Tom Palley reply to response about his paper on Keynes lack of understanding of class conflict. In many ways, this is how Tom discusses Keynes lack of understanding of old classical political economy. Tom is correct in pointing out that:"Kalecki (1933 [1971]) began the process of incorporating conflict into the Keynesian paradigm, but there is much more to be done regarding recognizing conflicts’ implications for economic theory and recognizing the multiple fora in which it appears."Of course, Kalecki was building on Marx and classical political economy. Read the full reply here.
Read More »Articles by Matias Vernengo
The Argentina of Javier Milei
10 days ago[embedded content]
A seminar organized by the Association for Heterodox Economics with myself, Ramiro Álvarez and the Argentine Senator Carolina Moisés.
Atonella Stirarti’s Godley-Tobin Lecture
March 10, 2024There was a problem during the 7th Godley-Tobin Lecture. I disconnected everyone when I was trying to fix a problem with Professor Stirati’s presentation, and I didn’t notice until much later. The worst part is that the recording was lost. I’m posting here the PowerPoint presentation for those interested. We will also post the link for the published version of the lecture, which will be open also on the website of the Review of Keynesian Economics (ROKE).
Read More »On the Heritage Foundation Freedom index
March 9, 2024[embedded content]
My interview with Rick Smith on the Heritage Foundation Index and its tenuous relationship with anything that can be called freedom, economic or otherwise.
Association for Heterodox Economics’ Webinar: The Argentina of Javier Milei
March 1, 2024April 16th 2024 10am New York / 3pm LondonSince the beginning of the military dictatorship in March 1976, pro-market visions were imposed by violating human rights in the darkest period of Argentina’s history and occupied political thought for more than four decades, even in democracy. Although these ideas had a brief pause in the period 2003-2015, they are still in force and now more than ever under the new administration of Mr. Milei. Mr. Milei has imposed a huge depreciation of the national currency, reducing the purchasing power of workers, and an adjustment of public spending by dismissing more than 50,000 public employees under the slogan of efficiency. Inflation has reached 200% per year and poverty has reached 60% under his administration, which has been in place for less than 5
Read More »Beyond the NAIRU, 7th Godley-Tobin Lecture by Antonella Stirati
February 22, 2024The 7th Godley-Tobin Lecture in a bit more than a week. For those not in Boston registration here.
Read More »On the possibility of a recession at the Rick Smith Show
February 20, 2024[embedded content]My brief interview at the Rick Smith Show on the likelihood of a recession this year, and the unfounded fears about public debt in the United States.
Read More »Dollar Hegemony and Argentina
February 1, 2024[embedded content]
First part of a two part interview with Anita Fuentes at Security in Context. The discussion on Argentina and Milei is in the next part. I’ll post it as soon as it is up.
On the New Argentine Pendulum
January 22, 2024A short paper for FIDE on the so-called Argentine pendulum. The pendulum was the phrase used by Marcelo Diamand to discuss the persistent boom and bust cycles associated with left of center developmentalist governments, and liberal governments that promoted adjustment. The suggestion in this paper is that in reality the previous pendulum was mostly political, and about constraining the left of center ability to redistribute income (higher wages), often restricting democratic institutions. The New Pendulum refers to the period that starts with the last dictatorship, in which alternative economic projects (in which deindustrialization plays a major role) explain the main oscillation. Milei is just one more movement of the pendulum. Full paper (in Spanish) here.
