Duncan Foley

Leo Model Professor
The New School

Duncan K. Foley graduated from Swarthmore College with a B.A. in Mathematics in 1964, and received the Ph.D. in Economics from Yale University in 1966. He has taught at M.I.T., Stanford, Barnard College of Columbia University, and since 1999 has been Leo Model Professor at the Economics Department of the New School for Social Research. He is an External Professor at the Santa Fe Institute.

He has published in the fields of Public Finance, Macroeconomics, Money, Marxist Economic Theory, Economic Dynamics, Neo-Ricardian Economics, Growth Theory, and Complex Systems Theory and Economics.

Foley's recent work includes studies of the relation of statistical mechanics and thermodynamics to economics, global warming policy, complexity theory and Classical political economy ("Unholy Trinity: Labor, Capital and Land in the New Economy", Routledge, 2003), work on the foundations of statistical method, and Marx's theory of money. He published a book on the history of political economy and economics, "Adam's Fallacy: A Guide to Economic Theology", in 2006. 


My Content

Recent claims, particularly in Paul Krugman’s column and blog, on the superiority of the Hicks-Modigliani version of Keynesian economics calls for a re-thinking of the issues raised in the early controversies over what Joan Robinson called ”bastard Keynesianism”. ”Good, old-fashioned, Keynesian economics” (GOKE) substitutes the general and unmotivated assumption of downward money wage rigidity for the detailed examination of the varied social coordination problems that characterize modern capitalist economies. This underrates Keynes’ role as a precursor of modern information economics, and risks losing significant policy insights.

A growth model incorporating dynamics of capital per capita, atmospheric CO2 concentration, and labor and energy productivity is described. In the “medium run” output and employment are determined by effective demand in contrast to most models of climate change. In a “long run” of several centuries the model converges to a stationary state with zero net emissions of CO2. Properties of dismal and non-dismal stationary states are explored, with a latter requiring a relatively high level of investment in mitigation of emissions. Without such investment under “business as usual” output dynamics are strongly cyclical in numerical simulations. There is strong output growth for about eight decades, then a climate crisis, and output crash.

Determining the social cost of carbon emissions (SCC) is a crucial step in the economic analysis of climate change policy as the US government’s recent decision to use a range of estimates of the SCC centered at $77/tC (or, equivalently, $21/tCO2) in cost-benefit analyses of proposed emission-control legislation underlines. This note reviews the welfare economics theory fundamental to the estimation of the SCC in both static and intertemporal contexts, examining the effects of assumptions about the typical agent’s pure rate of time preference and elasticity of marginal felicity of consumption, production and mitigation technology, and the magnitude of climate-change damage on estimates of the SCC.

My Video Content

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The Inaugural Conference @ King's, Institute for New Economic Thinking, Session 6: Mathematical Models: Rigorously Testable, Qualitative Metaphors, or Simply an Entry Barrier.

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An American professor explains how the financial sector grew in importance and in its portion of the whole economy starting with new economic policies begun in 1980.

My Grants

Mainstream economics has not adequately dealt with the long-term consequences of economic growth with regard to the effects of climate change, shifts toward a service-centered economy, and potential financial and fiscal instability. The project will aim to help correct this gap. It will focus on the sustainability of economic growth and implications for distribution, employment, stability, and economic policy. The effects of climate change will be examined in both standard and demand-driven growth models, with emphasis on attainable improvements in welfare from correcting the greenhouse-gas externality (which is often analyzed in a biased fashion in mainstream models). Distributive and employment impacts of global warming and sustainable consumption will be considered.