From David Ruccio

The goal of mainstream economists is to get everybody to work. As a result, they celebrate capitalism for creating full employment—and worry that capitalism will falter if not enough people are working.
The utopian premise and promise of mainstream economic theory are that capitalism generates an efficient allocation of resources, including labor. Thus, underlying all mainstream economic models is a labor market characterized by full employment.

Thus, for example, in a typical mainstream macroeconomic model, an equilibrium wage rate in the the labor market (Wf, in the lower left quadrant) is characterized by full employment (the supply of and demand for labor are equal, at Lf), which in turn generates a level of full-employment output (Yf, via the production

From David Ruccio

Liberals like to talk about all kinds of social ills and identity-laden tensions—but not class struggle. That’s their persistent and enduring blindspot.
Except, it seems, when it comes to Donald Trump. 
Thomas B. Edsall is a good example. Over the years, he’s produced a series of solid, insightful surveys of liberal research and analysis on a wide variety of economic and political topics. But he hasn’t written much if anything about class—until his latest, titled “The Class Struggle According to Donald Trump.”
And, to give him credit, Edsall is right about one thing:
Trump campaigned as the ally of the white working class, but any notion that he would take its side as it faces off against employers is a gross misjudgment.
But his view of class struggle is sorely

From David Ruccio
Forget Bitcoin. It’s the underlying technology, blockchain, that is generating the most excitement. Even utopia!
Bitcoin is a digital currency that was invented in 2009 by a person (or group) who called himself Satoshi Nakamoto. His stated goal was to create “a new electronic cash system” that was “completely decentralized with no server or central authority.” After cultivating the concept and technology, in 2011, Nakamoto turned over the source code and domains to others in the bitcoin community, and subsequently vanished.

While Bitcoin (and other so-called cryptocurrencies, such as Ethereum, Ripple, and the other 1500 or so other such currencies) have generated a great deal of media attention (for their novelty, their ability to permit transactions beyond

From David Ruccio

The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.* But the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal—and, if business as usual continues, it will turn out to be even more grotesquely unequal in the decades ahead. 
The alarm was most recently sounded by Michael Savage, in the Guardian, who cited a projection produced by the House of Commons library to the effect that, if trends seen since the 2008 financial crash were to continue, then the top 1%

From David Ruccio

First there was the Great Gatsby curve. Then there was the Proust index. Now, thanks to Neil Irwin, we have the Marx ratio.
Each, in their different way, attempts to capture the ravages of contemporary capitalism. But the Marx ratio is a bit different. It was published in the New York Times. Its aim is to capture one of the underlying determinants of the obscene levels of inequality in the United States today—not class mobility or the number of years of national income growth lost to the global financial crash. And, of course, it takes its name from that ruthless nineteenth-century critic of mainstream economics and capitalism itself.

Now, to be clear, there are lots of ratios than can be found in Marx’s critique of political economy—for example, the rate of

From David Ruccio
The majority of government expenditures in the United States go towards social insurance and means-tested transfers.* And the good news is, they work.
According to recent report by Bruce D. Meyer and Derek Wu, Social Security cuts the poverty rate by a third—more than twice the combined effect of the five means-tested transfers. Among those transfers, the Earned-Income Tax Credit and food stamps (officially, the Supplemental Food Assistance Program) are most effective. All programs except for the tax credit sharply reduce deep poverty (below 50 percent of the poverty line), while the impact of the tax credit is more pronounced at 150 percent of the poverty line. For the elderly, Social Security single-handedly slashes poverty by 75 percent, more than 20 times the

From David Ruccio

Maarten Vanden Eynde, The Invisible Hand (2015)*

We hear it all the time. On a regular basis. Having to do with pretty much everything.
Why is the price of gasoline so high? Mainstream economists respond, “it’s the market.” Or if you think you deserve a pay raise, the answer again is, “go get another offer and we’ll see if you’re worth it according to ‘the market’.”

Alternatively, if you want to solve a particularly pressing problem—such as climate change, widespread unemployment, or Third World poverty—mainstream economists’ usual answer is “let markets handle it.”**

Markets have a magical, quasi-mystical status within mainstream economics. They are both the original starting-point and far-reaching conclusion of mainstream economic theory. What I mean, first,

From David Ruccio

The usual suspects have attacked Bernie Sanders’s proposal for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker “who wants or needs one.” 
According to Robert J. Samuelson, “The proposal would add to already swollen federal budget deficits. . .Then there’s inflation. The extra spending and higher wages might push prices upward.”
After listing a number of other “unavoidable” problems, Samuelson concludes:
Americans are suckers for great crusades that make the world safe for the pursuit of happiness. In this context, Sanders’s job guarantee seems a masterstroke. The chronically unemployed need jobs; and states and localities have large unmet needs for public and quasi-public services. It’s a bargain made in

