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

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.

¡Es la deuda privada, estúpidos! Porqué los economistas del sistema se equivocan siempre en sus diagnósticos y en sus pronósticos*

La deuda, el dinero y el propio sistema financiero no desempeñan el menor papel en los modelos económicos neoclásicos convencionales. Muchos legos creen que los economistas son expertos en dinero, pero la creencia de que el dinero es meramente "el velo que cubre el intercambio" –y que, por lo mismo, la economía puede ser modelada sin tomar en cuenta ni el dinero ni la forma en que se crea— es un dogma fundamental de la teoría económica neoclásica. Sólo los economistas disidentes toman el dinero en serio.

Lea todo el ensayo de Steve Keen traducido por Sin Permiso aquí

*NOTA: Originalmente la entrada fue subida al blog Economarx21 (blog que ampliamente se recomienda seguir) por José Sandoval.

Has Trade Liberalisation in Poor Countries Delivered the Promises Expected?

The paper reviews the evidence of the impact of trade liberalization on the economic performance of poor developing countries with respect to poverty reduction, the distribution of income within countries, the distribution of income between countries, trade and the balance of payments, and economic growth, and finds that liberalisation has not delivered the benefits expected. Economic theory, and the historical and contemporary evidence, all provide arguments for protection of industrial activities in developing countries.

Lea todo el artículo de Penélope Pachecho-López y Anthony Thirwall aquí

Contra la dictadura de la teoría dominante y por una nueva ética

1. La teoría dominante se encuentra en crisis

En la actualidad, después de años de atrofia, está haciéndose oír un nuevo espíritu, y a la ciencia económica le toca mostrar una respuesta a la altura. La crisis global que está teniendo lugar marca un punto de inflexión de capital importancia. Como han señalado ya gran número de personas, en la crisis actual están cayendo las teorías económicas dominantes y el fundamentalismo de laissez-faire (dejar hacer) que extraía su legitimidad y vitalidad de ellas; teorías que no habían comprendido la fragilidad del sistema de acumulación sin control. Estas teorías desempeñaron su función en la construcción del sistema, promoviendo la transición a una economía dominada por las finanzas, a la liberación de los mercados financieros, a la reducción de la defensa y el control de la mano de obra, con un drástico empeoramiento en la distribución de los ingresos y el agravamiento de los problemas de la demanda. Así, también desempeñaron su parte en la venida del estado de crisis y ahora es necesario restaurar la economía a los cimientos éticos que subyacían el pensamiento de los economistas clásicos.

2. Necesidad urgente de una nueva serie de debates en el debate económico

Es necesario volver a abrir de forma urgente el debate sobre los cimientos de los diversos enfoques teóricos en el campo de la economía. Es hora de abandonar la idea de que existe únicamente una verdad sin alternativa alguna en las ciencias económicas, independientemente de su conveniencia como justificación para los economistas y los comentaristas económicos mayoritarios. Realmente es hora de dejar algo de espacio a las teorías alternativas (keynesianas, clásicas, institucionalistas, evolucionistas e históricas), con la amplia diversidad de sus variantes, tanto en la enseñanza como en la investigación.

Lea completo "Contra la dictadura de la teoría dominante y por una nueva ética: Manifiesto por la libertad del pensamiento económico" por el Fondo Sylos Labini publicado en su sitio web y en Rebelión. Traducción de Mar Rodríguez.

From Keynesianism to Neoliberalism: Shifting Paradigms in Economics

For the laste 25 years, economic policy and the public´s thinking have been dominated by a conservative economic policy known as neoliberalism.

(...) Two critical tenets of neoliberalism are its theory of income distribution and its theory of aggregate employment determination. (...) In a sense, the American neo-Keynesian position was implicitly a forerunner of today´s neoliberal laber market flexibility agenda.

Lea todo el artículo de divulgación de Thomas Palley aquí

Why capitalism fails; the man who saw the meltdown coming had another troubling insight: it will happen again

Since the global financial system started unraveling in dramatic fashion two years ago, distinguished economists have suffered a crisis of their own. Ivy League professors who had trumpeted the dawn of a new era of stability have scrambled to explain how, exactly, the worst financial crisis since the Great Depression had ambushed their entire profession.

