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

The Capture of Keynesianism

Communist revolutionary Che Guevara rapidly became an inspirational figure for revolutionary socialist change after his execution in Bolivia in 1967. Forty years later, Che lives on but his image now adorns t-shirts that have become popular fashion statements. This transformation reflects the extraordinary power of markets to capture and transform, turning an avowed enemy of the market system into a profit opportunity.

The process of capture also holds for economic policy, which has witnessed the conservative capture of Keynesianism. This capture is now on display as U.S. policymakers struggle to contain the effects of a collapsing house price bubble that was recklessly funded by Wall Street. The sting is that the full powers of Keynesian policies are being invoked to save an economy that no longer generates Keynesian outcomes of full employment and shared prosperity.

The political economic philosophy of Keynesianism emerged after World War II following the catastrophic experience of the Great Depression. The new paradigm advocated an economy with full employment and shared prosperity, and gave government the critical role of regulating markets and adjusting monetary and fiscal policy to ensure levels of demand sufficient to generate full employment.

These Keynesian tools are now being applied forcefully. (...) The capture of Keynesianism has been a gradual process. In the 1950s military Keynesianism became the hallmark of American policy, with defense spending becoming a huge and permanent component of government spending, to the benefit of the war industry.

(...) The result is Keynesian policy instruments remain, but Keynesian policy goals have been abandoned. Both Democrats and Republicans are quick to push for Keynesian stimulus policies when financial stability is threatened, but most (including too many Democrats) are silent when the economy fails to deliver shared prosperity.

Lea todo el escrito de Thomas Palley (uno de los máximos exponentes de la teoría postkeynesiana) aquí. Se recomienda también visitar su excelente página donde pueden descargarse artículos suyos.

The Political and Analytical Diversions of ‘Financial Regulation’

The only thing governments seem to be doling out in greater amounts than bailouts to private banks these days are promises for all sorts of ‘financial regulation’. The EU recently promised sweeping financial regulation. Gordon Brown insists it must be international, while the Obama administration promises it will be wide-ranging and strict.

My first problem with these promises is not simply that the horses bolted long ago. It is that those now calling for doors to be shut are the same political forces that only yesterday sang the virtues of open barns and assured us that competition would ensure horses always came back. That in itself should give pause and good reason to question the motivations behind these proposals.

But my bigger problem is the implicit presumption that the current financial crisis is simply the result of a lack of effective (sweeping, international or wide-ranging) regulation, with little to no serious relationship to the underlying economic and social trends of recent years. This is not only plain wrong, but also politically diversionary.

Analytically, this presumption mirrors the weaknesses of mainstream economic theory. First there were perfect markets, financial or otherwise, and they would lead to socially efficient outcomes. Then came ‘imperfections’, typically caused by ‘informational’ or other micro-level problems with transactions, which gave rise to conflicts of interest, potential misallocations of capital and crises. Virtue lies in deducing the contracts, ‘institutions’ and state regulation that can ameliorate these microeconomic conflicts, align incentives, and help earthly markets become more perfect.

This scheme not only leaves out the destructive endogenous tendencies of financial markets towards instability, but also abstracts from the historical, social, economic and political processes that condition the formulation, enforcement and avoidance of regulation. There is no ‘optimal regulation’ that applies equally to all periods and benefits the interests of all social groups. Financial regulation is an important but nevertheless secondary element of broader economic and political regimes. It is only ‘optimal’ in relation to specific socio-political interests.

Lea toda la opinión de Paulo dos Santos aquí que aparece en un interesante blog llamado "Political Finance" cuyo propósito definido en su página de inicio es "contribuir con ideas que puedan transformar el sistema moneatario y financiero en favor de los intereses de los trabajadores. Los contribuyentes a este blog son críticos de los mecanismos financieros privados e individuales y ven favorablemente el fortalecimiento de la provisión pública y colectiva de éstos (...) "Political Finance" es igualmente relevante para todas las organizaciones políticas interesadas en desarrollar trabajos sobre la economía capitalista."

