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on Post Keynesian Economics |
| By: | Leonardo Burlamaqui |
| Abstract: | This paper reconstructs Joseph Schumpeter's major works to propose a coherent new departure point for analyzing economic and social change. I argue that Capitalism, Socialism and Democracy (1942) (CSD) marks a radical departure from Schumpeter's earlier attempts in The Theory of Economic Development (1912 [1934]) (TED) and Business Cycles (1939) (BC) to merge equilibrium theory with evolutionary dynamics. In CSD, equilibrium disappears, cycles recede, and capitalism is recast as a process of creative destruction--turbulent, conflictual, and institutionally embedded. Yet the building blocks of this paradigm--innovation, the entrepreneurial function, credit creation, capital as a social relation, and the seeds of financial fragility--were already present in TED and BC, though obscured by equilibrium reasoning. The originality of this reconstruction lies in recovering Schumpeter's neglected concept of the "secondary wave, " buried in BC, which anchors financial fragility within the creative destruction paradigm and provides the bridge to Keynes's liquidity preference and Minsky's financial instability hypothesis. Reconstructed in this way, Schumpeter's trilogy yields a framework in which credit, innovation, technological disruptions, and financial fragility are inseparable. The synthesis illuminates both the resilience and the instabilities of contemporary capitalism and, when extended, helps to explain the logic of "hybrid institutional architectures"--above all the "China model, " today's most ambitious and misunderstood experiment in innovation-led, state-directed development in contemporary political economy. |
| Keywords: | Schumpeter; Keynes; Minsky; creative destruction; innovation; conflict; secondary wave; liquidity preference; financial fragility; economic and social change |
| JEL: | B15 B25 B52 E32 E44 O30 O43 P16 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1098 |
| By: | Francesco Ruggeri; Riccardo Pariboni; Giuliano Toshiro Yajima |
| Abstract: | Divergent trends in income and consumption inequality--with the first increasing substantially more than the latter--are an established, stylized fact for the US economy in the last decades. The same time period also experienced a steady increase in household debt, plausibly not independent from the patterns in income distribution and consumption as mentioned. In this article, we develop a stock-flow model that tries to replicate some of these dynamics. We emphasize the role played by changing behavioral attitudes toward consumption and demand for household loans by introducing an emulation mechanism that links the desired consumption for households of a given quintile with the realized consumption of the immediately superior quintile. Furthermore, we leverage the available data on income distribution quintile consumption, income, and wealth to estimate those attitudes empirically. The model, albeit simple and essential in nature, shows the Janus-like faces of household debt and emphasizes the predator-prey-like dynamics implied by a debt-led process, in which fresh borrowing increases aggregate demand and output, which feeds the ability to borrow and consume more; at the same time, the stock of accumulated debt "preys" on income due to the contractionary forces of the repayment mechanism. Through a simple and stylized representation of the multiple interactions between income distribution, consumption, and debt, we also formalize and highlight how the benefits of a process of debt-led growth are asymmetrically distributed and reinforce the same detrimental tendencies in income distribution that led to the emergence of debt as a necessary engine of growth. |
| Keywords: | Stock-Flow Consistent Model; Personal Income Inequality; Emulation; Debt |
| JEL: | E12 E21 D31 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1099 |
| By: | Mark Setterfield |
| Abstract: | The purpose of this paper is to contribute to the integration of unpaid caregiving in the household into short- and long-term macroeconomic theory and, in particular, the theoretical structure of production on the supply side of the economy. The ambition of the project is to furnish a general theoretical representation of how unpaid caregiving and its (gendered) social structure contribute to the technical conditions of production in the sphere of marketed output. In so doing, it aims to provide macro theorists with an apparatus that allows consistent description of both short-term (levels of activity) and long-term (rates of growth) macro outcomes in a manner that routinely integrates feminist insights regarding the gendered structure of the social reproduction of labor into macroeconomic analysis. |
| Keywords: | Social reproduction of labor; unpaid caregiving; macroeconomic theory; potential output; natural rate of growth; technical change |
| JEL: | E11 E12 B54 E23 J13 J16 J24 O33 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1083 |
| By: | Gunseli Berik; Ebru Kongar |