Read More »Tom Palley on “Israel’s genocide, US assistance, and consequences thereof”
January 21, 2024By Tom Palley South Africa has now presented its charge of Israeli genocide in the International Court of Justice (ICJ), and Israel has presented its rebuttal. Regardless of the ultimate judgment, a page has been turned. Israel’s actions in Gaza, assisted by the US, have changed the geopolitical landscape. The consequences stand to be dire and lasting.The case against IsraelThe case against Israel is stark and simple. The argument in descending order of import is as follows.First, and foremost, is Israel’s disproportionate response and application of collective punishment. Hamas is a criminal terrorist organization, not a state. Israel has a right to appropriate self-defense, but it has no right to kill vast swathes of non-combatant Palestinians as it tries to combat a criminal
Read More »Demand-led Growth In Rio
January 15, 2024The Review of of Keynesian Economics is co-sponsoring the Fifth Conference on Demand-led Growth in Rio, next July 11 and 12.2024 marks the 45th anniversary of Thirlwall’s classic 1979 paper that introduced Thirlwall’s law as well as the 75th anniversary of Prebisch’s manifesto on the main development problems of Latin America. These seminal works were key, for post-Keynesian and structuralist literatures, to put the balance of payments constraint at the center and as one of the main problems of long run growth and development. Furthermore, it was an important critique and alternative to the mainstream view that highlights factors of production scarcity as the only explanation to long run growth.As a result, many demand-led growth theories often emphasize the balance of payments as the
Read More »The Gift of Sanctions
January 8, 2024Jamie Galbraith presented, at the EPS session at the ASSA Meetings in San Antonio, the paper published by INET. As he said there: "Despite the shock and the costs, the sanctions imposed on the Russian economy were in the nature of a gift." A type of invisible hand effect, by which the unintended effect of the policy that should supposedly benefit US allies (Ukraine) has the unintended effect of helping its alleged enemies (Russia).From the abstract:This essay analyzes a few prominent Western assessments, both official
and private, of the effect of sanctions on the Russian economy and war
effort. It seeks to understand the main goals of sanctions, alongside
bases of fact and causal inference that underpin the consensus view that
sanctions have been highly effective so far. Such
Podcast Failures: Friedman and Chile, Hume and Public Debt
December 31, 2023I listen to a few podcasts during my commute. Two that I often appreciate are Know Your Enemy, associated with Dissent Magazine,* a series of interviews on mostly right wingers by Matthew Sitman and Sam Adler-Bell, and Past, Present and Future, a series of monologues by David Runciman, sponsored by the London Review of Books. Both are always entertaining and informative. I’m not a specialist in most of the subjects they discuss. However, two recent episodes (or at least I listened to them recently), one from
each, dealt with economic issues, and they did leave a lot to be
desired, to say the least.Very briefly, the issue with the interview with Jennifer Burns about her biography (in many ways, from this interview, and the one with Tyler Cowen, it is hard not to see it as a hagiography;
Second and third parts of the interview (in Spanish)
December 30, 2023Second and third parts of my interview with Diego Polanco. On Argentina, Brazil, heterodox economics, and more. In Spanish. First was here.
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What’s the deal with The Smiths
December 29, 2023With friends like this… This is NOT a review of the Smiths (the band), and neither of (or at least not a full one) of Glory M. Liu’s (relatively) new book Adam Smith’s America: How a Scottish Philosopher Became An Icon of American Capitalism. For a proper review go read Kim Phillips-Fein’s one. In a sense, the book remind me of Bernard Shaw’s famous saying that UK and the US were two countries divided by the same language. Here the gap is between fields, and there are two gaps, one within economics, modern mainstream economics and old classical political economy. Liu is a political scientist by training, and what she takes as economists views, including the understanding of the history of the discipline, are fundamentally from a mainstream perspective.The phrase by Sraffa, that I have
Read More »Robert Solow (1924-2023), who was on the board of ROKE, is dead
