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The road towards a decent society; lessons from classical political economy

Growing income inequality is threatening the American middle class, and the middle class is vanishing before our eyes. We are still one country, but the stretch of incomes is fraying the unity of our nation.

The Precariat under Rentier Capitalism Guy Standing We are in the midst of a Global Transformation, analogous to Karl Polanyi’s Great Transformation described in his seminal 1944 book. Whereas Polanyi’s Transformation was about constructing national market systems, today’s is about the painful construction of a global market system. To use Polanyi’s term, the ‘dis-embedded’ phase has been dominated by an ideology of market liberalisation, commodification and privatisation, orchestrated by financial interests, as in his model. The similarities also extend to today’s fundamental challenge, how to construct a ‘re-embedded’ phase, with new systems of regulation, distribution and social protection.

In the economic literature, several scholars have addressed the narrative of a two-stage European crisis. In a first stage, the so-called “he-cession”, men would have been hit the most by the economic recession induced by the financial crisis. Shortly thereafter, in the “she-austerity” stage, women would have suffered the heaviest burdens of the fiscal retrenchment measures. If that were the case, the policy response to the crisis would be producing an increase in the – already high pre-existing – gender inequality.

“Dual Economy” models were developed to explain growth in the developing world. Now they appear necessary to comprehend the high income trap that afflicts the world’s most developed economies.

Rob Johnson kicks off INET’s “Reawakening” conference with his take on how economists can win back the trust of a world that has rejected experts

This paper aims to assess such tendency to return to a supply-determined potential output, independent of aggregate demand, after episodes of demand expansion.

Preliminary draft prepared for INET conference session “A Decade of Stagnation. Why?”

What explains the slow recovery from the financial crisis and great recession in so much of the world?

Nicola Sturgeon covers a range of topics including how economists’ work relates to policymaking, the financial crisis and the dangers of groupthink, how dissatisfaction with stagnating wages and rising inequality played into political shocks like Brexit, the legacy of Adam Smith, why new economic thinking is so important, and what her government is doing to foster and apply it. 

This article originally appeared on Bloomberg

INET gathered hundreds of new economic thinkers in Edinburgh to discuss the past, present, and future of the economics profession.

What can today’s economists learn from the 18th century Scottish thinkers who grappled with societal and economic change?

Animal rights, child welfare, social equality are all a direct legacy of the “cult of feeling” 

The Festival for New Economic Thinking is a collaborative initiative of several organizations, and aims to bring together those who seek to improve how economics is taught, studied and practiced. 

Financial Globalization and its Cryptocurrency Discontents

Once again, an out-of-control industry is threatening public health on a mammoth scale

Why it’s time to repeal the debt ceiling and replace it with a ‘truth in borrowing’ act

The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense

Adair Turner in conversation with Nasser Munjee, moderated by David Webb

The Theory of the Firm, Financial Flows, and Economic Performance

Material from, and related to, INET’s 2017 conference: Reawakening

“Blindly” Engaging in Global Supply Chains Can Erode Developing Nations’ Economic Power

Rather than continue to narrow the field, economists need to ask what they’re missing

It is commonly overlooked that the concept of market efficiency embowers a time-dimension. Illustrating with an example from the class of persistent random walks, we show that a price process can be a martingale on one time-scale but inefficient on another.

The YSI Economics of Innovation Working Group in partnership with the Ragnar Nurkse Department of Innovation and Governance, Tallinn University of Technology is hosting a YSI Conference on “Innovation, Institutions and Governance”.

This paper analyzes the link between Kamakura Risk Information Services (KRIS) data on megabank default probabilities and credit spreads.

Engaging in music, literature and the arts is essential for understanding context and human behavior—which economists so often miss

The path of austerity could spread economic pain and social woes far beyond the Caribbean island, says public debt expert Martin Guzman 

Xavier Gabaix argues that public policies should prioritize alleviating deprivation at the bottom over narrowing the rich-poor gap 

This paper provides a critique of the DSGE models that have come to dominate macroeconomics during the past quarter-century.