| Abstract: | Macroeconomics is arguably the most male-dominated field within the discipline of economics. Since the mid-1990s, feminist economists have thoroughly and meticulously challenged this field through empirical and theoretical analyses and proposed alternative starting points, frameworks, and models. We evaluate the contributions of five scholars--Nilufer Cagatay, Diane Elson, Caren Grown, Stephanie Seguino, and Elissa Braunstein--who have been influential in the development of feminist macroeconomics as a heterodox project since 1995. Through citation analysis, we examine who is recognizing the macroeconomics-related contributions of these five scholars. We document that the journal articles published by these five are cited primarily by women, in mainstream journals, in disciplines other than economics, and in interdisciplinary journals both in and outside of economics. Our analysis reveals that the impact of the five scholars in heterodox macroeconomics journals is miniscule, and the citations of their works are primarily made by other feminist economists, most of whom are women. |
| Keywords: | Citations; Feminist Economics; Feminist Macroeconomics; Gender |
| JEL: | B54 E11 E12 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1081 |
| By: | Danielle Guizzo |
| Abstract: | Heterodox economics, often characterised as a progressive and critical intellectual community, has gained prominence in recent years, particularly in response to economic crises and political shifts. While its intellectual history is well-documented, particularly in the Global North, its role in supporting an alternative economics education through time remains underexplored. Furthermore, the ways in which higher education structures have supported or constrained critical thinking in economics have been largely absent from historical analyses. This article addresses these gaps by exploring the historical development of heterodox economics education in the UK between the 1960s and 1990s, looking at the case of polytechnics as higher education institutions. It adopts a multi-method approach, analysing archival institutional records (course prospectuses, syllabi, regulatory policy documents) alongside interviews with economics educators using inductive thematic analysis, followed by triangulation. The findings reveal that polytechnics, designed to mainly deliver vocational education, played a central role in developing heterodox content, further supported by relative regulatory tolerance. However, structural reforms in the 1980s – driven by funding constraints, the rise of performance metrics, and increasing alignment with university norms – narrowed the space for pluralist approaches and accelerated the marginalisation of heterodox economics in UK higher education. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/800 |
| By: | Agustin Mario |
| Abstract: | According to current macroeconomic models, there is a need to maintain a natural rate of unemployment to contain inflation. Put simply, unemployment is considered an (inevitable) cost of price stability. Even some Post Keynesian economists believe the so-called balance-of-payments (BOP) constraint imposes a trade-off between inflation and unemployment in developing countries. On the contrary, what has come to be known as Modern Money Theory (MMT), from its inception, argued that full employment and price stability (as defined) can be achieved simultaneously, through a labor buffer stock or Job Guarantee (JG). In addition to the theoretical literature on the JG, there have been a number of "real world" experiences. In particular, Argentina's Jefes y Jefas de Hogares Desocupados program ("Jefes") has been considered, in the MMT literature, as a (limited) JG case study. While the Jefes and its reform have been addressed in the past, this article considers the rationale for such reform within the broader framework of an economic policy based on two fundamental pillars of social inclusion: the expansion of social security and aggregate demand management that would drive economic growth and, thus, job creation. While both job creation and expansion of social security allowed for a steep decline in poverty and extreme poverty rates during the 2003-15 period, the economy did not reach full employment; in fact, jobs were lost for the less skilled. Not only did aggregate demand management not secure full employment, but it proved to be inherently inflationary. Indexation of public wages, social security payments and virtually every price paid by the government compounded the problem and institutionalized inflation. After the fall of the currency board in 2002, Argentina defaulted on its foreign currency public debt and implemented the Jefes, which could have been expanded to achieve full employment and an internally stable currency. Unfortunately, the Jefes was gradually faded out, along with the potential benefits of transforming it into a full-fledged JG. It is imperative to retake the road once taken. Labor markets and--more generally--the world economy are going through an unprecedented transformation driven by technological, environmental and demographic changes. In this context, MMT offers practical insights for achieving politically determined goals--for example, sustainable development goals. Specifically, the JG can now deliver employment for all. |
