In a dramatic and well-argued challenge to the prevailing wisdom, Prosperity and Public Spending , first published in 1988, contends that the failure of Keynesian economics has been due to its ...timidity. Far from contracting, the government must expand its powers and activities, in order to achieve and maintain economic prosperity. The need for such expansion arises from the fact that the system has developed from a craft-based economy to a mass-production network with sophisticated international finance. This "transformational growth" brings about irreversible and sometimes devastating changes, requiring government action. Professor Nell argues that a lack of government action in the decade prior to the book’s initial publication was responsible for the stagnation of the economy and he asserts that this could only be overcome by a determined policy intervention and the political will to achieve dominance over private capital.
Part 1: The Retreat from Prosperity 1. The Slowdown of the 1970s 2. The Breakup of Keynesian Consensus 3. The Impact of Government Deficits Part 2: From Kinship Capitalism to Corporate Industry 4. The Traditional Craft System: Family Firms to Family Farms 5. Corporate Industry: Demand-Determined Production 6. The State and the Corporate Economy 7. Transformational Growth and the Slowdown Part 3: Free Markets or Planned Prosperity 8. Inflation and the World Economy 9. Government and the Free-Market Consensus 10. Public Spending in a Demand-Constrained Economy 11. Postscript: The British Experience Geoff Hodgson.
In Making Sense of Economics Edward Nell presents an unorthodox and original view of the current state of economic theory and policies. Deriding the general trend for 'econobabble', the author ...explains the reason why conventional wisdom in economics now seems irrelevant and looks to likely future scenarios. Entertaining throughout, Nell employs a lightness of touch and wit not generally associated with economic literature. It is an accessible and enjoyable read which requires minimal prior knowledge of econoimcs. It will appeal to those who care what is really happening in the economy.
To begin with, we'd like to express our appreciation to our three commentators for their thoughtful and helpful reviews. Like the founders of the subject, we believe, and our reviewers seem to agree, ...that structural econometrics has the potential to enable us to develop serious working models of how different economies actually operate, and also to tell us something about the changing patterns of their growth and transformation. But both we and our reviewers agree that there is a great deal wrong with the way econometrics is practiced today.
We model a macroeconomy with stock-flow consistent national accounts built from the local interactions of heterogenous agents (households, firms, bankers, and a government) through product, labor, ...and money markets in discrete time. We use this model to show that, without any restrictions on the type of interactions agents can make, and with asymmetric information on the part of firms and households in this economy, power-law dynamics with respect to firm size and firm age, income distribution, skill set choice, returns to innovation, and earnings can emerge from multiplicative processes originating in the labor market.
Lance Taylor, in this issue, offers a solid critique of Piketty's account of the causes of the changes in inequality over the past centuries and especially its recent increase. Piketty's analysis ...relies on the neo-Classical aggregate production function, and the relationship r > g; Taylor's critique hits the mark on the first, but seems to miss on the second, and his alternative account also appears flawed. He invokes Pasinetti, but the Pasinetti model gives very different results if some realistic changes are introduced. In particular, if high executive pay is taken into account, as realism demands, an apparently opposite conclusion or a contradiction may be reached. But dropping the requirement that growth be balanced ('uneven development') allows a Pasinetti approach to establish a simple, though still abstract and partial, model of the growth of inequality in wealth.
Keynes provided not one but two formulae for calculating the relationship between the Present and the Future. On the one hand we have the well-known Marginal Efficiency of Capital (MEC), where the ...value of the present stock equals the discounted sum of future earnings, but on the other we have the Conventional Projection (CP) where the expected earnings in the future reflect the productivity of present facilities. The MEC is likely to reflect the views of fund managers, the CP the views of corporate managers. These two sets of judgments of the future may coincide or diverge. Either way they determine the value of the present capital in terms of claims to it-and this determination may be stable or unstable, but in any case will be volatile in the sense that the underlying uncertainty can lead to rapid shifts. By contrast, the Classical Equations will give us the value of present capital in terms of its replacement or real cost. This is reliable, being based on the real side of the economy. The ratio of this to the uncertain and volatile MEC/CP financial calculation is analogous to Tobin's Q, and will play a role in determining investment decisions, but it chiefly gives us insight into how volatile those must be.
Our aim is to understand how the process of transformational growth during the 1990s shaped the boom and bust of the New Economy. From the debate on new technologies and productivity growth, we move ...on to consider the questions raised by technological developments of the 1990s. Our focus is on the three-way relationship between the development of information and communications technologies, structural change and economic growth, as the key determinants of the cycle of expansion. This brings to the fore the effects of private investment driven by high-technology but we also need to consider the role played by finance and macro policy, and, in particular, the government budget.
First published in 1984, this book carefully dissects and convincingly demonstrates that conservative economics is incoherent in theory and disastrous in practice. The three main schools of thought ...supporting "free-market" policies – supply side economics, monetarism and rational expectations – are examined in turn and each is found defective. Three case studies of conservative policy in action follow: Reagan’s U.S., Thatcher’s U.K. and Pinochet’s Chile and their courses are charted in depth. In addition, Robert Heilbroner and Edward Nell analyse economic conservatism’s ideology and social policy, and the book concludes with an assessment of the political reasons for the continuing appeal of free-market conservatism despite its theoretical incoherence and practical failure.
This is a careful and comprehensive look at this subject which tackles both the theory and the practice head-on. It will make useful and stimulating reading for students of economics and political economy on courses of economic policy and macro-economics and in addition will be of keen interest to all those involved in the debate about one of the major policy issues of our time.
1. Introduction - Capitalism as Gestalt: A Contrast of Visions Robert Heilbroner Part 1: Theory 2. Supply-side Economics: Incentives and Disasters Rosemary Rinder 3. Monetarism: Conservative Policy and Monetary Theory Edward Nell and Alex Azarchs I The Conservative Critique of Interventionist Policy II Wealth Effects and the Government Budget Constraint III The Real Balance Effect in Neoclassical Theory: Micro and Macro IV Milton Friedman’s Monetary Theory 4. Rational Expectations: Radical Assumptions and Conservative Conclusions I Expectations and Rationality within a Capitalist Framework Jan Kregel II The Micro Foundations of the Short-Run Phillips Curve Bob Cherry, Pat Clawson and James Dean III Rational Expectations and Imperfect Knowledge Jagdish Handa 5. Social Policy: Private Reactions to Public Decisions Edward Nell Part 2: Practice 6. The Politics of Reaganomics Teresa Amott 7. Thatcherism: The Miracle that Never Happened Geoff Hodgson 8. Supply-side Economics in a Small Economy: The Chilean Case Antonio Schneider 9. Conclusions-Cowboy Capitalism: The Last Round-Up Edward Nell
This paper reconstructs and modernises a Marx-based theory of the transformation of feudalism into capitalism, using a combination of history of economic thought and economic history. It tries to ...revive and reinterpret the theory of value in a historical context and to show how it may be used, in parallel with a historical description of the transformation of institutions, in order to capture a qualitative change of the economic system.
