Chris Dillow — Limits Of Managerialism

The problem here is that the managerialist mindset and social media don't mix, for two inter-related reasons. One is that social media are egalitarian whereas managerialism is hierarchic; there's not much deference on Twitter, and it might be no accident that, AFAIK, very few chief executives are on it. The other is that you can't control social media; nobody can predict what'll go viral, and all bloggers and tweeters know they can't tell what posts will be widely circulated and what won't.

Stumbling and Mumbling
Limits Of Managerialism
Chris Dillow | Investors Chronicle (UK)

INET — Mazzucato and Wray: Making Finance Work for Innovation (video)

This episode features Institute for New Economic Thinking grantees Mariana Mazzucato andRandall Wray, who are working together on an Institute grant on how to best finance the innovation we need in the 21st century.

Building on the seminal work of Joseph Schumpeter and Hyman Minsky, Institute for New Economic Thinking grantees Marianna Mazzucato and Randall Wray are bringing the disparate intellectual traditions of finance and innovation together in the search for insights about how finance might better serve the purpose of capital development. A key question in their exploration is whether financial innovations support value creation in the real economy or if they extract value from the real (productive) economy and, as a result, undermine the value creation and capital development process.

Wray and Mazzucato both have unique career trajectories for an economist. Wray came to economics relatively late in his academic career after studying psychology as an undergraduate, and Mazzucato studied history before finding the discipline. These diverse backgrounds have a strong influence on their research, as both Wray and Mazzucato approach economics as outsiders. Specifically, Wray’s perspective is informed by Minsky’s work on money and finance, while Mazzucato’s view is deeply influenced by Schumpeter’s thinking on innovation.

Together, they offer a unique perspective on the economics of innovation and on how well the financial sector is serving society. Is finance engaged in "creative destruction" or is it's speculation really a case of "destructive creation?" Watch the interview to see what they have to say!

INET
Mazzucato and Wray: Making Finance Work for Innovation (video)
L. Randall Wray | Professor of Economics, UMKC and Mariana Mazzucato, RM Phillips Professor of Science and Technology at the University of Sussex

So much for the myth that MMT downplays the role of private investment in the economy.

Chris Dillow — Thatcherite Roots Of The Crisis

This story agrees with Tim, in that it is consistent with the banking crisis being a crisis not of free markets, but of managerialism....

Another thing: one could also argue that Thatcher's cut in top tax rates helped to incentivize not just good entrepreneurship but also the rent-seeking and excessive risk-taking that contributed to the crisis.

Stumbling and Mumbling
Thatcherite Roots Of The Crisis
Chris Dillow | Investors Chronicle

Michael Hudson — The Giant 21st Century Asset Grab

Read transcript of Paul Jay interview at Credit Writedowns
The Giant 21st Century Asset Grab
by Michael Hudson

Michael Husdon explains how the phase of Ponzi finance described by Minsky developed and is still in full swing, even after the crisis this resulted in.

Interestingly, it follows Ravi Batra's historical scenario. After WWII, military people (warriors) ran companies, based on organization and planning. After that, in the Sixties and Seventies, experts in production (intellectuals) ran companies based on knowledge, and beginning in the Eighties financial managers (acquisitors) took the reins and began to feed off prior gains parasitically, running companies down in the process. Instead of growing production, financial managers sought to increase economic rent.

The rise of corporatism

Now the capitalist system has been corrupted. The managerial state has assumed responsibility for looking after everything from the incomes of the middle class to the profitability of large corporations to industrial advancement. This system, however, is not capitalism, but rather an economic order that harks back to Bismarck in the late nineteenth century and Mussolini in the twentieth: corporatism.

Read it at Project Syndicate
Blaming Capitalism for Corporatism
Edmund S. Phelps and Saifedean Ammous

(h/t Edward Harrison at Credit Writedowns)

They could have written "soft fascism" instead of corporatism.

David Warsch — The Making of the Managerial Class

Warsh reflects on The Roots, Rituals, and Rhetorics of Change: North American Business Schools after the Second World War, by Mie Augier and James G. March (Stanford Business Books, 2011).

Read it at CounterPunch
How Business Schools Came to Be the Way They Are
by David Warsh

Understanding managerialism is essentially for approaching institutional economics. This is the managerial age, and managerialism has shaped contemporary institutional arrangements and practice.

Managerialism results in a fallacy of composition. When most managers act in the same way by following common principles, then what might benefit one or a few firms if practiced is reversed when almost all firms do the same thing. Randy Wray considers rampant managerialism in finance as one of the chief contributors to institutional dsyfunctionality and systemic risk.