| Keywords: | Job Guarantee; MMT; Argentina; Jefes Program; Economic Policy |
| JEL: | F30 N10 N14 P16 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1088 |
| By: | Alberto Russo (Department of Economics and Social Sciences, Universita' Politecnica delle Marche) |
| Abstract: | Drawing on Peter Turchin's structural-demographic theory, this paper provides a preliminary examination of how rising inequality and financial liberalization contribute to political instability through the interplay of mass immiseration and elite overproduction. We capture these dynamics through a simplified agent-based macroeconomic model, introducing two structural shocks { growing inequality and financial liberalization { that reect the transformations reshaping advanced economies in recent decades, a process intertwined with political disintegration. A wealth tax on the richest households can reduce political fragmentation and improve economic performance, but lasting resilience will require embedding such measures within a broader rethinking of the policy paradigm that has prevailed since the 1980s. |
| Keywords: | Inequality, Financial Liberalization, Political Instability, Agent-Based Model. |
| JEL: | C63 D31 E02 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:anc:wpaper:500 |
| By: | Pavlina R. Tcherneva |
| Abstract: | This paper employs the concept of "enshittification"--the systematic degradation of a service or product in the pursuit of profit--as a powerful metaphor to analyze the decay of the US labor market in the postwar era. Situating this process within Hyman Minsky's theory of capitalist development, it argues that the current phase of money manager capitalism has accelerated a pervasive "bait-and-switch" dynamic that has emerged since the 1970s. The "bait" was the postwar social contract, which promised but never guaranteed economic security through tight full employment and access to good jobs for all. The "switch" was the neoliberal policy shift that dismantled labor protections, weaponized unemployment (via the NAIRU doctrine), and fostered financialization, leading to stagnant wages, precarity, and household indebtedness. The "trap" is the worker's inescapable dependency for survival on a job within a system that uses the threat of unemployment as a policy tool. The paper identifies the erosion of four key forces--competition, regulation, interoperability, and worker power, all of which held the tenuous postwar contract together--as the drivers of this enshittification. It concludes by articulating how the federal job guarantee proposal can act as a systemic circuit breaker capable of reverse reengineering the labor market. The job guarantee is not only an alternative to precarious employment and the NAIRU policy framework, but also a comprehensive de facto regulator that introduces much needed competition for labor by firms in the economy. The paper evaluates how the program can introduce countervailing forces to arrest the degradation of the labor market and establish a new standard for good jobs, thereby laying the foundation for a renewed social contract. |
| Keywords: | Enshittification; Job Guarantee; Social Contract; Money Manager Capitalism; Labor Market Precarity; Financialization |
| JEL: | J01 J08 J38 J64 B52 E24 B26 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1100 |
| By: | L. Randall Wray |
| Abstract: | Until Modern Money Theory came along, no one seemed to ask the question--let alone answer it--as to why the US government borrows, given that it can print money. For the past 28 years, we've been answering it in exhausting detail. But it remained a question no one wanted to consider. However, in recent days social media has been ablaze because Jared Bernstein, who is now chair of the US Council of Economic Advisers, appeared to stumble over that exact question in a promotional clip from the newly released documentary Finding the Money. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:lev:levyop:op_72 |
| By: | Pavlina R. Tcherneva |
| Abstract: | On November 5, 2024, American voters sent Donald Trump back to the White House. In 2020, he lost his bid for reelection to Joe Biden, after winning in 2016 against Hillary Clinton (but only thanks to the electoral college). This time, however, Trump won the popular vote. All the new energy that surrounded the Harris-Walz campaign was outmatched by the turnout from Trump supporters. All polls—whatever one’s feelings about their reliability--kept pointing to the same defining issue in this (as in every other) election: the economy. Critical issues of democracy, abortion, and immigration filled the airwaves and political speeches, but the economy remained once again more powerful than any one of them. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:lev:levypn:24-3 |
| By: | L. Randall Wray |
