Stephanie Blankenburg

Transcription

1 The 29 incisive essays in this book will be of great interest not only to Australians but also to everyone concerned with the constraints on progressive economic policy in a small, open economy. The four distinguished authors cover a wide range of topics, from unemployment and inflation to financial crises and the economics of imperialism. In an age when old truths have been forgotten, and ancient fallacies revived, the lucid post-keynesian arguments of Halevi, Harcourt, Kriesler and Nevile deserve to reach a very wide audience. J.E. King, La Trobe University and Federation University Australia, Australia With this second volume of Post-Keynesian Essays from Down Under Halevi, Harcourt, Kriesler and Nevile have provided us with yet another marvel of collective brilliance made in Australia. Spanning core policy debates across several decades and four continents, these influential papers are a tour de force in what sets apart post-keynesianism, at its best, from presently dominant economic paradigms. Policy analysis properly grounded in theory, theory properly grounded in history and both, applied and theoretical analyses, stringently focused on how best to improve the lives of ordinary people. A wonderful and inspiring read all around, full of small gems of historical detail and as utterly relevant now as at the various times of writing the individual contributions. Stephanie Blankenburg, Department of Economics, School of Oriental and African Studies (SOAS), University of London, UK

2 Post-Keynesian Essays from Down Under Volume II: Essays on Policy and Applied Economics Theory and Policy in an Historical Context Joseph Halevi Center CRIISEA of the Universit é de Picardie, Amiens, France, Senior Lecturer, University of Sydney, Australia, International University College, Turin G. C. Harcourt Visiting Professorial Fellow in the School of Economics, University of New South Wales, Australia Peter Kriesler Associate Professor, University of New South Wales, Australia and Emeritus Professor, University of New South Wales, Australia

3 Joseph Halevi, G. C. Harcourt, Peter Kriesler and 2016 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2016 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. Typeset by MPS Limited, Chennai, India.

4 Contents List of Figures and Tables Preface Acknowledgements About the Authors viii x xii xiv Introduction 1 Part I Policy 1 Tools of Choice for Fighting Recessions 15 and Peter Kriesler 2 Macroeconomic Impacts of Globalization 32 Peter Kriesler and 3 Exchange Rates and the Macroeconomy in an Era of Global Financial Crises, with Special Reference to Australia 48 Peter Kriesler, and G. C. Harcourt 4 A Critique of the New Consensus View of Monetary Policy 61 Peter Kriesler and Marc Lavoie 5 The Current Financial Crisis: Causes and Policy 69 Peter Kriesler 6 The Current Crisis Has a Silver Lining 79 7 The ABC of G and T 92 G. C. Harcourt 8 The Systemic Downside of Flexible Labour Market Regimes: Salter Revisited 95 G. C. Harcourt 9 Political Aspects of Buffer Stock Employment 100 Peter Kriesler and Joseph Halevi 10 How Voluntary Is Unemployment? Two Views of the Phillips Curve 110 Part II Australia 11 A Simple Econometric Model of the Australian Economy 121 v

5 vi Contents 12 Can Keynesian Policies Stimulate Growth in Output and Employment? Australian Economic Growth: A Structural Perspective (A Preliminary Report) 164 Joseph Halevi and Peter Kriesler 14 Corporatism in Australia 174 Peter Kriesler and Joseph Halevi 15 Structural Change and Economic Growth 197 Joseph Halevi and Peter Kriesler 16 Why Keynesian Policy was More Successful in the Fifties and Sixties than in the Last Twenty Years 209 and Peter Kriesler 17 The Share of Wages in Income in Australia Inflation in Australia: Causes and Cures The Effects of Immigration on Unemployment The Effects of the Immigration of Low-skilled Workers on Unemployment 258 and Peter Kriesler 21 Why Privatize Airports? 267 Peter Kriesler Part III World Economy 22 Asia, Japan and the Internationalization of Effective Demand 281 Peter Kriesler and Joseph Halevi 23 History, Politics and Effective Demand in Asia 300 Joseph Halevi and Peter Kriesler 24 Stagnation and Economic Conflict in Europe 315 Joseph Halevi and Peter Kriesler 25 The Changing Patterns of Accumulation and Realization in East Asia since the 1990s 340 Joseph Halevi and Peter Kriesler 26 The Accumulation Process in Japan and East Asia as Compared with the Role of Germany in European Post-war Growth 355 Joseph Halevi

6 Contents vii 27 The EMS and the Bundesbank in Europe 368 Joseph Halevi 28 The Argentine Crisis 397 Joseph Halevi 29 Imperialism Today 405 Joseph Halevi Index 419