Amid the hand-wringing and the self-flagellation, a few more cerebral commentators started to speak about the arrival of a “Minsky moment,” and a growing number of insiders began to warn of a coming “Minsky meltdown.”

“Minsky” was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession. But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through. A contrarian amid the conformity of postwar America, an expert in the then-unfashionable subfields of finance and crisis, Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.

Lea todo el ensayo de Stephen Mihm en la página del Levy Institute aquí

EXPECTATIVAS RACIONALES Y LA RELEVANCIA DE LA TEORÍA DE LA PROBABILIDAD PARA LA INCERTIDUMBRE

Una crítica a la hipótesis de expectativas racionales y de los resultados de la nueva economía clásica ha sido realizada desde el campo de la economía postkeynesiana. De acuerdo con este punto de vista, las distribuciones de probabilidad no son la base para comprender el comportamiento del mundo real bajo incertidumbre. Para los postkeynesianos se producen muchas situaciones importantes en las que existe la "verdadera" incertidumbre con respecto a las consecuencias futuras que tendrán las decisiones realizadas hoy. En estos casos de verdadera incertidumbre, los individuos que toman decisiones presentes creen que ningún gasto de recursos para analizar datos pasados, o señales del mercado actuales pueden proporcionar estadísticas fiables o pistas intuitivas con respecto a las perspectivas futuras.

La crítica postkeynesiana considera que, en una teoría general del comportamiento económico, todas las decisiones económicas pueden ocurrir bajo una de las tres situaciones mutuamente excluyentes:
1) el estado de probabilidad objetiva;
2) el estado de probabilidad subjetiva ;
3) el estado de verdadera incertidumbre.

En el estado de probabilidad objetiva, lo individuos que toman decisiones creen que el pasado es estadísticamente fiable, y, por tanto, una guía insesgada del futuro. Esta es la hipótesis de expectativas racionales, donde el conocimiento de las consecuencias futuras de las decisiones actuales implican la confluencia de probabilidades subjetivas y objetivas.

En el estado de probabilidad objetiva, la mente del individuo o lo que Savage denomina probabilidad personal respecto a acontecimientos futuros en el momento de la elección gobiernan los resultados futuros. Estas probabilidades subjetivas no tienen que coincidir con distribuciones objetivas, incluso si existen distribuciones objetivas bien definidas. Este marco proporciona la base para una teoría de la elección, que puede expresarse en lenguaje de la teoría de la utilidad esperada. Así, en la teoría de la utilidad esperada, de acuerdo con Sugden (1987:2), "se define una prospectiva como una lista de consecuencias con una lista asociada de probabilidades, una para cada consecuencias, de forma que estas probabilidades sumen la unidad... [y] las preferencias de un individuo se definen sobre el conjunto de todos las perspectivas concebibles".

Lea todo el ensayo de Joaquín Pi Anguita 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.

The New Consensus on Monetary Policy and its Post-Keynesian Critique

A New Consensus (or New Neoclassical Synthesis) has arisen among neoclassicaleconomists, which has been defined by a number of New Keynesian economists and already presented in heuristic form. This new view seeks to redefine the application of monetary policy by respecifying the most appropriate monetaryrule. In other respects it represents a return to Milton Friedman’s analysis of the expectations augmented Phillips curve.

This paper seeks to look at the underlying framework of the New Consensus models, providing a Post-Keynesian critique. In the light of this critique, the model is reformulated, with its basic structure intact, but with alternative post-Keynesian specifications of the Phillips curve being considered.

Descargue todo el artículo de Marc Lavoie y Peter Kriesler desde esta página

Similitudes and Discrepancies in Post-Keynesian and Marxist Theories of Investment: A Theoretical and Empirical Investigation

There has been a substantial amount of convergence between post-Keynesian and Marxist economics, the writings of Kalecki being common ground for both traditions. Still, some differences remain. While authors in both traditions seem to agree to a large extent on short period issues, long-period matters relating to the role of saving, the rate of profit, inflation, crowding out, excess money supply, are still contentious. All this seems to depend on the exact form taken by the investment function, more specifically the role of capacity utilization. Four different equations are set up to be tested, two of which correspond to two variants of the Marxist view, while the other two equations correspond to a naive and a sophisticated Kaleckian view, the latter being based on hysteresis. The equations are tested on three sets of annual Canadian data.