From David Ruccio

From the very beginning, the area of mainstream economics devoted to Third World development has been imbued with a utopian impulse. The basic idea has been that traditional societies need to be transformed in order to pass through the various stages of growth and, if successful, they will eventually climb the ladder of progress and achieve modern economic and social development.
Perhaps the most famous theory of the stages of growth was elaborated by Walt Whitman Rostow in 1960, as an answer to the following questions: 
Under what impulses did traditional, agricultural societies begin the process of their modernization? When and how did regular growth become a built-in feature of each society? What forces drove the process of sustained growth along and determined

From David Ruccio

Does anyone really need any additional evidence of the lopsided nature of the current recovery? 
Employers certainly don’t. They’re managing to hire additional workers, thus lowering the unemployment rate. But they don’t have to pay the workers they hire much more than they were getting before, with wages barely staying ahead of the rate of inflation. As a result, corporate profits continue to grow.
Clearly, what we’re seeing remains a one-sided recovery: employers are getting ahead—and their workers are still being left behind.
According to the latest report from the Bureau of Labor Statistics, total nonfarm payroll employment increased by 164,000 in April, thus reducing the headline unemployment rate to 3.9 percent and the expanded or U6 unemployment rate (which

From David Ruccio

While Amazon let it slip last week that its Prime program—the annual membership that offers discount pricing and free 2-day shipping—now tops 100 million members, there’s another number people might be curious about: the company’s average annual wage, which Amazon revealed in compliance with a new regulation that asks companies to show a comparison between an average worker’s wage and the salary of their CEO.

Amazon has reported an average compensation for its varied, mostly warehouse (and now, with Whole Foods, grocery store), workers at $28,446 a year. The federal government defines its poverty guideline for a family of four to be $25,100. So, Amazon’s average wage falls easily within 150 percent of the poverty line—and stands at about one-half of the median

From David Ruccio

From the beginning, mainstream macroeconomics has been a battleground between the visible and the invisible hand.
Keynesian macroeconomics, represented on the left-hand side of the chart above, has an aggregate supply curve with a long horizontal section at levels of output (Y or real GDP) below full employment (Yfe). What this means is that the aggregate demand determines the actual level of output, which can be and often is at less than full employment (e.g., when AD falls from AD1 to AD2, output to Y1, and prices to P2), with no necessary tendency to return to full employment and price stability. Therefore, according to Keynesian economists, the visible hand of government needs to step in and, through a combination of fiscal and monetary policy, move the economy

From David Ruccio
The history of capitalism is actually a combination of two histories: it’s a history of employers attempting to hire workers and develop new technologies to make profits and expand the reach of capitalism; it’s also a history of workers banding together to improve wages and working conditions and imagine ways of moving beyond capitalism.
The World Bank’s World Development Report, currently in draft form, comes down firmly on the side of employers and their historical role.
The theme of the 2019 report is the “changing nature of work.” As envisioned by the reports authors,
Work is constantly being reshaped by economic progress. Society evolves as technology advances, new ways of production are adopted, markets integrate. While this process is continuous, certain

From David Ruccio
As federal deficits and debt grow, they end up receiving, not paying for, a larger and larger share of federal expenditures.
Tax cuts and spending increases enacted by Republicans over the past four months will lead to wider than previously expected budget deficits, according to the Congressional Budget Office. The federal budget deficit would total $804 billion this year, 43 percent higher than it had projected last summer, and exceed $1 trillion a year starting in 2020.
Larger deficits will, of course, add to the national debt: debt held by the public will hit $28.7 trillion at the end of fiscal 2028, or 96.2 percent of gross domestic product, up from 78 percent of GDP in 2018.
Those estimates assume current law will remain in effect, meaning Congress would allow

From David Ruccio     
“. . . ten years on, U.S. capitalism has created the conditions for renewed instability and another, dramatic crash.”
The economic crises that came to a head in 2008 and the massive response—by the U.S. government and corporations themselves—reshaped the world we live in.* Although sectors of the U.S. economy are still in one of their longest expansions, most people recognize that the recovery has been profoundly uneven and the economic gains have not been fairly distributed.
The question is, what has changed—and, equally significant, what hasn’t—during the past decade?