7 List of Figures and Tables Figures 1.1 The transmission mechanism of monetary policy Exchange rate Australian dollar/twi (real) Post-Keynesian Phillips curve Household debt-to-income ratio in Australia GDP growth rates: Australia (volume measures, quarterly change) Ratio of net foreign debt to GDP Australia s current account (seasonally adjusted $M) Unemployment rates Inflation rates (percentage change in CPI) Exports by country (per cent to total) Employment by industry (per cent to total) $A TWI volatility (absolute average of daily % change) Population growth and employment growth per head (in 16 OECD countries) 249 Tables 10.1 Inflation as the dependent variable: Australia, to Unemployment as the dependent variable: Australia, to Components of gross national product, Australia, to (deflated Am) A simple econometric model of the Australian economy Forecasts made by the model The structural deficit Australia: to Unemployment in the two bigger slumps Unemployment in the two smaller slumps 217 viii

8 List of Figures and Tables ix 17.1 Illustration of the aggregation problem Wages, salaries and supplements as a percentage of gross national product at factor cost Wages as a percentage of wages plus gross operating surplus of companies Regression equations 264

9 Preface Geoff Harcourt intended to put together one more volume of selected essays in order to reach double figures. But then Peter Kriesler reminded him that since he joined the School of Economics at the University of New South Wales, Australia in August 2010 as a Visiting Professorial Fellow, they, sometimes with, had published several joint papers. Moreover, Peter and John, and Peter and Joseph Halevi, had also been publishing joint papers for many years. All their works, whether as sole author or jointly, had important common themes. The underlying theoretical framework was essentially post-keynesian. 1 They all stressed the importance of the underlying institutional framework, of the economy as an historical process and, therefore, of path determinacy. Money and finance were an integral part of the economy, with monetary variables affecting real variables and vice versa at all stages of analysis. In addition, all the works saw the ultimate goal of economics as being a tool to suggest policy even the theoretical works were motivated by the desire to make the world a better place, with better being defined by an overriding concern with social justice. So arose the proposal we made to Taiba Batool that we put together four volumes of Post-Keynesian Essays from Down Under, subtitled Theory and Policy in an Historical Context. She enthusiastically accepted the offer, ably assisted by Ania Wronski. We therefore set about putting the selections together. When Taiba left Palgrave Macmillan for pastures new, she passed the project onto Laura Pacey and Rachel Sangster who, just as enthusiastically, oversaw the bringing together and publication of the four volumes. Laura, in particular, has been extremely helpful and patient in our journey from idea to manuscript. Our grateful thanks go to Joan Harcourt for forgiving Geoff for breaking the promise never again to undertake a major research project, witnessing yet again her love and support of over 60 years; to Teresa, Peter s wife, for her continual love and support; and to Fay, John s wife, who, in the absence of a secretary, typed much of his introductions to chapters (and commented that the names had not changed much since the last time she did this when, as a young wife, she typed drafts of John s PhD thesis). We would also like to thank Roni Demirbag for his help in getting Joseph s papers in order, and Jason Antony for his gracious and good-natured multidimensional expert help in assembling the volumes. x

10 Preface xi Note 1. For an overview of what we consider to be post-keynesian economics see Harcourt, G. C. and Kriesler, P Post-Keynesian Theory and Policy for Modern Capitalism, Journal of Australian Political Economy, No. 75, Winter 2015,

11 Acknowledgements The authors and publishers wish to acknowledge with thanks the following for either previously publishing their articles, or granting permission to reproduce copyright material: The Centre for Applied Economic Research for permission to reprint Tools of choice for fighting recessions in E. Carlson and W. Mitchell (eds) The Urgency of Full Employment, 2002, pp Edward Elgar Publishing for permission to reprint Macroeconomic impacts of globalization in H. Bloch (ed.) Growth and Development in the Global Economy, 2003, pp SAGE Publications for publishing Exchange rates and the macroeconomy in an era of global financial crises, with special reference to Australia, Economic and Labour Relations Review, Vol. 24, No. 1, 2013, pp SAGE Publications for publishing A critique of the new consensus view of monetary policy (co-authored with Marc Lavoie), Economic and Labour Relations Review, Vol. 16, No. 1, 2005, pp SAGE Publications for publishing The current financial crisis: causes and policy, Economic and Labour Relations Review, Vol. 19, No. 2, 2009, pp SAGE Publications for publishing The current crisis has a silver lining, Economic and Labour Relations Review, Vol. 19, No. 2, 2009, pp SAGE Publications for publishing The ABC of G and T, Economic and Labour Relations Review, Vol. 24, No. 3, 2013, pp SAGE Publications for publishing The systemic downside of flexible labour market regimes: Salter revisited, Economic and Labour Relations Review, Vol. 23, No. 2, 2012, pp SAGE Publications for publishing Political aspects of buffer stock employment, Economic and Labour Relations Review, Supplement to Vol. 12, 2001, pp Taylor and Francis LLC for permission to reprint How voluntary is unemployment? Two views of the Phillips curve, Journal of Post Keynesian Economics, Vol. 2, No. 1, 1979, pp John Wiley and Sons for permission to reprint A simple econometric model of the Australian economy, Australian Economic Papers, Vol. 1, No. 1, 1962, pp Cambridge University Press for publishing Can Keynesian policies stimulate growth in output and employment? in S. Bell (ed.) The Unemployment Crisis in Australia: Which Way Out?, 2000, pp Reprinted with permission. SAGE Publications for publishing Australian economic growth: a structural perspective (a preliminary report), Economic and Labour Relations Review, Vol. 2, No. 2, 1991, pp The Social Policy Research Centre for permission to reprint Corporatism in Australia, Discussion Paper No. 57, Allen and Unwin Australia for permission to reprint Structural change and economic growth in G. Mahoney (ed.) The Australian Economy Under Labor, 1993, pp SAGE Publications for publishing Why Keynesian policy was more successful in the fifties and sixties than in the last twenty years, Economic and Labour Relations Review, Vol. 22, No. 1, 2011, pp xii

