Tuesday, August 28, 2018

Economic and technological determinism

Mind blowing stuff


A while ago now I discussed technological determinism, and the existence of economic laws, even if not in the same sense that in the so-called hard sciences. This semester I'm teaching a class for first year students (non Econ majors, to clarify for those outside the US) titled somewhat facetiously 'From Fire to Uber.' In fact, the first reading is Heilbroner's 1967 paper discussed in the first link provided above, on whether machines make history.

Bob was on the side of technological determinism. The epigraph was Marx's famous dictum according to which: "the hand-mill gives you society with the feudal lord; the steam-mill, society with the industrial capitalist." And he essentially argued that the computer (he also discussed atomic energy technology, but not biotechnology. The computer, the bomb, and DNA were all part of the immediate techno-scientific developments of the post-war period) would essentially gives us the society with the technician. In fact, reading recently David Graeber's new book (original discussion here), on bullshit jobs, I was reminded of Bob's prediction. Bullshit jobs are essentially the result of the 'computer mill,' that gives society with the bureaucrat.*

Heilbroner and almost anybody else that uses that particular citation of Marx seems to suggest that historical materialism, or Marx's conception of history, requires technological determinism. While it is clear that the idea that the economic structure determines the cultural, political and social superstructure of society is a type of economic determinism, it is less clear to me that Marx accepted technological determinism. And as I noted in a previous post, Marx's conception of history, even if permeated by some economicism (I seem to recall that John Kenneth Galbraith suggested that he agreed on that point with Marx, the prominence of economics, but cannot find the quote anywhere), does not imply historical determinism. Not only he has very little to say about the future of society (including communism), but also all his laws of tendency allowed for countervailing forces that could reverse the original course of events.

In that sense, Marx's economic determinism is a sort of soft determinism, which allows for sociopolitical factors to affect economic developments. Here I'm echoing Nathan Rosenberg (pp. 61-62) who suggested long ago that "Marx's position... cannot be reduced to a crude technological determinism." So one may very well ask why I think that Marx's (or Heilbroner's) soft economic determinism does not imply technological determinism. Ultimately the reply hinges on what drives technology, which is a component of the supply side of the economy, and what drives the economy, supply side forces or demand side factors.

In my view, as stated too many times in this blog, the process of growth is demand driven. The adoption of machines (investment) in general results from the needs to adapt productive capacity to demand. In that sense, the computer and the society with the bureaucrat that it created are the result of growing economy and for the most part, as much as in the case of the society with the steam-mill, the one with the computer has been heavily dependent on the role of the state. In fact, there are few sectors in which the role of the state in the development of a technology are more evident than in the case of the computer (see here, for example), the internet and the derived technologies. Sure, I'm probably, like Bob a soft determinist, but with reverse causality.

Probably population growth (which was the main, or only, source of growing demand in pre-modern societies) and the State, and more importantly inter-State warfare, have been the driving forces for socioeconomic change, and technological developments have been the result. Of course, if the Military-Industrial Complex gives you the computer, then the computer may require the bureaucrat. So there are feedback mechanisms. It's the proverbial chicken and egg story. But in my view, demand driven stories of growth break with the technological determinism of the mainstream (neoclassical) and certain Marxist interpretations of history.

* In Graeber's view is not really information technology though. Bullshitization is a development of financialized or neoliberal capitalism (I'll discuss my views on that in another post). I should add that Graeber thinks that the computer has led to a new economic mode of production that he refers to as Managerial Feudalism.

Monday, August 27, 2018

Economic Development in the XXIst century Webinar Series


This seminar series focuses on the analysis of Economic Development in the XXIst century. The notions of distribution, industrial policy and balance of payments constraints will be profoundly analyzed during these four sessions. As there is much disagreement about what drives economic development - and at the same time it is a central objective for developing economies - this question merits deep reflection. Through these seminars there will be a particular focus on the external constraints that developing economies face that make economic development challenging. Although the seminars will deal with small open economies, given that the balance of payment constraint will be part of the discussion, scholars working on the Eurozone may also find the discussion on interesting for their work.