Personal connections are key to understanding concentrations of wealth and power

In this episode of Hidden Forces, host Demetri Kofinas speaks with Robert Johnson, about the political economy, inequality, and the failings of our technocratic institutions.

YSI Philosophy of Economics working group is organising a workshop preceding the INEM conference.

An examination of some little-known ways nation states and central banks prop up megabanks

Why we should worry about job quality, not quantity—or robot overlords

New research shows that access to elite colleges varies by parents’ income—reinforcing inequality across generations 

When an economic model fails, it is reality—and the people living in it—who pay the bills while the model lives on, unscathed.

Davis looks at the financialization of non-financial corporations—i.e., firms that traditionally produce goods and services and invest in machinery, buildings and technology rather than trade in financial assets—and asks what it means that they’re taking on large financial investments.

The same angst that Americans and Europeans have about the future of jobs is an order of magnitude higher in Asia.

Robinson explains how natural experiments are done and why they’re useful. He also explains distribution of power and development of state play critical roles in successful economies.

Back-room deals on corporate tax reform won’t increase growth

Economists’ infamous failure at predicting the recent financial crisis has brought new impetus to studies on diversity in the economics profession. Such studies have underlined how diversity plays a prominent role in enriching economic analyses.

The prevailing stock market ideology enriches value extractors, not value creators

If standard economic theory can’t explain a traffic jam, how can it cope with crises?

The YSI Latin America Working Group is hosting a workshop at the United Nations ECLAC Summer School on Latin American economies.

As the Nobel laureate economist Robert Solow noted in 1987, computers are “everywhere but in the productivity statistics.” Since then, the so-called productivity paradox has become ever more striking. Automation has eliminated many jobs. Robots and artificial intelligence now seem to promise (or threaten) yet more radical change. Yet productivity growth has slowed across the advanced economies; in Britain, labor is no more productive today than it was in 2007.

How a Banking Union Has Created Deep Divisions that Undermine the Eurozone’s Stability

Why it’s urgent that China adjust its balance of payment structure and safeguard its foreign assets

Price gouging in the US pharmaceutical drug industry goes back more than three decades.

Professor Ghilarducci describes the roadblocks to securing retirement and retirement plans beyond the 401k.

Greater efficiency, lower costs, and universal coverage make it the sustainable option, say some top economists

Mason doesn’t think teaching contending economic theories is effective, and sees the objective of introductory economics courses as teaching students basic tools to understand economic terminology and standard relationship between cause and effect.

The famed short-seller offers a mid-2017 reality check for “fake fiscal news,” and economic pipe dreams, and sees “portents of even worse things”

Faced with rapid cost reductions for clean electricity generation, some commentators suggest that we no longer need the Paris agreement or other policy interventions, because technology alone can solve all problems.

McCloskey discusses her career, critiques of economics, and offers advice for young economists.

A new model probes why the US leads the world in jailing and imprisoning people, and what it will take to reverse course

Model Ambiguity, Consistent Representations of Market Forecasts, and Sentiment

Current proposals will worsen inequality and harm those Trump promised to protect—while further enriching the top 1%

The Young Scholars Initiative is hosting its regional convening for Latin America in Mexico City from 17-21 June. 

Naomi Klein discusses her new book, No Is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need.

This seminar is happening at INET Oxford

Young Scholars Initiative (YSI) has released a new e-book, “Conversations on Dependency Theory”

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Why some goods and services should stay in the public domain

This blog post looks at the aggregate picture and collates some micro evidence in a more robust estimating framework to shed light on this question.

A workshop hosted by the YSI Inequality Working Group (IWG) will take place from 12-13 June at the London School of Economics in collaboration with the International Inequalities Institute (III).

Trump’s withdrawal from the Paris accord sets the US economy back

The Young Scholars Initiative and the University of the Free State, SA, invite young scholars to attend the first YSI Africa conference. 

Economics is not, nor can it be, value-free.

YSI Working Groups are cooperating with Dimensions of Poverty conference

Conventional wisdom has it that the primary function of the stock market is to raise cash for companies for the purpose of investing in productive capabilities. The conventional wisdom is wrong.

