nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2008‒05‒05
three papers chosen by
Karl Petrick
University of the West Indies

  1. "The Discrete Charm of the Washington Consensus" By Jan Kregel
  2. "Old Wine in a New Bottle: Subprime Mortgage Crisis—Causes and Consequences" By Michael Mah-Hui Lim
  3. Building Socialism and Communism: Planning and the Process of Transcending Markets By Al Campbell

  1. By: Jan Kregel
    Abstract: Over the last two centuries in Latin America a Washington Consensus development strategy based on integration in the global trading system has dominated both domestic demand management and industrialization "from within." This paper assesses the performance of each from the point of view of the impact of external conditions, and the validity of its underlying theory. It concludes by noting that replacing the Consensus will require not only reform of the international financial architecture but also a return to the integrated policy framework represented in the Havana Charter.
    Date: 2008–04
  2. By: Michael Mah-Hui Lim
    Abstract: This paper seeks to explain the causes and consequences of the United States subprime mortgage crisis, and how this crisis has led to a generalized credit crunch in other financial sectors that ultimately affects the real economy. It postulates that, despite the recent financial innovations, the financial strategies—leveraging and financial risk mismatching—that led to the present crisis are similar to those found in the United States savings-and-loan debacle of the late 1980s and in the Asian financial crisis of the late 1990s. However, these strategies are based on market innovations that have heightened, not reduced, systemic risks and financial instability. They are as the title implies: old wine in a new bottle. Going beyond these financial practices, the underlying structural causes of the crisis are located in the loose monetary policies of central banks, deregulation, and excess liquidity in financial markets that is a consequence of the kind of economic growth that produces various imbalances—trade imbalances, financial sector imbalances, and wealth and income inequality. The consequences of excessive risk, moral hazards, and rolling bubbles are discussed.
    Date: 2008–04
  3. By: Al Campbell
    Abstract: This short paper will argue the following 8 points. This paper will- 1) as a background to what this paper will consider, accept both that planning is an inherent and essential aspect of socialism, and that not only the details but the very basic nature of the planning that will be appropriate in today’s world for supporting (various) transitions to socialism has to be created; 2) focus on just one of many questions that need to be resolved concerning the appropriate basic structure of today’s socialist planning, the question of the role of markets in planning for socialism; 3) discuss the essential nature of capitalist markets in relation to shaping their participants in ways appropriate for capitalism (any mode of production creates its own presuppositions), and therefore in ways inappropriate for either living under socialism or effecting the transition from capitalism to socialism ; 4) review Marx and Engels’ position that immediately after the seizure of power by a workers’ government capitalist commodity production and capitalist markets will still exist; 5) review Marx and Engels’ position that the transition to socialism will involve a withering away of both capitalist markets and commodity production, and that under socialism these will already both be transcended; 6) then argue, closely based on Marx and Engels’ writings, that under socialism there will necessarily be markets, albeit markets of a different nature that I will call “socialist markets” (and I will carefully indicate their fundamental difference from capitalist markets); 7) then argue that notwithstanding that socialist markets are both necessary for socialism and different from capitalist markets, they will still represent barriers to the transition from socialism to communism; 8) finally discuss what will be necessary for the transcendence of socialist markets which is a necessity for completing the transition to a communist mode of production, which Marx indeed saw as a society without markets.
    Keywords: Socialism, Communism, Transcending Markets
    Date: 2008–09

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