(...) With the fall of the Berlin Wall and the strengthening of the neoclassical stronghold upon academic institutions, it is possible to observe some convergence among the various heterodox branches of economics. One particular source of convergence has been the rediscovery of the works of Michal Kalecki, who was trained as a Marxist economist, but whose influence has become quite large among the successors of the so-called Cambridge economists. Kalecki’s importance has been underlined by the godmother of post-Keynesianism, Joan Robinson, and rightly so it seems now.

The importance of Kalecki, beyond his economic and technical insights, lies in the fact that economists from both the Marxist branch and the post-Keynesian branch now make use of his insights and share common models that have been inspired by his work.

Lea todo el artículo completo de Marc Lavoie, Gabriel Rodríguez y Mario Seccareccia publicado en la revista International Review of Applied Economics dando clic aquí para bajar el archivo

“KEYNESIANS”, MONETARISTS, NEW CLASSICALS: A POST KEYNESIAN CRITIQUE

Sixty years after the publication of The General Theory of Employment, Interest, and Money (hereafter referred to as GT), interpretations and critical reactions of Keynes’s theory are still being discussed in Economics. This book was written during a time when Say’s Law - that is to say, supply creates its own demand - was the foundation of orthodox economic thought.1 Keynes’s explanation for the chronic unemployment of the Great Depression revolutionized economic theory by arguing that in a monetary capitalist economy, even with flexible prices and wages, a lack of aggregate demand is a normal result of the economic process.

The primary purpose of this article is to present briefly a survey of main orthodox theoretical interpretations and criticisms of Keynes’s ideas that have become embedded in theoretical discussions on macroeconomic theory. Secondly, this paper explains why, according to the Post Keynesian view, most accepted theoretical interpretations and criticisms of Keynesian theory (a) involve logical inconsistencies when compared with Keynes’s theoretical analytical structure and (b) misrepresent the dynamic characteristics of modern entrepreneurial economies.

Lea todo el artículo de Fernando Ferrari Filho aquí

Is the NAIRU theory a Monetarist, New Keynesian, Post Keynesian or a Marxist theory?

The NAIRU theory has become the mainstream theory in explaining unemployment in Europe and is often used to justify demands for a cutback of the welfare state, reducing unemployment benefits, reducing minimum wages, decentralizing collective bargaining, etc. Close inspection reveals that it nonetheless shares some arguments with Post Keynesian and even Marxist theory. The paper proposes an underdetermined, encompassing NAIRU model, which is consistent with several theoretical tradtions. Depending on the closure with respect to demand formation and determination of the NAIRU itself, the model allows for New Keynesian, Post Keynesian and Marxist results.

Lea todo este peculiar artículo escrito por Engelbert Stockhammer aquí

Fiscal Policy: an important instrument

There has undoubtedly been a major shift within macroeconomic policy over the past two decades, from the pre-eminence of fiscal policy to that of monetary policy. The latter has gained considerably in importance as an instrument of macroeconomic policy, whereas the former is rarely mentioned in policy discussions anymore, except in the context of
limiting its use.
Fiscal policy is often discussed in a framework in which there is no issue of aggregate demand failure and in which the economy adjusts in a stable fashion toward a supply-side equilibrium. However, once it is recognized that there are failures of aggregate demand which can have lasting effects on the supply side of the economy (e.g. through effects on investment and thereby on productive capacity), fiscal policy can be seen to have an important role to play.

Lea este artículo publicado por Phillip Arestis y Malcolm Sawyer en la New School Economic Review aquí

The End of Neo-liberalism?

Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.

Lea este artículo de Joseph Stilgitz aquí
http://www.project-syndicate.org/commentary/stiglitz101