Business cycles

This note outlines and discusses some of the strands in the post-Keynesian literature on business cycles. Most post-Keynesians have focused on endogenously generated cycles, but the mechanism varies: some focus on the goods market, others on financial markets, the labor market, or political intervention. The merits of formal modeling of the cycles have also come in for debate.

Lea todo el resto del artículo de Peter Skott aquí

Did Social Over Spending Cause the Euro-Crisis?

Carlo Panico: Most media plays no attention to scientific economic literature*

*Extracted from: http://tmypfunam.wordpress.com/

The Euro Crisis in 7 Simple Charts: They're telling you a real pack of lies

The crisis of the euro currency zone is an excellent example of how flagrant lies can successfully be converted into accepted wisdom. Almost every generalization about the crisis found in the mainstream media is false. As a result, the mainstream punditries on the crisis are ideological polemics masquerading as analysis. Further, often progressive critiques of the reactionary "austerity" policies by the euro zone governments accepts the mainstream faux-facts about the crisis, fuelling the There-Is-No-Alternative (TINA) syndrome.

(...) The common response of European progressives to this narrative it that the vast majority of Greeks, Italians, etc, have struggled long and hard for their social benefits, and it is a crime they, the majority, must pay for the greed of a tiny financial oligarchy. To put the mainstream narrative succinctly, in the European South especially, people are paid too much, work too little, receive excessive public benefits and retire too early; and progressives respond that these are legitimate rights forged in struggle.

(...) There is a problem with this diagnosis of the euro crisis. It is false on all counts, left, right and center. To begin with the most obvious lie, the retirement age for the state pension is the same for men in Germany, France and each of the PIGS, 65, though in Italy and Greece women can take the pension at 60. Pension programs allowing for earlier retirement can be found in the PIGS, and that is also true in Germany, the United Kingdom and France, where accusations of labor fecklessness do not dominate discussions of economic policy (except, perhaps, from the employer associations).

Lea todo el resto del ensayo de John Weeks aquí

La rebelión contra la teoría económica neoclásica y otras revueltas*

En junio de 2000 comenzó en París una rebelión. Estudiantes de elite se rebelaron contra lo que les prometía prestigio, dinero y carrera: contra el tipo de teoría económica con que se les instruía en las universidades elitistas de París. Esa teoría dominante, la neoclásica, omnipresente en los libros de texto del mundo entero. La sabiduría convencional que inspira la política económica y financiera en todos los países capitalistas les resultaba un acúmulo de dogmas ajenos al mundo. Inapropiada para entender mejor el mundo, y no digamos para cambiarlo.

(...) En su pugna con el establishment científico, tienen los rebeldes una difícil posición, de la que son parcialmente culpables. Saben lo que no quieren; pero no saben lo que quieren. Saben que de lo que se trata es de revivir la teoría económica como ciencia social, confrontarla con el mundo real de los mercados y de los capitalismos realmente existentes, superando el platonismo de los modelos de la doctrina dominante. Pero no van más allá de la promoción de una apertura a las posiciones heterodoxas, conforme a un pluralismo metodológico y teórico en la ciencia económica. Aquí radica la debilidad del movimiento rebelde, que no logra emanciparse de su adversario supuestamente todopoderoso, la teoría económica neoclásica. Sus miembros tratan desesperadamente de orientarse, buscando inspiración ejemplar en la historia y en la actualidad. Así, van a dar en los pocos grandes economistas que, como Schumpeter, Keynes y Sraffa, criticaron al menos parcialmente la teoría económica dominante. Así, buscan en los neorricardianos y en los postkeynesianos el acceso perdido a la realidad económica. Muy recientemente, algunos han empezado a redescubrir al malfamado Marx. Pero aquí se cobra buena venganza el hecho de que, desde hace décadas, los marxistas, mayoritariamente, dejaran de comprender ni una palabra de economía o de economía política, al tiempo que la teoría económica oficial castigaba al marxismo con el desprecio.

Lea todo el resto del ensayo de Michael R. Krätke en el blog de Alejandro Valle Baeza aquí

* NOTA EXTRAÍDA DE LA PÁGINA PERSONAL DEL DR. ALEJANDRO VALLE BAEZA

The Crisis in Mainstream Economics

Despite its great technical sophistication, in its conceptual essence, mainstream economics, now argued by its proponents to be increasingly converging on agreement and uniformity, is what Joan Robinson dubbed (as early as 1964) “pre-Keynesian theory after Keynes”. Dominant figures in this transformation include Friedrich Hayek, Milton Friedman, Robert Lucas and Eugene Fama, with Lucas and Fama currently the patron saints of Chicago and modern macroeconomics (real and financial) and macroeconomists, including Michael Woodford and John Cochrane. Now that it is put to its first really challenging test, following the period of “the great moderation”, let us examine whether its explanatory power and relevance have been found wanting.

Though there are several variants of modern macroeconomics, they all have their roots in (Irving) Fisherian Walrasian models of the process of accumulation in modern societies. In these, theconsumer queen attempting to maximise her expected life time utility is the core actor and decision-maker, with all other actors and institutions subject to her whims and desires, especially within a competitive environment.

Fisher’s basic vision and construct in theoretical terms was spelt out most fully and rigorously in the Arrow-Debreu model of general equilibrium. Subsequently, in the hands of Lucas and others, it was simplified in order to analyse the macroeconomic economy and to be the basis of stochastic general equilibrium models which at a practical level came more and more to serve policy makers in both central banks and treasuries. (At the same time Fisher’s perceptive analysis of the consequences of debt deflation has largely been ignored.)

Lea todo el resto del artículo de Geoff Harcourt aquí

On the dismal state of a dismal science?

According to a growing of commentators, the real problem is the dismal state of influential parts of contemporary mainstream economics, especially macroeconomics and financial economics. More particularly, the reference is to the Rational Expectations School in macroeconomics, championed by Robert Lucas jr., Thomas Sargent and Edward Prescott, and the Efficient Markets Hypothesis in financial theory, championed by Eugene Fama. Since major representatives of the two lines of thought teach at the University of Chicago, we may, for short, also speak of the Chicago School. It is also known as New Classical Economics (NCE). However, as we shall see below, NCE and the economics of the old classical economists (and their modern interpretators) are radically different in important respects.

Descargue todo el artículo de Heinz Kurz publicado en Investigación Económica aquí.

Neoclassical Inflation: No theory there

The theoretical generalization that the price level is determined by the quantity of money is commonly employed as a teaching device, in abstract modeling, and as a guide to policy. It represents a profound misunderstanding of inflation. In specific, the famous parable, more money then more inflation, is logically wrong.

Far from the strength of neoclassical economics, its theory of inflation encapsulates and epitomizes its most fatal analytical errors and contradictions. Prominent among these errors and contradictions are the failure to provide a convincing explanation for the existence of money, and the closely related inability to provide a definition of money that makes its supply analytically determinate. These basic problems require the creation of an imaginary economy, the analysis of which results in arbitrary conclusions that cannot be generalized beyond neoclassical Cloud-Cuckoo Land.

Lea todo el resto del artículo de John Weeks aquí