is sufficient to employ all the economy's labour. Associated with this is the rise of imperfectly competitive firms. The economic dynamics of capitalism have evolved as a result, with growth and employment being determined by different factors.
Unless there is a radical reform of the global financial system, it will continue to be conducive... more Unless there is a radical reform of the global financial system, it will continue to be conducive to financial crises and the necessary reforms are looking increasingly unlikely. Government rhetoric and actions can often influence in desirable ways both the speculative actions that now determine the exchange rate and the effect of exchange rate movements on the domestic economy. Managing the exchange rate should start with Australian support for measures such as the Tobin tax which dampen speculation. In 2008 and 2009 exchange rate changes were helpful in reducing the impact of the global financial crisis Australia, largely because of a very clear commitment by the Australian government to make preservation of jobs its top priority. In 2009 a rapid rise in the exchange rate was unhelpful. In the short run little can be done about this but the longer run it is possible to offset the adverse effects.
ABSTRACT The paper examines the IS-LM framework, first considering whether it presents an adequat... more ABSTRACT The paper examines the IS-LM framework, first considering whether it presents an adequate representation of the economics of Keynes, and then its suitability for analysing modern capitalist economies, concentrating on the criticisms advanced by Victoria Chick. The "essence" of Keynes' central message is identified, and Keynes' reaction to various formulations of the IS-LM are examined . The question of whether Hicks' IS-LM framework was an important step in the eventual distortion of Keynes' message is considered. Finally, the work of Chick is used to consider the degree to which the IS-LM framework can yield insights into actual economies.
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