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on Post Keynesian Economics |
| By: | Engelbert Stockhammer |
| Abstract: | Blecker and Setterfield’s outstanding Heterodox Macroeconomics book covers, as its subtitle suggests, a lot of ground on “models of demand, distribution and growth”, but issues of finance are largely absent. This is symptomatic of the state of heterodox macroeconomics, which has a developed common framework for the analysis of distribution and growth, but not for finance. The paper takes this as a starting point for some reflections on the role of finance in post-Keynesian (PK) and Marxist approaches. In PKE, financial factors play a constitutive role and determine the equilibrium values of key macroeconomic variables. Hyman Minsky’s work puts finance at the heart of PK business cycle theory. Marxist macroeconomics often treats finance as subordinate to real (productive) processes or not at all. We consider three episodes of how PK-Marxist debates played out: the Woytinsky-Hilferding debate of the 1930s, the debate on heterodox explanations of business cycles and the debate on financialisation. In these, the relation between PK and Marxism was confrontational, largely non-interactive and productive, respectively. The paper concludes that heterodox macroeconomics lacks an effective framework for a productive articulation of the different views on the role of finance. |
| Keywords: | finance, macroeconomics, post-Keynesian economics, Marxian economics |
| JEL: | B50 E60 G01 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2607 |
| By: | Srinivas Raghavendra (University of Galway, Ireland) |
| Abstract: | This paper examines how the financialization of advanced capitalist economies in the 1990s relates to the rise of artificial intelligence (AI) as the dominant technological framework in the 21st century. Using insights from political economy and Kaleckian theory, it suggests that AI is not a break from previous trends but a continuation and intensification of the computational rationality developed during the late 20th century's shift toward finance-led capitalism. The study highlights three structural limits that AI introduces to capitalist reproduction: the zero-slack labor constraint, the full-employment constraint, and resource limitations. These limits and their interactions threaten to destabilize the class relationship between capital and labor, the territorial basis of the state, and the legitimacy of democratic capitalism. The paper proposes that the emerging oligarchic state faces a legitimacy crisis that might be alleviated by universal basic income (UBI), which could serve as a political tool to maintain democratic support amid automation and inequality. It concludes by reflecting on how capitalism, much like an adaptive biological system, sustains itself through ongoing structural transformations, reshaping its institutions and practices to enable it to deflect existential threats while preserving its core logic of private appropriation. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ico:wpaper:178 |
| By: | Rapetti, Martin |
| Abstract: | The article presents a simple three-sector macroeconomic model that incorporates key structural features common to many Latin American economies. The model allows for the formal identification of three benchmark levels of the real exchange rate (RER). The macroeconomic equilibrium RER is the level consistent with the simultaneous achievement of internal and external balance (i.e., full employment and a sustainable balance of payments). The social equilibrium RER corresponds to a state in which workers, at full employment, obtain a real wage consistent with their income aspirations. The developmental RER is defined as a benchmark level that ensures the labor-absorbing tradable sector earns a risk-adjusted rate of profit comparable to that in developed countries, thereby fostering investment. The three-RER-levels framework provides a unified analytical setting to organize and compare alternative theories developed in Latin America —including unbalanced productive structures, distributive conflict, structural inflation, macroeconomic populism, and stop-and-go cycles— and to clarify how different configurations of the benchmark RER levels underpin competing diagnoses and development strategies in the region. |
| Keywords: | real exchange rate, Latin America, equilibrium, conflict, development. |
| JEL: | E12 F41 N16 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127649 |
| By: | Rodríguez Weber, Javier |
| Abstract: | This paper develops a historical hypothesis on the dynamics of income inequality in core capitalist societies, expanding Branko Milanovic’s Kuznets Waves framework. While Milanovic argued that inequality follows long-term cyclical patterns driven by technological revolutions and their political consequences, this study extends his theory by emphasizing the link between inequality and systemic instability at both extremes—when inequality is either too high or too low. It contends that capitalism becomes unstable not only when excessive inequality erodes political legitimacy and financial balance, but also when very low inequality undermines profitability and capital accumulation. In both cases, the resulting instability precipitates crises that compel institutional transformation. Reforms reinforcing the status quo tend to fail, as inequality cannot rise or fall indefinitely; only structural change can restore stability and initiate a new cycle. Through a historical examination of major turning points—from the Industrial Revolution and the Great Depression to postwar reconstruction and the neoliberal turn—the paper illustrates how inequality trajectories emerge from critical junctures of crisis and reform. It concludes that the current phase of high inequality may be nearing its upper limit, potentially heralding another institutional realignment—though not necessarily one of greater equality or stability. |
| Keywords: | Inequality, Political Instability, Economic crisis, Kuznets waves, Capitalism |
| JEL: | D31 D33 E39 N10 P16 |
| Date: | 2025–11–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127306 |
| By: | Naudé, Wim (RWTH Aachen University) |
| Abstract: | This paper provides an explanation of the theory of innovation and economic growth, in light of the 2025 Bank of Sweden Prize in Memory of Alfred Nobel, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt. Their scholarship is critically evaluated, and the useful, less useful, and most problematic aspects highlighted. The verdict is that it is largely a collection of anthropocentric stories of innovation and growth. It avoids spelling out why sustained growth is desirable, it reduces innovation’s ultimate goal to the pursuit of economic growth, it is based on a deep seated notion of human exceptionalism, and it promotes directed technical change - based on the assumption that all resources are fungible and can be substituted - as a way to sustain economic growth without causing environmental destruction. Their analysis of growth is useful for highlighting the importance of scientific knowledge, for showing that creative destruction can be more destructive than creative, and that economic growth will only be sustained under very special conditions. However, the failure to address energy remains a glaring gap. For economics to become more useful, it would require becoming an Earth Systems Science based on biocentric holism. |
| Keywords: | innovation, economic growth, technology, sustainability, energy |
| JEL: | O31 O33 J11 J24 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18408 |
| By: | Tim Lloyd; Scott A. Wolla |
| Abstract: | Many students will have at most one economics course, but the discipline can inform a lifetime of decisions. What are some good ways to introduce the subject? |
| Date: | 2024–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00100:102744 |