Let’s start with U.S. stock markets, which over the course of less than 18 months, from October 2007 to March 2009, dropped by more than half. And since then? As is clear from the chart above,

From David Ruccio

50 years ago, Martin Luther King Jr. was assassinated, just days after joining a march of thousands of African-American protestors down Beale Street, one of the major commercial thoroughfares in Memphis, Tennessee. King and the other marchers were demonstrating their support for 1300 striking sanitation workers, many of whom held placards that proclaimed, “Union Justice Now!” and “I Am a Man.” 
The night before his assassination, King told the striking sanitation workers and those who supported them: “We’ve got to give ourselves to this struggle until the end.  Nothing would be more tragic than to stop at this point in Memphis. We’ve got to see it through.” He believed the struggle in Memphis exposed the need for economic equality, social justice, and human dignity

From David Ruccio

For the first time in American history, students in more than half of all U.S. states are paying more in tuition to attend public colleges or universities than the government contributes.
The privatization of public education has been under way for decades but this inflection point was hastened by deep cuts states made to their higher-education appropriations in the midst of the Second Great Depression.

For the United States as a whole, according to a new report from the State Higher Education Executive Officers Association, students and their families were forced to come up with almost half (46.2 percent) of total educational revenue for public colleges and universities in 2017. They had to pay only 28.8 percent of the total in 1992, a share that had risen to 36.2

From David Ruccio

Millennials may be the largest, best educated, and most diverse generation in U.S. history. But they’re also generation screwed. As a result, they’re more likely than their elders to think of themselves as working-class and less likely to identify as middle-class.  
The large downshift in class identity among young adults is explained by the fact that they are being left behind—with lower earnings, fewer jobs, more part-time employment, and a higher unemployment rate than any other generation in the postwar period.

And while it is true that recent college graduates make more than young workers with a high-school diploma, the annual real wages of both groups have declined since 2009.
So, it should come as no shock that most Millennials have nothing saved for

From David Ruccio
It was Paul Samuelson who, in 1997, declared with morbid optimism that “Funeral by funeral, economics does make progress.”*
What Samuelson presumed is that, over time, wrong ideas would be killed and laid to rest and better ideas would flourish, thus creating the foundation for progress in economic thought.
That’s what I consider to be the epistemological utopianism of mainstream economic thought: using the correct scientific methods, the work that economists do gets closer and closer to the Truth—the singular, incontestable, capital-t truth. It used to be the case (for Samuelson and many others, such as fellow Nobel laureates Kenneth Arrow, Gerard Debreu, and Paul Krugman) that mathematical models represented the best way of making progress (inspired by a particular

From David Ruccio

I have been arguing, since 2016 (e.g., here, here, and here), that one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow Republicans have supported—and, as we saw, eventually rammed through—would be an increase in inequality. That’s because corporations would likely use a portion of their higher profits to engage in stock buybacks, leading to an increase in stock prices. And stock ownership in the United States is already grotesquely unequal. Therefore, the rise in equity prices would disproportionately benefit the small group at the top of the wealth pyramid. 
And that’s exactly what is happening. As CNN Money reports, U.S. corporations have showered Wall Street with $214 billion of stock buyback announcements so far this year.

From David Ruccio
The dystopia of the American healthcare system certainly invites a utopian response—a ruthless criticism as well as a vision of an alternative.
As I showed last week, the left-wing response involves a critique of the conditions and consequences of the capitalist organization of U.S. healthcare and the fashioning of a radical alternative. Single-payer, which uses tax revenues to finance the purchase of adequate healthcare services for everyone, is one possibility. On top of that, it is necessary to expand the diversity of healthcare providers, which would include more democratic, cooperative or worker-owned healthcare enterprises.
That’s how activists, educators, and policymakers informed by heterodox economics can begin to rethink the U.S. healthcare system. What

From David Ruccio

Economic journalists, like Neil Irwin, are falling all over themselves celebrating the strength of the current economic recovery. 
According to the latest data from the Bureau of Labor Statistics, 313 thousand new jobs were added in February. The official unemployment rate remained at a relatively low 4.1 percent. Hourly wages grew at an annual rate of 2.6 percent. And so on.
Here’s Irwin:
This is not the kind of data you expect in an expansion that is nine years old, or out of a labor market that is already at full employment. . .
the February numbers are a delicious sweet spot for the economy. Many more people are working, including people who hadn’t even been in the labor force. If that trend continues — and it’s worth adding the usual caveat that each month’s

From David Ruccio
This is the first in a series of blog posts on the utopian dimensions of healthcare.
I’ve written quite a bit about the U.S. healthcare dystopia over the years—including a seven-part series back in 2016.* But I haven’t yet addressed the utopian dimensions of healthcare reform.
The appearance of the new issue of Jacobin Magazine, titled “The Health of Nations,”  is a good occasion to start that discussion. Adam Gaffney starts with much the same question that provoked my own series of blog posts: “if American health care used to be so much worse, why is it in crisis now?”
In part because, despite such wide-ranging reform, the system’s injustices remain unresolved, pervasive, and deadly.
The figures tell the story. Even without Republican rollbacks, twenty-eight million

