February 1, 2013
For a long time now orthodox economics has been hindered by its extreme irrealism—a refusal even to attempt a realistic theoretical understanding of how modern capitalism functions. The shift to using fanciful assumptions to explore largely minor issues, following a brief Keynesian moment in the post-Second World War era, has been in many ways self-reinforcing. Once fundamental characteristics of the capitalist economy such as labor exploitation, accumulation, built-in inequality, monopoly power, rent-seeking behavior, technological change, and the tendency to stagnation were removed from the analysis—as a result of an ideological process of system-rationalization—there was little recourse but to fall back in successive stages on more and more abstract models based on increasingly purified notions of individual rationality.… Nevertheless, the deepening crisis of today's monopoly-finance capital has given rise to a new era of questioning within the economics profession, and some top-tier neoclassical economists are now struggling—though hindered at every step by their own training and inclinations—to recapture knowledge long abandoned.
October 1, 2012
Many readers of Monthly Review were undoubtedly both surprised and delighted by Neil Barofsky's blistering essay in the New York Times written just after he left his position as the Special Inspector General in charge of oversight at TARP (Troubled Asset Relief Program).… Neil Barofsky was that truly rare government "bureaucrat," a true believer in government by the people and for the people. Now he has written a book that should shock our nation.
September 1, 2012
Majority opinion in Europe holds that Europe has all it takes to become an economic and political power comparable to, and consequently independent of, the United States…. I believe that Europe suffers from three major handicaps that rule out such a comparison. First of all, the northern part of the American continent…is endowed with natural resources incomparably greater than the part of Europe to the west of Russia…. Secondly, Europe is made up of a good number of historically distinct nations whose diversity of political cultures…has sufficient weight to exclude recognition of a "European people"… In the third place…capitalist development in Europe was and remains uneven, whereas American capitalism has developed in a fairly uniform way throughout the northern American area, at least since the Civil War. Europe, to the west of historic Russia…is composed of three unequally developed sets of capitalist societies.
July 1, 2012
As the economies of Europe, North America, and Japan continue to stagnate orthodox economics has revealed itself to be bankrupt, unable to explain what is happening much less what to do about it. It was not the failure to see the "Crisis of 2008" coming that represents the economics profession's biggest failure, Paul Krugman declared in a recent talk, but what came after: "the profession's descent into uninformed quarreling," coupled with its reversion to Say's Law (the notion that supply creates its own demand)—the disproof of which was the main achievement of the Keynesian revolution.… Yet… [no] prominent orthodox analyst, has sought to engage in a genuine overhaul of received economics on the level of what Keynes accomplished in the 1930s. Indeed, no such scientific revolution appears possible within mainstream economics today, which is characterized not by its realism but its irrealism—serving now an entirely ideological function. Here one is reminded of Paul Sweezy's observation nearly fifty years ago: "Bourgeois economics, I fear, has irrevocably committed itself to what Marx called 'the bad conscience and evil intent of apologetic.' If I am right, Keynes may turn out to be its last great representative"
July 1, 2012
Austerity is now ’in fashion,” as governments respond to the revenue shortfalls of the crisis through deficit reduction plans and fiscal stability pacts, and economists blame it on the profligate spending of households and countries. Consumers, they say, bought houses they could not afford and countries consumed more than they produced, while loose monetary policies made this spending possible. Governments ’got prices wrong,” keeping interest rates too low for too long, and while increases in government spending might alleviate current employment problems, this deficit spending is inflationary, and in any case will not help in the long run as budget deficits raise interest rates, ’crowding out” business and household spending. It is as if we have stepped back in time, to the depression years of the 1930s, when monetary theories of the cycle were dominant, the ’overinvestment” of the boom blamed for the downturn, and effective fiscal actions proposed by Keynes and others blocked by preoccupation with the public debt and its burdens.… The analysis here is concerned with the systematic rejection of Keynes’s and Kalecki’s revolution in economics and the resurrection of Say’s Law (supply creates its own demand) of pre-Keynesian economics in all but name—a view that underlies today’s austerity economics.
May 1, 2012
The Great Financial Crisis and the Great Recession began in the United States in 2007 and quickly spread across the globe, marking what appears to be a turning point in world history. Although this was followed within two years by a recovery phase, the world economy five years after the onset of the crisis is still in the doldrums…. The one bright spot in the world economy, from a growth standpoint, has been the seemingly unstoppable expansion of a handful of emerging economies, particularly China. Yet, the continuing stability of China is now also in question. Hence, the general consensus among informed economic observers is that the world capitalist economy is facing the threat of long-run economic stagnation (complicated by the prospect of further financial deleveraging)…. It is this issue of the stagnation of the capitalist economy, even more than that of financial crisis or recession that has now emerged as the big question worldwide.
April 1, 2012
For decades we have been arguing in Monthly Review that stagnation is the normal state of the mature monopoly-capitalist economies. Today the reality of stagnation is increasingly gaining the attention of the corporate media itself.… For those accustomed to thinking of the capitalist economy as either growing rapidly or occasionally falling into a severe crisis (from which it quickly bounces back), long-run stagnation is a difficult to understand phenomenon. [A stagnating economy] neither collapses into a full (or "classic") crisis, which would allow it to clear out (or devalue) its overaccumulated capital, nor is it able to achieve a full recovery. Instead, it remains caught in a stagnation trap, limping along at a low rate of growth, with high unemployment and excess capacity. Under the circumstances—and without the help of some external stimulus like a major war, a financial bubble, or an epoch-making innovation—the capital accumulation process is unable to move off dead center.
March 1, 2012
When stressing the need for a radical structural change it must be made clear right from the beginning that this is not a call for an unrealizable utopia. On the contrary, the primary defining characteristic of modern utopian theories was precisely the projection that their intended improvement in the conditions of the workers' life could be achieved well within the existing structural framework of the criticized societies…. As we also know, the high-sounding "utilitarian" moral principle of "the greatest good for the greatest number" came to nothing since its Benthamite advocacy. The problem for us is that without a proper assessment of the nature of the economic and social crisis of our time—which by now cannot be denied by the defenders of the capitalist order even if they reject the need for a major change—the likelihood of success in this respect is negligible.
January 1, 2012
Immanuel Wallerstein, The Modern World System IV: Centrist Liberalism Triumphant, 1789–1914 (Berkeley: University of California Press, 2011), 396 pages, $26.95, paperback.
December 1, 2011
Over the last thirty years, capital has abstracted upwards, from production to finance; its sphere of operations has expanded outwards, to every nook and cranny of the globe; the speed of its movement has increased, to milliseconds; and its control has extended to include "everything." We now live in the era of global finance capitalism.… Financialization has involved increasingly exotic forms of financial instruments and the growth of a shadow-banking system, off the balance sheets of the banks. The repeal of the Glass-Steagall Act in 1999 symbolized the almost complete deregulation of a financial sector that has become complex, opaque, and ungovernable.… Although these are useful ideas, they only begin a full analysis of finance capitalism. Where did finance capitalism come from? Did neoliberal policy create finance capitalism? Does finance capital exploit differently from industrial capital? And, most importantly, what are the central contradictions that generate crises in finance capitalism?