The Young Scholars Initiative and its working groups will be hosting meetings and discussions in and around the 2017 Trento Festival of Economics. 

Ocean expert Peter Neill says the watery depths hold solutions to earth’s most pressing challenges

A discussion featuring Kenneth Smith, Head of the Trade and NAFTA Office of the Ministry of the Economy of Mexico, and Jay Pelosky, Principal of Pelosky Global Strategies.

This two-day skills workshop / annual meeting of the Finance, Law, and Economics Working Group (FLE) aims to connect participants with politicians (MEP), lobbyists, NGOs, and practitioners working in fields related to law and finance. It will comprise workshops and visits with representatives, which will facilitate exchanges between academia and politics. Participants will gain fresh insights into the decision-making and lobbying processes in Brussels, allowing them to translate their ideas into actions and create a stronger social impact. 

Globalization has fallen into disrepute; the myth of the prosperity and happiness-generating  free market has been dispelled. A visionary concept that provides guidance and direction is required now.

Citations Measure More Than Just Scientific Impact

Demand, Secular Stagnation and the Vanishing Middle-Class

The U.S. economy is widely diagnosed with two ‘diseases’: a secular stagnation of potential U.S. growth, and rising income and job polarization. The two diseases have a common root inthe demand shortfall, originating from the ‘unbalanced’ growth between technologically ‘dynamic’ and ‘stagnant’ sectors.

How austerity policies and microfinance can bankrupt rather than empower women. Professor Girón discusses why microfinance cannot replace development banks.

The Institute of New Economic Thinking Young Scholars Initiative (INET YSI) Working Group on the History of Economic Thought is organizing a YSI Workshop on Methods in the History of Economic Thought on 17 May in Antwerp, Belgium, ahead of the Annual ESHET Conference.

The Institute of New Economic Thinking Young Scholars Initiative (INET YSI) Working Group on the History of Economic Thought is organizing a YSI Workshop on Institutions and Communities in the History of Economic Thought on 6 June in Madrid, Spain, ahead of the Annual ESHET Conference.

A look at America’s strange and dangerous approach to medicine, and how to fix it

This paper presents a model of mass incarceration in the United States, which has the largest proportion of its population imprisoned among advanced countries.

The Economic History Working Group and the Financial Stability Working Group are organizing a two day seminar on May, 12th-13th in New York. The theme for the will be “Institutional responses to financial crises 1870 to 2017”.

The History Project will hold its fifth conference on May 11-12, 2017 at the University of Cambridge. The conference will be concerned with the economic history of India, particularly in relation to exchanges across frontiers, the history of the law, and the history of economic thought.

On behalf of the Host Committee, we are writing to offer some further information about the “Gala Dinner”, which will take place on the evening of 19 July, following the final session of the 2017 ECINEQ Conference. The dinner will be held at a restaurant near the conference venue. 

A breakup of the Euro will be too difficult and costly for member countries.

This note comments on Eric Weinstein’s, “How and Why Government, Universities, and Industries Create Domestic Labor Shortages of Scientists and High-Tech Workers,” posted recently on INET’s website.

A discussion with Kaushik Basu, Professor of Economics and the C. Marks Professor of International Studies at Cornell University and former Senior Vice President and Chief Economist of the World Bank. 

Professor Dutt discusses how group identity is key to addressing inequality and how inequality can disrupt group identity.

The reaction to repressive political conditions that prevailed in Brazil during the 1970s helped to produce a commitment to diversity and tolerance among Brazilian economists.

How the U.S. New Economy Business Model Has Devalued Science and Engineering PhDs

April 28-29, 2017, USC Dornsife INET is hosting a conference on inequality, globalization, and macroeconomics at the University of Southern California. The goal of this conference is to bring together leading researchers to discuss and present new approaches and new results on the relationships between inequality and macroeconomics and between inequality and globalization. Please direct any questions or comments to [email protected]. 

The energy transition is happening. But the pace of change depends on a range of technical, business, and societal factors.