El Síndrome de Sísifo: estancamiento, financiarización y crisis en Estados Unidos

(...) El mensaje esencial del artículo estriba en que la naturaleza de la catástrofe actual consiste en una crisis del preponderante modelo de financiarización, la cual hunde sus raíces más profundas en las deficiencias estructurales de la economíareal norteamericana y del sistema monetario y financiero internacional global. Por lo tanto, la crisis de las hipotecas subprime y el carrusel de activos tóxicos implicados son la consecuencia -no la causa- de un prolongado proceso acumulativo de: estancamiento productivo; financiarización; tremebundos desequilibrios sectoriales (real y financiero); deflación de deuda; acelerada concentración de la riqueza y del ingreso y, last but not least, regulación favorable al capital financiero especulativo.

(...) Tres son las causas fundamentales que impelen a la economía estadounidense por el derrotero infausto de recurrentes y abruptos ciclos boom-bust desde hace aproximadamente 30-40 años. Primero, el estancamiento estructural del sector real. Segundo, la financiarización de la economía. Tercero, la desregulación y re-regulación a favor del capital financiero.

Lea aquí todo el excelente artículo del Dr. Ignacio Perrotini publicado en Economía Informa.

Why Do Global Markets Suffer From Chronic Excess Capacity?: Insights From Keynes, Schumpeter and Marx

(...) Contradictions inherent in Golden Age capitalism led in time to the end of prosperity.2 Economic instability began in the late 1960s and erupted full force in the 1970s with two OPEC oil price shocks, the collapse of the Bretton Woods fixed exchange rate system, and the buildup of excessive debt in the Third World. These problems created a powerful movement, led by business and, especially, financial interests, to roll back the economic regulatory power of national governments, replacing conscious societal control with the "invisible hand" of unregulated markets, and eliminate restrictions on the flow of goods and money across borders, creating an integrated global economy.

Supporters of neoliberal globalization used neoclassical economic theory to sell their program. The standard neoclassical view holds that, absent excessive government interference, both national economies and the integrated global economy will operate efficiently, more or less like the models of a perfectly competitive market system found in college textbooks. Competitive market pressures lead to the full utilization of labor and productive capital, and cause aggregate demand (or spending) to balance full-capacity income, a proposition known as Say’s Law. There is thus no need for governments to engage in activist Keynesian aggregate demand management. Globally integrated financial markets will raise efficiency and productivity, it was argued, because they will allocate world savings to the most productive investment projects no matter where in the world they are located.

(...) Heterodox critics of neoliberalism, on the other hand, argued that the abandonment of growth targeting by activist demand management would slow real GDP growth and generate higher unemployment. High unemployment and the drive for labor market ‘flexibility’ in turn would slow real wage growth and raise inequality. Financial liberalization would lead to high real interest rates and increased instability in global financial markets. Poorer countries that substituted neoliberalism for interventionist economic development policies, it was argued, were less likely to experience rapid long-term growth. These problems were not seen as the inevitable result of increased global integration per se, but were caused by the specific institutions and practices that constitute neoliberalism.

(...) This essay focuses on one of the most important economic problems created by the spread of neoliberal globalization -- the generation and continued reproduction of substantial excess capacity in most important globally contested industries.

Lea todo el artículo escrito por James Crotty aquí

Entrevista a Eric Hobsbawm

¿Cree que regresaremos al lenguaje del marxismo?
Hasta un cierto punto, lo hemos hecho. Encuentro bastante extraño que el redescubrimiento de Marx lo han generado los hombres de negocios, ya que no hay izquierda.
Desde la crisis de los 90, son los hombres de negocios quienes empezaron a hablar en términos de decir: "Bueno, Marx predijo esta globalización y podemos pensar que el capitalismo está planteado como una serie de crisis".
No creo que el lenguaje marxista políticamente será prominente; pero intelectualmente, la naturaleza del análisis marxista sobre la forma en la que el capitalismo opera verdaderamente será importante.

Lea la entrevista completa hecha por la BBC a Eric Hobsbawm aquí

Four Crises of the Contemporary World Capitalist System

This essay examines aspects of the global political economy that I hope will inform progressive governments and movements for social change. It evaluates the constraints and opportunities presented in the current conjuncture of world capitalist development by analyzing four areas of crisis in the contemporary world capitalist system. These are not the only contradictory elements in the contemporary conjuncture, but they are, in my view, the most salient.

Lea el artículo completo de William K. Tabb publicado en la Monthly Review aquí