Webinar 1 (Wednesday 09/12): Value and Distribution in a small open economy

By Guido Ianni, Ph.D. candidate at the University of Buenos Aires.

Guido will discuss what determines income distribution in these economies, and how the alternative "closures" can lead to different economic productive structures.

Webinar 2 (Friday 09/21): Income distribution and the balance of payments - Some Latin American structuralist contributions

By Ariel Dvoskin and Germán Feldman. Ariel Dvoskin is Professor of Microeconomics at the National University of Buenos Aires and Germán Feldman is Professor of Macroeconomics at the National University of San Martín.

Drawing on Latin American structuralist analysis, Dvoskin and Feldman will explain not only Value and Distribution, but also their relationship with the Balance of Payments. In this lecture, notions related to balance of payments constraints will appear so it could be interesting for those working on or worried about the Eurozone.

Webinar 3 (Thursday 09/27): Industrial policies and growth in the XXIst century

By Margarita Olivera, Federal University of Rio de Janeiro

This webinar will deal with the role of industrial policies in development in the current age. Margarita is studying the impact of international institutions, such as the WTO and free trade agreements, on the possibilities of economic development.

Webinar 4 (Wednesday 10/03): The role of Central Banks in Economic Development.

By Matías Vernengo, is full professor of economics at Bucknell University. He is co-editor of the Review of Keynesian Economics and co-editor in chief of the New Palgrave Dictionary of Economics.

The final webinar will be focus on the relationship between Central banks, inflation and growth from an historical perspective. Were Central banks instruments of the state to promote economic development once? When did everything change? Matías will try to answer some of this questions under an economic development long-run perspective.

Timetable:
11.00 US East Coast (gmt-4)
12.00 ARG/BRA (gmt-3)
16.00 UK bst (gmt+1)
17.00 ITA cet (gmt+2)

Register to attend: Here.

Questions can be directed to webinar-organiser, Santiago J. Gahn, YSI Economic Development Working Group sjgahn@gmail.com

Thursday, August 23, 2018

International Confederation of Associations for Pluralism in Economics (ICAPE) Call for Papers

From Geoff Schneider ICAPE's Executive Director:

Proposals for papers, workshops and panels at ICAPE are due Tuesday, September 4th. I hope you can join us for this conference that brings together all of the heterodox perspectives.Information below.

International Confederation of Associations for Pluralism in Economics (ICAPE)
Call for Papers, Panels and Workshops
Agnes Scott College, Atlanta, GA
January 3, 2019, 7:00 AM to 5:00 PM

Gender, Race, Class and Crises:
Pluralistic Approaches to the Economic Issues of our Time

