According to its main authors, MMT is not “ultimately” about money. Money is just a prerequisite for addressing the more important issue of mobilizing domestic resources for the full employment of the labour force and other public endeavours....Good introductory article.
I don’t think anyone was surprised by this year’s “Nobel” prize in economics, which went to three American-based specialists in the design of on-the-ground experiments in low income countries, Abhijit Banerjee, Esther Duflo and Michael Kremer. I think the award has merit, but it is important to keep in mind the severe limitations of the work being honored....
On balance, I think it’s fine that this prize honors experimentalism, but we shouldn’t lose sight of the larger picture. Using experimental methods to incorporate more learning in program administration should be standard practice; perhaps some day it will be. But the big problems in poverty and oppression are too complex and encompassing to be reduced to experimental bits, and there is no substitute for theoretical analysis and a willingness to take chances with large-scale collective.
Davies picks this up in the conclusion: “The biggest gap in economics is the way it completely ignores social capital.” This is why our Bennett Institute Wealth Economy team is exploring the measurement of social capital. Economics doesn’t entirely ignore it – it gets lables such as ‘institutions’ or ‘goodwill’ – but is treated as a black box at best. So I agree with the book that economics will have more to offer the world if we measure and understand better the “subtler and more human aspects of income and wealth.”The Enlightened Economist
India is a country of contrasts. It is home to a $160 billion tech services industry, while also buffeted by environmental and social challenges - and this makes it fertile ground for globally scalable, tech-driven solutions....World Economic Forum
AbstractThis paper focuses on the different development strategies of China and India, particularly regarding the role of manufacturing and services, for long-run productivity growth, external competitiveness and financial fragility. The findings appear to support the argument that productivity improvements in manufacturing drive productivity improvements in other sectors. They also substantiate previous findings that the Indian services-led growth trajectory has had limited success in transferring surplus labor from agriculture to other sectors. Furthermore, the trajectories have affected the export performances of the two countries with the Indian trade balance and current account revealing persistent deficits, compared to China's surpluses. The paper also argues that the way in which India has sought to sustain these deficits entails elements of financial fragility, and that the Chinese struggles with the internationalization of the renminbi also imply a possibility of financial instability.
I was going to write about Jamaica today but this topic emerged that I thought I should deal with before I write about the home of reggae. In fact, some of the material is input into a reasoned discussion about Jamaica so it logically precedes it. With the increasing profile of Modern Monetary Theory (MMT), social media activists are wont to talk about MMT in various ways that, in many cases, do not bear resemblance to our work. But that doesn’t stop them claiming things about what we have written or said and then proceeding to say how this is a ‘big problem’ with MMT that they cannot accept. Then their own local commentators chime in reinforcing the point. It is obvious that the original writer hasn’t read our work or if they have they haven’t grasped it (including the nuance and subtlety) but still feels privileged to hold themselves out as experts to wax lyrical about the technical flaws in the said work. This gets amplified by the responses from the readership who have probably read even less – to the point that we end up with MMT being constructed as something ridiculous and foreign to its original. Sort of like start by saying you are discussing 2, call it 3 and say it equals 4. It is a problem because it confounds people and also gives those who oppose our work ways to further misrepresent it in the public debate....This is an important post with many links to Bill's previous posts on the subject.
The structures of the global economy present challenges to any country or political party that wants to try to break out of U.S. hegemony. Even for countries as big and with as much potential as Brazil or Egypt, countries that have experienced waves of relative independence, the inertia of these economic structures helps send them back into old patterns of extraction and debt. In this moment of right-wing resurgence it is hard to imagine political movements arising with plans to push off the weight of the economic past. But that weight cannot be ignored.
What drives economic development? What is the nature of the external constraints that developing economies face? What is the role of industrial policy and the central banks in the development process? These were the core questions that were posed in the recent webinar series on Development in the 21st Century, organized by the Economic Development working group of the Young Scholars Initiative (YSI). These four meetings were particularly oriented towards examining notions such as distribution, patterns of specialization, industrial policies and balance of payment constraints. The discussion of such phenomena is especially important in a context of deep academic divides regarding the drivers of economic development....
I am doing some work on the way technology can be chosen to maximise employment in the pursuit of advancing general well-being. This is in the context of some work I am doing on advancing what is known as ‘relative pro-poor growth’ strategies in Africa via employment creation programs and draws on my earlier work in South Africa on the Expanded Public Works Program. In the current work, I have been assessing ways in which the Labour Intensive Public Works program in Ghana has been deployed to serve this purpose. The problem one confronts when working as a development economist in less well-off nations is that the institutional bias promoted by the IMF and the World Bank is towards advancing, at best, what we term ‘absolute pro-poor growth’. But that sort of agenda typically fails to strengthen other aspects of a strong civil society because it is almost always accompanied by rising inequality which continues to concentrate power and influence at the top and leads to resources being disproportionately expropriated by the wealthy (and usually foreign) classes. Institutions such as democracy, justice, law and order and causes such as environmental sustainability are then compromised....Bill Mitchell – billy blog
In 1995, the late economist Gustav Ranis wrote that, “If there is one key to developmental success, it is avoiding the encrustation of ideas,” which is achieved through policymakers' “ever-increasing reliance on the responsiveness of large numbers of dispersed decision-makers.” That description suits China perfectly.Agility.