| Abstract: | This is a revised version of the keynote address presented at the FDR library for the Levy Institute Summer Seminar on Money, Finance, and Public Policy on June 20th, 2025. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1084 |
| By: | L. Randall Wray |
| Abstract: | In this note, we will first address the issue of rating sovereign government debt: Do the credit raters know how to do it, and does it make any sense to do it? We will conclude that the answer to both is "no." We then turn to possible negative impacts of government deficits and debt--and assess how likely it is that the US faces them. Finally, we address the claim that the dollar has provided an exorbitant privilege to the US and whether that may be coming to an end. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:lev:levypn:25-4 |
| By: | Dimitri B. Papadimitriou; Giuliano Toshiro Yajima; Gennaro Zezza |
| Abstract: | Contrary to upbeat announcements on the prospects for the US economy from the current administration in Washington, economic conditions are softening for this year. The market for labor is increasing anemically after the significant downward adjustments to the earlier months of 2025 and the disappointing reports in recent months (July and August 2025) that showed small numbers of new jobs. The unemployment rate ticked up as did the jobless claims for August. The Federal Reserve Bank of New York’s Survey of Household Spending showed a broad-based decrease in the rate of growth: from 4.5 percent in April to 4.1 percent in August--the lowest level since April 2021. The same survey, however, showed that the share of consumers making large purchases (electronics, home appliances, furniture, home repairs, and vehicles) increased from 53.5 percent to 60.8 percent over the past four months (April) of this year, perhaps due to worries about American tariffs causing forthcoming price increases. In the same survey, the expected year-ahead growth in necessary spending decreased from 4.9 to 4.7 percent over the past four months (FRBNY 2025a). This is in concert with the decline in consumer confidence reported in September (Conference Board 2025). |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:lev:levysa:sa_10_25 |
| By: | Pavlina R. Tcherneva |
| Abstract: | On April 21, 2025, a day after Easter Sunday, the world mourned the passing of His Holiness Pope Francis. Five years earlier, on Easter Sunday, April 12, 2020--amid the devastating COVID-19 pandemic--he issued a powerful plea for economic justice, urging leaders to address the deepening crisis of insecurity faced by workers. His call for a universal basic wage (distinct from a universal basic income) sought to guarantee dignity and rights for all laborers—during the pandemic and beyond--underscoring the value of essential work. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:lev:levypn:25-2 |
| By: | Joerg Bibow |
| Abstract: | For the past hundred years or more, payments have been primarily associated with banking, and banking as we know it today--being the result of many centuries of evolution--features a bundling of (at least) three main lines of business: lending, deposit-taking, and payment services. In the past 15 years or so, banks have come under severe competition as providers of payment services. Will "banking on payments" become outmoded and payments untethered from banking, or will payments still have a place in the future of banking? This paper sets out to explore this question and to address the following two related issues. First, what are the likely consequences (especially for the financing of growth and the provision of liquidity in the form of bank deposits) of the apparent "unbundling" of the traditional connections in banking between lending, deposit-taking, and payment services? Second, what are the implications of the evolution (or revolution) of money, payments, and banking for public policy, monetary theory, and the theory of monetary policy? |
| Keywords: | banking; money; payments; financial intermediation; bank regulation; monetary policy |
| JEL: | B22 E12 E42 E58 G21 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1091 |
| By: | Dimitri B. Papadimitriou; Giuliano Toshiro Yajima; Gennaro Zezza |
| Abstract: | In this report, Institute President Dimitri B. Papadimitriou, Research Scholar Giuliano T. Yajima, and Senior Scholar Gennaro Zezza discuss the rapid recovery of the US economy in the post-pandemic period. They find that robust consumption and investment and a relaxation of fiscal policy were the key drivers of accelerated GDP growth--however, the signs that the same rapid rate of growth will continue are not encouraging. In the authors' assessment, projections relying on significant increases in private sector expenditures, including residential investment, are doubtful unless the relaxation of fiscal policy continues; both the household and corporate sectors will be deleveraging instead of increasing spending; the trade balance will continue along its same path in a deficit position; and the run up in the stock market carries significant downside risks. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:lev:levysa:sa_6_24 |