December 24, 2023Over the years, I had the opportunity to interact with Bob Solow, who was very open to discuss with people he disagreed with, and debate the substantive analytical and empirical issues, taking seriously the ideas of others. I first met him because when I was an Assistant Director at CEPA (now Schwartz Center, SCEPA), back in 2000 or 2001, working for Lance Taylor, I found out he was spending some time in NY at the Russell Sage Foundation, and I invited him for a talk (if memory doesn’t fail me the title was, The Good Five Years, about the Clinton boom). He presented, according to him, his first overhead projector slide.At any rate, after that I invited him to be part of the board of ROKE, which he accepted. In his letter, he explained what he thought ROKE was about and what it should do
Read More »A short note on Argentina’s depreciation, inflation and possible dollarization
December 20, 2023That Argentina is in for a major crisis is, I think, pretty clear and well-known. I won’t delve too much on the political aspects of what Finchelstein refers to as wannabe Fascistic tendencies of the new president. Today a major protest should take place, and the same people that suggested that Peronists groups forced the recipients of social transfers to participate (something that was never proved) under threat of being cutoff, are threatening to cutoff those that participate. You know, because they defend individual liberties and all.First of all, the economic plan (and many heterodox authors had been calling for what exactly done) was simply maxi-depreciation, of 100 percent, of the official exchange rate, to try to close the gap with the parallel market (or blue) rate, and the
Read More »Argentina and the Philippines: Similar development struggles
December 16, 2023By Jesus Felipe and Matías VernengoALTHOUGH the economies of Argentina and the Philippines are very different, the two share structural problems that make both nations’ development a complex process. The election of Javier Milei as the new president elect of Argentina, gives us the opportunity to review the differences and parallels between the two economies.Milei is a radical libertarian populist economist with authoritarian tendencies. His proposals range from the dangerous in economics (dollarization, closing the Central Bank, a drastic reduction of social spending) and social issues (curtail human rights and democratic advances, loosen gun ownership laws, and the elimination of all those institutions that would have any relationship with his two biggest obsessions: the State and the
Read More »Tony Thirlwall (1941-2023)
December 1, 2023Leading academic and Keynesian best known for Thirlwall’s Law on economic growthJohn McCombieThe economist Tony Thirlwall, who has died aged 82, was, in his own words, an “unreconstructed Keynesian”. He saw this not as a pejorative title, but more as an accolade, considering that many of the insights of John Maynard Keynes, and in particular the importance of demand, are still relevant for understanding today’s economy.Tony is perhaps best known for his original way of thinking about economic growth. This challenged the supply-side orthodoxy, which often assumes a closed economy in which the growth of demand is missing and the structure of production does not matter. Thirlwall took the Keynsian approach that it is demand that drives growth, but, importantly, the balance of payments can be
Read More »Neoliberalism Resurgent in Argentina
November 26, 2023Extended post with Sergio Cesaratto on the website of Brave New Europe. A comparison of dollarization with some of the effects of the euro, and the similarities and differences between Argentina and Southern European countries.
Read More »Was Keynes a Liberal or a Socialist?
November 25, 2023A Socialist Rag My old Will Lyons Lecture at Franklin & Marshall College in the Spring of 2021 is now a working paper. Prof. Lyons was a Bucknell Graduate, and a professor at F&M. The topic was based on the, at that time, recent reading of Jim Crotty’s book. From the abstract:Right-wing critics of Keynes have often suggested that he was a socialist. His policy proposals were very often described as a slippery slope that would lead society into a totalitarian nightmare. Alternatively, from the left, Keynes was often seen as a reformist that intended to preserve the essence of capitalism. His reforms were mere window dressing on an exploitative system. The scholarship on Keynes also remained divided. However, in the last few decades a more robust position in favor of Keynes’ socialist
Read More »Interview (in Spanish) with Diego Polanco about Milei and Argentina
November 21, 2023[embedded content]
First part of my interview with Diego Polanco on the Argentine election, and the never ending crisis of the economy. Second part in a couple of weeks.
