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on Post Keynesian Economics |
| By: | David Laidler (University of Western Ontario) |
| Abstract: | The first of these essays was written for a happy occasion – my acceptance of honorary membership in the European Society for the History of Economic Thought. The second marked an altogether sadder event - the death of Mark Blaug. Though at first sight their topics are very different, both in fact deal with some of the limitations inherent in applying contemporary criteria, in the first case those of modern equilibrium modeling, and in the second, those of empirically oriented positive economics, to understanding and assessing the economics of the past. |
| Keywords: | Time; Progress; Empirical Evidence; True Model; Rational Expectations; Money; Quantity Theory; Value Theory; Positive Economics; Empiricism; Formalism; Bimetallism; Gold Standard; Monetarism |
| JEL: | A10 B1 B2 B10 B31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:epuwoc:20126&r=pke |
| By: | Marco Pagano (Università di Napoli Federico II, CSEF and EIEF) |
| Abstract: | In the past two decades, academic research has produced massive evidence of the beneficial role of financial development for growth and the allocation of investment. Our current vision, however, is dominated by instances of dysfunctional behavior of financial markets associated with acute and widespread crises. This raises the issue of when and why finance ceases to be the “lifeblood” and turns into a “toxin” for real economic activity. This paper is a first step towards an answer. Its thesis is that the metamorphosis occurs when finance becomes “too large” relative to the underlying economy. At this point finance stops contributing to economic growth and comes to threaten the solvency of banks and systemic stability. A related question is why regulation is not designed so as to prevent the financial industry from growing above this threshold. I argue that the answer lies largely in the symbiosis between politicians and the finance industry. |
| Keywords: | Financial development, financial crisis, risk taking, market failure, political economy |
| JEL: | G01 G18 G21 G28 H81 O16 |
| Date: | 2012–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:326&r=pke |
| By: | Jon D. Wisman |
| Abstract: | This article addresses the political meaning of President Ronald Reagan's 1981 declaration that "government is the problem." Whereas historically the state had been used by elites to extract as much surplus as possible from producers, with democratization of the franchise, the state became the sole instrument that could limit, or even potentially end, the extraction of workers' surplus. Once control of the state is in principle democratized by the ballot box, the fortunes of the elite depend solely upon controlling ideology. In 1955, Simon Kuznets offered the highly influential conjecture that while rising inequality characterizes early economic development, advanced development promises greater equality. However, rising inequality in most wealthy countries over the past four decades has challenged this hypothesis. What those who embraced Kuznets' conjecture failed to recognize is the dynamics by which the rich, with their far greater command over resources, education, and status, inevitably regain control over ideology and thereby the state. Over the course of history, only the very severe crisis of the 1930s discredited their ideology and led to a sustained period of rising equality. However, by 1980 they had regained ideological ascendancy. This article examines how this struggle over ideology has unfolded in the U.S. since the democratization of the franchise in the late nineteenth century. It concludes with reflections on whether the current crisis holds promise of again de-legitimating the elites' hold on power and ushering in another period of rising equality. |
| Keywords: | Inequality, ideology, class power, democracy, Kuznets' curve. |
| JEL: | B00 N32 N42 O15 Z13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2013-01&r=pke |