June Sekera — Denial of the public non-market system, and the consequences

Public non-market production makes up a quarter to a half or more of all economic activity among advanced democratic nation-states. Yet the public economy’s ability to function on behalf of the populace as a whole is seriously imperiled in many western democracies, and particularly jeopardized in the United States. The surging influence of mainstream economics has been a prime factor in the degradation of the public domain over the last several decades – a phenomenon that James Galbraith (2008) has called “the collapse of the public governing capacity.”

Market advocates, exploiting neoclassical economic theory, have foisted market axioms and precepts onto government, intent on transforming public goods production in imitation of an idealized and idolized market model.

The ravaging of government in the interests of ideology and private profit has proceeded largely unhampered because we have no adequate theory to explain the nature and dynamics of the non-market public economy, no intellectual infrastructure to explain how its purposes and processes differ crucially from those of the market, and no effective explanatory model that shows why such differences matter substantially for democratic governance and the well-being of the populace....

The post is short and to the point.

However, I think the last sentence may be an exaggeration.

MMT does address this issue in terms of public purpose, and it is not original in doing so. John Kenneth Galbraith's career as public policy economists was all about addressing this and at one time he was listened to, and he played a policy making role in government, too. Many Post Keynesians also focused on this.

The problems are, first, the assumptions both substantive and procedural (methodological) of conventional economists, and secondly, the dominance of this approach in academic economics and also policy making circles.

Real-World Economics Review Blog
Denial of the public non-market system, and the consequences

Excerpted from June Sekera, “Missing from the mainstream: the biophysical basis of production and the public economy”, real-world economics review, issue no. 81, 30 September 2017, pp. 27-41, 

JW Mason — Can Sanders Do It?

This is a model post for the logical structure of argument.

My old professor Jerry Friedman wrote a piece several weeks ago, arguing that a combination of increased public spending and income redistribution (higher minimum wages and other employment regulation favorable to labor) proposed by the Sanders campaign could substantially boost growth and employment during his presidency. As readers of this blog know, this piece has gotten a lot of attention in the past couple of days. Most notably, it inspired a letter from four former CEA chairs strongly rejecting the claim that Sanders proposals could “have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.” A number of prominent liberal economists have endorsed the CEA letter or expressed similar doubts.

I want to try to clarify the stakes in this debate. There are three questions, each logically prior to the other.

1. Is it reasonable to think that better macroeconomic policy could deliver substantially higher output and employment?

2. Are the kinds of things proposed by Sanders capable in principle of getting us there?

3. Are the specific numbers in Sanders’ proposals the right ones for such a really-full employment plan?

The second question doesn’t matter until we’ve answered yes to the first one. And the third doesn’t matter until we’ve answered yes to the first two.

The first question is not only logically prior, it also seems to be what the public debate is actually about. The CEA letter, and almost all the other criticism of the Friedman paper I have seen, focuses on whether the outcomes described are plausible at all, not the specific ways they are derived from the Sanders proposals. Almost all the pushback I have seen has been to the effect that 5 percent real GDP growth and 275,000 new jobs per month are not possible results of any conceivable macro policies.

As I’m sure Jerry Friedman would agree, there are plenty of ways his estimates could be improved. But it’s pointless, even disingenuous, to debate the specific numbers before agreeing on the larger questions. I want to focus on the first question here, both because it is the premise of the others and because it is where the debate is currently located.
So: Is it plausible that there could be 5 percent-plus real GDP growth and 300,000 new jobs per month over the eight years of a Sanders presidency? I think it is — or at least, I don’t think there is a good economic argument that it’s not.

I want to make five related points here.…

J. W. Mason's Blog
Can Sanders Do It?
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

Backgrounder:

Grasping Reality
We Need to Hold the Line on Analytical Standards Here: Bernie Sanders Blogging
Brad DeLong | Professor of Economics, UCAL Berkeley

Economist's View
Paul Krugman: Varieties of Voodoo

Mark Thoma | Professor of Economics, University of Oregon

Hopefully, Bernie will be forced into unleashing Stephanie.

INET — Macroeconomic Policy and Economic Stability - Adair Turner Keynote at INET Hong Kong

Video and paper.

INET Senior Fellow Adair Lord Turner delivers the day 1 keynote address at the Institute for New Economic Thinking's "Changing of the Guard? Conference in Hong Kong, with an introduction by George Soros.

INET
Macroeconomic Policy and Economic Stability - Adair Turner Keynote at INET Hong Kong