Dollars & Nonesense: Milei and the risk of hyperinflation
November 20, 2023Javier Milei will be Argentina’s next president. Milei is an extreme right-wing populist, with authoritarian, some may say Fascistic, tendencies. He is an admirer of Trump and Bolsonaro. He is rumored to talk with his deceased dog, that he had cloned. His party’s proposals range from the dangerous – like dollarization, the closing of the Central Bank, the drastic reduction of social spending, the loosening gun ownership laws, and the criminalization of abortions – to the insane – like instituting a market for human organs, or allowing fathers to opt out of the paternity obligation to pay parental support. Some of his views are outright despicable, like his minimization of the human rights violations of the last dictatorship. He has also has played fast and loose with all his proposals,
Read More »The theory of monetary disorder
November 2, 2023“When I discovered that the economic order produced social disorder, they took away my scholarship.”New working paper by Tom Palley. From the abstract:This paper introduces the notion of monetary disorder. The underlying theory rests on a twin circuits view of the macro economy. The idea of monetary disorder has relevance for understanding the experience and consequences of the recent decade-long period of monetized large budget deficits and ultra-easy monetary policy. Current policy rests on Keynesian logic whereby a large fall in aggregate demand warrants robust offsetting monetary and fiscal policy actions. That logic neglects potential monetary disorder being bred within the financial circuit in the form of inflated asset prices and leveraged balance sheets. That disorder is likely
Read More »Beyond the NAIRU – 7th Godley-Tobin Lecture
November 1, 2023The 7th Godley-Tobin Lecture will be given by Antonella Stirati at the Eastern Economic Association meeting next Spring in Boston. The previous lecture by Professor Joseph Stiglitz will be published in the January issue of ROKE.
Read More »Argentina Between Anger and Fear
October 28, 2023My piece in Phenomenal World on the Milei phenomenon, the possibility of dollarization, and the recent electoral results in Argentina. Read it here.
Read More »Exchange Rate Arrangements: Fix, Float, or Manage?
October 27, 2023Updated version of a textbook chapter on exchange rate arrangements. It is for undergraduate use. From the abstract:The paper tries to provide a concise summary of the main debates on exchange rate arrangements. It a simple taxonomy of exchange rate arrangements, fixed, flexible and managed, and a brief analysis of the main debates about their advantages and disadvantages. It emphasizes the different policy objectives of mainstream and heterodox schools of thought, suggesting that they tend to be more relevant than the specific defense of one particular exchange rate arrangement. In that sense, there are divergences on their preferences within schools of thought. The paper also discusses the causes of currency crises and the role of the dollar in the international monetary system.Full
Read More »Lucas Teixeira on Inflation
October 19, 2023The talk here. Recording is not the best, and the Power Point cannot be seen. It is available here for those interested. [embedded content]Paper is here. From the abstract:In the overlapping global emergencies of the pandemic, climate change and geopolitical confrontations, supply shocks have become frequent and inflation has returned. This raises the question how sector-specific shocks are related to overall price stability. This paper simulates price shocks in an input-output model to identify sectors which present systemic vulnerabilities for monetary stability in the US. We call these prices systemically significant. We find that in our simulations the pre-pandemic average price volatilities and the price shocks in the COVID-19 and Ukraine war inflation yield an almost identical set
Read More »Minimum wage
September 29, 2023Students will have a midterm soon. There will be some questions on the very likely shutdown (using the ISLM) and the minimum wage. The figure below shows the real (deflated with CPI) and nominal minimum wage for the US since 1939.No surprises in the story. Minimum wage in real terms peaked in 1969, a culmination of an expansion that started in the 1950s. It fell significantly starting in 1979, with the Volcker shock and the fixed nominal minimum wage during the Reagan years, and never recovered the Golden Age peak. Since the 1970s, Dems managed to increase the rate in nominal terms (Carter, Clinton and Obama), but not reverse its decline in real terms. So far Congress has managed to stop the Biden administration attempts at raising the rate. And even when procurement contracts should give
Read More »Dollar Hegemony, coming soon
September 19, 2023The dollar’s hegemony rests on the economic, military, and international political power of the USA. There have been two eras of dollar hegemony which were characterized by different models. Dollar hegemony 1.0 corresponded to the Bretton Woods era (1946-1971). Dollar hegemony 2.0 corresponds to the Neoliberal era (1980-today). The deep foundation of both models is USA power, but the two models have different economic operating systems. The articles in this book explore this and consider two further questions: what is the future of dollar hegemony? And: is there a better way of organizing the world monetary order? There has been considerable speculation of a drift to currency multipolarity but, so far, there is little evidence of that. The Chinese renminbi might join or displace the
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