The Delphic Oracle Was Their Davos: A Four-Part Interview With Michael Hudson: Mixed Economies Today, Compared To Those Of Antiquity (Part 2) — John Siman interviews Michael Hudson

Mixed Economies and Monopoly

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
The Delphic Oracle Was Their Davos: A Four-Part Interview With Michael Hudson: Mixed Economies Today, Compared To Those Of Antiquity (Part 2)
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Michael Roberts — Neoliberalism works for the world?

[Noah] Smith is keen to refute the ‘mixed economy’, anti free trade ideas that have been sneaking into mainstream economics since the Great Recession, namely that ‘neo-liberalism’ and free markets are bad for living standards. Instead, a little dose of protectionism on trade (Rodrik) and state intervention and regulation (Kwak) helps capitalism to work better.

But no, says Smith. Neoliberalism works better. He cites China’s growth phenomenon as his main example! In China, “the shift from a rigid command-and-control economy to one that blended state and market approaches — and the liberalization of trade — was undoubtedly a neoliberal reform. Though Deng’s changes were mostly done in an ad-hoc, common sense manner, he did invite famed neoliberal economist Milton Friedman to give him advice.”

He then adds India to this argument: “A decade after China began its experiment, India followed suit. In 1991, after a sharp recession, Prime Minister Narasimha Rao and Finance Minister Manmohan Singh scrapped a cumbersome system of business licensing, eased curbs on foreign investment, ended many state-sanctioned monopolies, lowered tariffs and did a bunch of other neoliberal things.”

Boy, does this take the biscuit. China’s economy is an example of successful neoliberal economic policy!? In several posts I have shown that China is not a free market economy by any stretch of the evidence and may not even be described as capitalist. It is state-owned and controlled with investment and production state-directed, with profit secondary to growth as the objective. Indeed, the IMF data on the size of public investment and stock globally put China in a different league compared to any other economy in the world.

As for India, the state sector also remains significant, something which continually upsets the World Bank and neoliberal economists. The policy measures of the 1990s can hardly be used as the explanation of the pick-up in economic growth in India. During the 1990s, productivity growth in all the major ‘emerging economies’ picked up – only to fall back again after the Great Recession. Globalisation and foreign capital were drivers then everywhere.

Anyway it is not really true that Indian government policy is ‘neo-liberal’ – on the contrary. In contrast, the clear shock switch to neoliberal capitalism by Russia’s post-Soviet governments and its oligarchs was a total disaster (Smith calls it a ‘mixed success’!). Growth, living standards and life expectancy collapsed. Indeed, the conclusion that might be drawn is not that ‘neo-liberal reforms’ have driven the relative economic success of China and India in the last 30 years but their resistance to such policies....

Michael Roberts Blog

Neoliberalism works for the world?
Michael Roberts

Ann Jones — American Capitalism Has Failed Us: We're Overworked, Underemployed and More Powerless than Ever Before

Comparing America to the Nordic model. Guess which wins big?

AlterNet
American Capitalism Has Failed Us: We're Overworked, Underemployed and More Powerless than Ever Before
Ann Jones, Tom Dispatch

Bill Mitchell — The government really is instrumental in creating growth

Sometimes one reads a press article that is so obviously misleading that it is hard to know where to start with it. But perhaps the conclusion is the best place to start sometimes. Such is the case of a Bloomberg article (January 15, 2016) – What #ResistCapitalism Gets Wrong – written by American academic Noah Smith. Basically, the article attempts to attribute all of the post-Second World War prosperity to the “free market economy”, which he says is “a term many use synonymously with ‘capitalism’”. By the end of the article we learn that in fact that prosperity does not come from ‘free market’ liberalisation and that strong governments are essential for growth and reductions in inequality. The “boring old mixed economy” where, in Noah Smith’s words “government really is instrumental in creating growth”. Start with the conclusion and read backwards is my advice in this case.…

Bill smacks Noah down for purveying conventional wisdom by setting for the facts. But Bill admits that Noah finally comes around in the end and wishes he had begun the post that way.

