Real-World Economics Review

One essential aspect of Minsky’s Financial Instability Hypothesis was the argument that there are two price levels in capitalism: consumer prices, which are largely set by a markup on the costs of production, and asset prices, which are determined by expectations and leverage. This argument originated with Keynes in Chapter 17 of the General Theory, when he noted that investment is motivated by the desire to produce “those assets of which the normal supply-price is less than the demand...

Subject to an unregulated free market for labor, Polanyi believed that “workers would die as the victims of acute social dislocation through vice, perversion, crime, and starvation”. The US has the most “flexible” labor market of all OECD countries, meaning the freest market for labor, with the least intervention by government or social institutions, as defined by Polanyi. “Essentially, to get high ratings, a country must have low marginal tax rates, a low minimum wage, a high degree of...

Deirdere McCloskey should be freaking out. A man called Trump threatens her world. McCloskey is not just the most eloquent but also the most thorough defender of the idea that ‘the bourgeois ethic’ and bourgeois virtues were crucial to the unprecedented prosperity of modern men and women – and improved our ethical standards in the process: “Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become...

According to Eurostat, unemployment differences in the EU are still large (graph). Especially the euro countries do bad. The Netherlands and Germany seem to buck this trend but this must be ascribed to whopping surpluses on their current accounts. As not all countries can, by definition, run current account surpluses at the same time (my surplus is your deficit) this means that total domestic demand in the Euro Area is way to low. Another option: people are working too much and have to...

from David Ruccio Gabriel Zucman, in his article in the special issue of Pathways, “State of the Union: The Poverty and Inequality Report 2016” (pdf), reveals lots of scary numbers about wealth inequality in the United States.* The scariest is the percentage of wealth owned by the top 0.1 percent of households, which “has exploded in the U.S. over the past four decades.” The share of wealth held by the top 0.1 percent of households is now almost as high as in the...

To simple people it is indubitable that the nearest cause of the enslavement of one class of men by another is money. They know that it is possible to cause more trouble with a rouble than with a club; it is only political economy that does not want to know it. — Leo Tolstoy, What Shall We Do Then? (1886) The financial sector has the same objective as military conquest: to gain control of land and basic infrastructure, and collect tribute. To update von Clausewitz, finance has become war...

from David Ruccio Eduardo Porter is right: the “long, painful slog out of the Great Recession” hasn’t been accompanied by any kind of shared prosperity. As the chart above reveals, the share of income going to the bottom 90 percent of U.S. households has actually fallen since 2007 (from 50.3 percent to 49.5 percent)—and, in recent years, remains far below what it was (67.4 percent) in 1970. In other words, the so-called recovery looks a lot like the unequalizing dynamic of...

During the first Putin presidency, the Russian government gave a very high priority to paying back Russian international debt and used quite a lot of  the income from oil to do this. Jeffrey Sachs answers why (also read the last paragraph): The lack of Western assistance The lack of Western assistance was grim and was my greatest frustration[32] during late 1991 and 1992.  The early days were inauspicious to say the least.  When the G-7 deputies came to Moscow in late November 1991, just...

For a kind of prediction of the 1947 mortality crisis you will find a march 1947 article by Ernest Germain published by the fourth international here (I love the internet). Basically, the exhaustion of war time stocks (during the war partly provided by the 1943 United Nations Relief and Rehabiliation Administration), the horrible losses of people manpower suffered during the war, the dislocation and loss of production capacity caused by the war and a terrible drought in 1946 caused a...