12 Acknowledgements xiii The Economic Society of Australia and New Zealand for publishing The share of wages in income in Australia, Economic Monograph No. 298, April John Wiley and Sons for permission to reprint Inflation in Australia: causes and cures, Economic Papers, Vol. 5, No. 14, 1974, pp The Australian Government Publishing Service for publishing The effect of immigration on Australian living standards, The International Journal of Applied Economics and Econometrics for permission to reprint The effects of the immigration of low skilled workers on unemployment, International Journal of Applied Economics and Econometrics, Vol. 18, 2010, pp SAGE Publications for publishing Why privatize airports?, Economic and Labour Relations Review, Vol. 7, No. 1, 1996, pp Institut de Sciences Mathématiques et Economiques Appliquées for permission to reprint Asia, Japan and the internationalization of effective demand, Économies et Sociétés, Serie MP, no. 10, April 1996, pp Edward Elgar Publishing for permission to reprint History, politics, and effective demand in Asia in J. Halevi and J. Fontaine (eds) Restoring Demand in the World Economy: Trade, Finance and Technology, 1998, pp Taylor & Francis Ltd. For permission to reprint Stagnation and economic conflict in Europe, International Journal of Political Economy, Vol. 34, No. 2, 2004, pp Ashgate/Gower for permission to reprint The changing patterns of accumulation and realization in East Asia since the 1990s in M. Hart-Landsberg, S. Jeong and R. Westra (eds) Marxist Perspectives on South Korea in the Global Economy, 2007, pp Edward Elgar Publishing for permission to reprint The accumulation process in Japan and East Asia as compared with the role of Germany in European post-war growth in R. Bellofiore (ed.) Global Money, Capital Restructuring and the Changing Patterns of Labour, 1999, pp Edward Elgar Publishing for permission to reprint The EMS and the Bundesbank in Europe in P. Arestis and V. Chick (eds) Finance, Development and Structural Change, 1995, pp The editors of Monthly Review for permission to reprint The Argentine crisis, Monthly Review, Vol. 53, No. 11, April 2002, pp Taylor and Francis LLC for permission to reprint Imperialism today in R. Bellofiore (ed.) Rosa Luxemburg and the Critique of Political Economy, 2009, pp

13 About the Authors Joseph Halevi, alma mater University of Rome La Sapienza, began teaching economics at the New School of Social Research in New York and later at Rutgers University. He has a permanent appointment at the University of Sydney. He was Visiting Professor at the University of Connecticut and regularly in France at the Universities of Grenoble, Nice and Amiens. He has authored many books and contributed to the first edition of The New Palgrave Dictionary of Economics in 1987 and co-edited Beyond the Steady State with Macmillan in 1992, among others. G. C. Harcourt is a graduate of the Universities of Melbourne and Cambridge. He has worked mainly at Adelaide (1958 to 1985) and Cambridge (1964 to 1966; 1972 to 1973; 1980; 1982 to 2010). He is now Visiting Professorial Fellow at UNSW Australia. He is Emeritus Reader in the History of Economic Theory at Cambridge University; Emeritus Fellow of Jesus College at Cambridge; and Professor Emeritus at the University of Adelaide. He has authored or edited 29 books and over 380 articles, notes, chapters in books and reviews. His books include Some Cambridge Controversies in the Theory of Capital (1972), The Structure of Post-Keynesian Economics (2006), (with Prue Kerr) Joan Robinson (2009) and (jointly edited with Peter Kriesler) The Oxford Handbook of Post-Keynesian Economics, 2 vols (2013). Peter Kriesler currently teaches in the School of Economics at the University of New South Wales. He organises the Annual Australian Society of Heterodox Economists Conference, which is now in its fourteenth year. Peter s main publications are in the areas of history of economic thought, heterodox economics, the Australian economy, labour economics, and economic perspectives on human rights. is Emeritus Professor at the University of New South Wales in Sydney, Australia. He has published extensively on fiscal policy, macroeconomic policy in general, economics and ethics, and the history of economic thought. He has served on a number of statutory authorities and government enquiries. He was the Recipient of the Economic Society of Australia Distinguished Fellow Award for the year xiv