Considering that the post appeared in Bloomberg View, I think there's a good chance that Noah suckered his audience in with confirmation bias by reiterating the conventional nostrums about "the free market" as synonymous with "capitalism," and then turned it on them in the end. If that is the case, it was a good job of persuasion.

Bill Mitchell – billy blog
The government really is instrumental in creating growth
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Cameron K. Murray — #ResistCapitalism

My twitter feed has been aroused into fierce anti-capitalist protest. Welcome to 2016 I guess.

This situation gives me chance to flesh out some important points that cannot be made effectively on Twitter.…

Fresh Economic Thinking
#ResistCapitalism
Cameron K. Murray

Dani Rodrik — From Welfare State to Innovation State

Mariana Mazzucato. public investment, and inclusive capitalism. 

The present and foreseeable problem is that most economists and policy people are thinking in terms of the market state. It proved not to work in the early days of industrial capitalism and it's proving not to work again now in the knowledge age of digital capitalism. Capital is about capital formation, and capital formation increases productivity owing to technological innovation, displacing workers. Only the state can deal with this, since private sector markets are unable to handle it and firms, unwilling.

Project Syndicate
From Welfare State to Innovation State

Dani Rodrik is Professor of Social Science at the Institute for Advanced Study, Princeton, New Jersey

Richard D Wolff — "Pure" Capitalism Is Pure Fantasy

By celebrating pure capitalism, such arguments can criticize the economic crisis without sounding anticapitalist. They reaffirm their loyalty to capitalism in the abstract even as they attack its concrete here and now. The trick is to identify the present system and its enduring, deep crisis as anything but capitalist.

This is fantasy. Impure capitalism is the only kind we have ever had....

Truthout | Op-Ed
"Pure" Capitalism Is Pure Fantasy
Richard D Wolff | Professor of Economics Emeritus, University of Massachusetts, Amherst and currently Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan.

Reuters — Germany fears revolution if Europe scraps welfare model

German Finance Minister Wolfgang Schaeuble warned on Tuesday that failure to win the battle against youth unemployment could tear Europe apart, and dropping the continent's welfare model in favor of tougher U.S. standards would spark a revolution.

Germany, along with France, Spain and Italy, backed urgent action to rescue a generation of young Europeans who fear they will not find jobs, with youth unemployment in the EU standing at nearly one in four, more than twice the adult rate.

"We need to be more successful in our fight against youth unemployment, otherwise we will lose the battle for Europe's unity," Germany's Schaeuble said.

While Germany insists on the importance of budget consolidation, Schaeuble spoke of the need to preserve Europe's welfare model.

If U.S. welfare standards were introduced in Europe, "we would have revolution, not tomorrow, but on the very same day," Schaeuble told a conference in Paris.

Reuters
Germany fears revolution if Europe scraps welfare model

(h/t Zero Hedge)

Even eurocrat neoliberals are not dumb enough to think that Europeans will accept imposition the market state, pace Hayek. That's only for the US (Reagan, Clinton) and UK (Thatcher, Blair).

Richard Pomfret — The Age of Equality

Politicians who rail against socialism or capitalism always adopt a more moderate stance after they come into office. This column argues this is because we are still experiencing the consequences of the industrial revolution. The current state of that process involves a widely accepted compromise between aggregate prosperity and distributional equality.

Read it at Vox.eu
The Age of Equality
Richard Pomfret | Professor of Economics at Adelaide University

Politicians who rail against socialism or the market always adopt a more moderate stance after they come into office – not because they are cowed by outside forces, but because this is what their electorates want. At any point in time, some voters will be animated by encroachments of the state or by market-generated excesses, but these cannot plausibly be seen as appeals for unfettered capitalism or central planning. The reality is of choices within a narrow band whose limits have been determined by a quarter millennium of economic history.