ICAPE was founded 25 years ago (in 1993) by a group of heterodox economists committed to the idea of pluralism in economics. ICAPE’s founding occurred in the wake of a plea for a “pluralistic and rigorous economics" which was published as a paid advertisement in the American Economic Review and signed by many leading economists. Today, we find the mainstream as monolithic as ever in its domination of journals and degree programs, but there are small signs of progress. Analysis of institutions and actual human behavior is displacing some of the emphasis on rational optimizing behavior of individual actors. Institutions in the U.K. are calling for new approaches to economics. Nonetheless, much remains to be done. This is particularly true when it comes to issues of Gender, Race, Class and Crises, where heterodox economists have much to say while much mainstream analysis is inadequate.
The 2019 ICAPE conference will explore the following themes:
·         Given the #MeToo and Black Lives Matter movements, the ongoing domination of the economics profession by white men, and the inadequacies of mainstream economic analysis of gender and race, what can pluralistic economists offer as an alternative?
·         Inequality continues to be a major issue of our time, and one that is central to much pluralistic analysis while being absent from much mainstream analysis. What can pluralistic economists add to the analysis of this crucial topic? How can a contemporary analysis of class, race and gender contribute to our understanding?
·         Contemporary capitalism faces recurrent macroeconomic crises and looming environmental crises. How can pluralistic economists shed light on the dynamics and possible solutions to these crises?
·         What are the major problems confronting today’s communities, and how can pluralistic approaches to economics address those problems?
·         To what extent is it possible to combine and integrate different heterodox approaches into a unified, pluralistic approach?
·         What are the best methods for teaching and conducting research in pluralistic economics?
·         How should we cope with the exclusion of pluralistic ideas from economics journals, textbooks and curricula? What strategies should we adopt?
·         What should younger scholars know about each pluralistic tradition? What are the cutting edge approaches to teaching and scholarship in each tradition?
It has never been more important for pluralistic economists to discuss robust alternatives to mainstream economics and to bolster pluralistic approaches to teaching and research.
This ICAPE conference will occur on the day before the 2018 ASSA meetings from 7AM to 5PM at Agnes Scott College in suburban Atlanta. Agnes Scott is located within a short cab or train ride from the convention hotels. The conference registration fee is $120 ($60 for graduate students/low income), which includes breakfast and lunch, along with coffee and refreshments throughout the day.
One of the purposes of the conference is to bring together economists from a variety of heterodox perspectives. There will be multiple opportunities for people to come together, including breakfast, coffee breaks, and a lunch plenary. Please plan on spending the entire day at the conference. In general, requests to schedule sessions at particular times of the day cannot be granted.
We welcome work from all strands of heterodox economic theory, including evolutionary, ecological, complexity, institutional, feminist, Austrian, Marxian, Sraffian, Post-Keynesian, behavioral/psychological, social, radical political economy, critical realism, agent-based modeling, and general heterodox. We are particularly interested in material from graduate students, sessions on pluralistic teaching, and material on the state of pluralism in economics. And, we are interested in research from any of the perspectives listed above.
Submissions:
The deadline for submitting proposals is Tuesday, September 4, 2018. We welcome proposals for individual papers, full sessions, teaching workshops, research workshops and roundtables. Proposals for complete sessions or workshops with a coherent theme are encouraged, especially those that are pluralistic in nature, reflecting multiple perspectives in the discipline. Those who make a submission will be informed whether their proposal has been accepted by the 10th of September 2018.
Anyone needing an early decision on their submission to secure travel funding should indicate the need for an early decision as part of their submission. Submissions will be evaluated for acceptance on a rolling basis.
ICAPE member associations are encouraged to submit entire sessions or workshops. Current dues-paying ICAPE member associations include: AFEE, AFIT, ASE, IAFFE, and URPE.
For individual papers, please include your (1) name, (2) title, (3) affiliation, (4) abstract of up to 300 words or less, (5) three keywords, (6) short abstract of 40 words, and (7) contact information (address, phone, email). For full sessions consisting of papers, roundtables, workshops, and other formats, please include the above for each contribution, as well as a title for the session, the names of the chair and discussants (if any), and the name and contact information of the session organizer.
All proposals should be submitted by email to Geoff.Schneider@Bucknell.edu as a Word or RTF document. Your email subject should be titled using the corresponding author’s last name, “ICAPE,” and a brief title in the subject line (e.g., “Schneider.ICAPE.Teaching Roundtable”). Please also title the Word or RTF document containing your submission in a similar fashion.
Authors who present at the ICAPE conference are encouraged to submit their papers to the American Review of Political Economy (http://www.arpejournal.com/submissions/), edited by Michael Murray and Nikolaos Karagiannis. Papers from the conference will be published in a special issue of the ARPE.
Note that ICAPE does not arrange lodging for this conference. Participants should make their own arrangements.
Please address your questions to Geoff Schneider (Geoff.Schneider@Bucknell.edu), Executive Director of ICAPE.
ICAPE is looking for locations for future conferences in San Diego on January 5-6, 2020. If you know of a potential location in any of these cities, please contact us.