The first is the middle-income trap. With a per capitaannual income of around $9,000, China remains significantly below the threshold for high-income status, set at around $12,000-$13,000 by the World Bank. Only a few countries in history have managed this leap during the last half-century....The problem with this approach is, one, using aggregates where value is expressed in terms of USD rather than real value. The analysis should include standard of living and distribution, as well as purchasing power parity, to be meaningful.
Second, China may become ensnared in the so-called Thucydides Trap…Reverse logic. The US is becoming ensnared in the Thucydides Trap by its own choice to pursue global hegemony, which makes China not only a competitor but also a threat. China will have to deal with this reality and it is doing so. This will entail greater military spending which is stimulative economically, increases attention in R&D and innovation, and encourages dual-use development of technology.
The third potential trap is what Joseph Nye calls the Kindleberger Trap. Charles Kindleberger, an architect of the Marshall Plan, blamed the breakdown of the international order in the 1930s on America’s failure to match its provision of global public goods to its new geopolitical status as the world’s dominant power. If China does the same, according to Nye, chaos could erupt again, especially at a time when the US is withdrawing from global leadership.As a socialist country, China is committed to public investment both domestically and abroad and its record so far is somewhat spectacular. China is also proposing a socialist socio-economic and political system that is capable of surpassing the capitalist West and is also suggesting its adoption to other developing countries in place of the neoliberal, neo-imperialist and neocolonialist alternative the West is offering.
Finally, there is the climate-change trap. High-income countries in general, and great powers in particular, consume a disproportionately large share of resources.The Chinese leadership is already committed to this, while the US elite is opposed to it.
A blue-collar wave is rising in China — and buoying Xi Jinping.
In most countries, a slowing economy and a sinking stock market would put some heat on politicians. Not in China. A working class that numbers more than 400 million has President Xi’s back.
Under his presidency, China’s economic policies are favoring workers more than at any other time in recent decades....Bloomberg
With respect to to this post, readers might be interested in a long set of follow-up debates below. h/t Patrick Bond, whose contribution was just published here at Human Geography.
David Harvey Denies Imperialism
In a major critique of David Harvey’s work, the radical political economist John Smith takes on Harvey’s claim that the “East” is now exploiting the “West,” a statement, he argues, that is backed up by nothing more than his authority. Harvey could not be more wrong, or about a bigger issue. The root of Harvey’s error is his denial that the global shift of production to low-wage countries represents a major deepening of imperialist exploitation….Short summaries of moments in an ongoing debate over neo-imperialism.
Emerging and Developing Economies for the First Time Account for a Larger Share of World GDP or Global Output Than Developed Economies; A Point Surpassed After the 2008 Financial Crisis That Has Continued Apace (See Figure 1)....
How has this been achieved? Possessing good institutions is what economists have come to focus on and the spread of such institutions seems to have been key, as the father of New Institutional Economics predicted. The seminal work in this area was by Douglass North who was frustrated by neoclassical economic models that focused on measurable factors like workers and investment, with attempts to measuring technological progress, even though they could not fully explain why some economies grow well and others do not.
So, North took economics out of its comfort zone, which consisted of examining more easily measured inputs like labour and capital, and instead brought in politics, psychology, and strategy, as well as history, in order to understand why some countries succeed and others fail. He stressed that there was no reason why countries could not learn from more successful economies to better their own institutions. That finally happened in the 1990s....
This sort of imitation of good institutions and effective economic policies was as outlined by institutional economists such as Douglass North. It took the fall of the Berlin Wall, the rescue of India by the IMF in 1991 as well as China’s re-orientation towards the global economy in 1992 for these economies to look to adopt a new course. By emulating ‘best practice’ in other economies as well as opening up, which meant learning from more successful foreign companies, these countries have made tremendous progress as North would have expected. He would have approved of these economies looking more widely than just on capital or labour or technology in fashioning their growth policies.The take-away from Douglass North's work is not so much that capitalism is the superior system in the sense that conventional economics treats it as that Western approaches to socio-economic and political organization proved superior to other approaches. The issues are more complicated than the simplified models of conventional economics, with their restrictive assumptions that are ideologically based — e.g., maximization and equilibrium. North recognized that broader scope was required.
North once remarked: “My pet peeve all through the last twenty years or thirty years has been the narrowness of economists, in fact of all social scientists, in not opening up whole new areas” (North et al. 2015: 9). And his ideas have brought us closer than ever before to answering the age-old question of how countries can become rich.