From David Ruccio

Chris Rock may be right. Still, Americans are well aware that economic inequality in their country is obscene, even though they often underestimate the growing gap between the poor and the rich. 
But it’s Frank Rich, who conducted the interview with the American comedian, who made the more perceptive observation:
For all the current conversation about income inequality, class is still sort of the elephant in the room.
All the experts agree—from Thomas Piketty and the other members of the World Inequality Lab team to John C. Weicherof the conservative Hudson Institute—that inequality in the United States, especially the unequal distribution of wealth, has been worsening for decades now. Both before and after the crash of 2007-08. And there’s no sign that things are

From David Ruccio
Donald Trump’s decision to impose import tariffs—on solar panels and washing machines now, and perhaps on steel and aluminum down the line—has once again opened up the war concerning international trade.
It’s not a trade war per se (although Trump’s free-trade opponents have invoked that specter, that the governments of other countries may retaliate with their import duties against U.S.-made products), but a battle over theories of international trade. And those different theories are related to—as they inform and are informed by—different utopian visions.
In one sense, Trump and his supporters are right. Capitalist free trade has destroyed cities, regions, livelihoods, and industries. The international trade deals the United States has signed in recent

From David Ruccio

U.S. capitalism has a real problem: there don’t seem to be enough workers to keep the economy growing.
And it has another problem: capitalists themselves are to blame for the missing workers.
As is clear from the chart above, the employment-population ratio (the blue line) has collapsed from a high of 64.4 in 2000 to 59 in 2014 (and had risen to only 60.1 by the end of 2017).* During the same period, the average real incomes of the bottom 90 percent of Americans have stagnated—barely increasing from $37,541 to $37,886.

That should be indicator that the problem is on the demand side, that employers’ demand for workers’ labor power has decreased, and not the supply side, that workers are choosing to drop out of the labor force.
But, as I explained back in 2015, that

From David Ruccio

Economic inequality is arguably the crucial issue facing contemporary capitalism—especially in the United States but also across the entire world economy.  
Over the course of the last four decades, income inequality has soared in the United States, as the share of pre-tax national income captured by the top 1 percent (the red line in the chart above) has risen from 10.4 percent in 1976 to 20.2 percent in 2014. For the world economy as a whole, the top 1-percent share (the green line), which was already 15.6 percent in 1982, has continued to rise, reaching 20.4 percent in 2016. Even in countries with less inequality—such as France, Germany, China, and the United Kingdom—the top 1-percent share has been rising in recent decades.
Clearly, many people are worried about

David Ruccio

Ed Wolff is right:
For the vast majority of Americans, fluctuations in the stock market have relatively little effect on their wealth, or well-being, for that matter.

That’s because, as his research shows (and as I illustrate in the chart above), the bottom 90 percent of Americans own (either directly or indirectly) a tiny share—16 percent—of total stock value in the United States.* The rest is owned by the top 10 percent: 40.3 percent by just the top one percent (with a net worth in 2016 of $10,257,000 or more) and 43.6 percent by the next nine percent (who have a net worth between $1,143,200 and $10,257,000).
The fact is, the only real wealth owned by the vast majority of Americans is their principal residence. Otherwise, they’re forced to have the freedom to get by on

From David Ruccio

According to the Tax Justice Network, the United States ranks second in the 2018 Financial Secrecy Index. This is based on a secrecy score of 59.8, which is practically unchanged from 2015. The only country ahead of the United States is Switzerland, with a secrecy score of 76. The rise of the United States continues a long-term trend, as the country was one of the few to increase their secrecy score in the 2015 index.  

The continued rise of the United States in the 2018 index comes on the back of a significant change in the U.S. share of the global market for offshore financial services. Between 2015 and 2018, the United States increased its market share by 14 percent. In total, the United States accounts for 22.3 percent of the global market in offshore financial

From David Ruccio
I have often argued—in lectures, talks, and publications—that every economic theory has a utopian dimension. Economists don’t explicitly talk about utopia but, my argument goes, they can’t do what they do without some utopian horizon.
The issue of utopia is there, at least in the background, in every area of economics—perhaps especially on the topic of control.
Consider, for example, the theory of the firm (which I have written about many times over the years), which is the focus of University of Chicago finance professor Luigi Zingales’s lecture honoring Oliver Hart, winner of the 2016 Nobel Prize for economics, at this year’s Allied Social Science Association meeting.
One of the many merits of Oliver’s contribution is to have brought back the concept of power inside