Tuesday, August 21, 2018

Income distribution and the balance of payments: a formal reconstruction of some Argentinian structuralist contributions

A two part paper by Ariel Dvoskin and Germán David Feldman. From the abstract:

In this two-part paper, we explore the interaction between income distribution and the balance of payments, by assessing the contributions of three Argentinian exponents of the Latin American Structuralist School: Oscar Braun, Marcelo Diamand and Adolfo Canitrot. With this aim, we introduce a two-sector model inspired by the classical tradition. Part I of the article examines the implications for prices and quantities of the phenomenon of ‘technical dependency’. That is, the inelastic demand for imported inputs observed in peripheral economies, a true constraint to growth during the Bretton Woods era. We leave until Part II of the paper the assessment of the implications of ‘financial dependency’, namely the influence exerted on the profit rate of peripheral economies by the international profit rate.

Links here and here.

Friday, August 17, 2018

Distribution and Conflict Inflation in Brazil under Inflation Targeting

I can't watch this either

For those interested in the Brazilian situation I highly recommend the recently published paper by Franklin Serrano and Ricardo Summa (Review of Radical Political Economics page here). From the abstract:
In this paper, we analyze Brazilian inflation under the inflation-targeting system from a conflict inflation perspective and show how the inflation target system only worked well when there was a trend of exchange rate appreciation. Later, the strengthening of the bargaining power of workers and rising real wages since 2006, combined with continuous nominal exchange rate depreciation after mid-2011, increased distributive conflicts and are ultimately behind the recent shift toward austerity.
 A preliminary version is available here.

Thursday, August 16, 2018

A Tale of Two Currency Crises: A Short Comment

So the Turkish foreign exchange crisis is all over the news. But the Argentine one is less conspicuous in the international media. Turkey's economy has had many similarities with Latin American economies over the years, in terms of the incomplete process of industrialization, and the types of crises associated with neoliberal reforms over the last three decades. Note, however, that the Argentine nominal depreciation has been larger than the Turkish (the same is true if you go back to the previous big crisis in both countries in the late 1990s and early 2000s, respectively) and one should expect more coverage (perhaps Erdogan has worse press than Macri, but the authoritarian credentials of the latter should not be dismissed; neither the neoliberal ones of the former, I might add).
In all fairness the NYTimes does cite Argentina (and other emerging markets; not a fan of the term, as I think I discussed before on a post about... wait for it... an external crisis in Argentina and Turkey four years ago) in the piece about it today, saying that:
"For nearly 10 years now, the flood of cash from global central banks has financed shopping malls in Istanbul, booming cities in China and 100-year bonds in Argentina. Today, many of the malls are empty, property developers in China are riddled with debt, and Argentina has just submitted to a bailout from the International Monetary Fund."
That seems to suggests that the reason for the crisis is to some extent that central banks created too much liquidity (printed too much money), allowing too much spending (perhaps by the government, wink, wink, nudge, nudge, say no more: it's a fiscal problem), and that's why we are having these problems. However, the NYTimes does get the external problem, the current account, which I always suggest is the way you should go if you are looking for fundamentals (here another discussion from 4 years ago on currency crisis, this one more theoretical). The NYTimes says:
"A country runs a current account deficit if it takes in more money — in investments and trade — from foreigners than it sends to other countries. That leaves the country at the mercy of international investors to keep it afloat financially, and those investors could find other markets more enticing — particularly when emerging markets see their currencies lose value. That is precisely what forced Argentina to go to the I.M.F., the first major emerging market to take such a step during this period of uncertainty."
However, as I noted on my earlier post on the Argentine situation, while I do think that current account positions are the relevant fundamental (the other would be international reserves) for a currency crisis (and that fiscal positions are the result not the cause of a crisis, since they are in domestic currency for the most part), it worth noting that the Turkish situation is not, at least looking at recent data, particularly bad.
Note that there is a secondary axis for the Turkish current account as a share of exports (the right hand side one), and that Turkey has a much larger deficit with respect to exports than Argentina, but not one that is deterioration drastically (these are based on IMF estimates, btw). This suggests that the current account, even though it is crucial in the long run, is probably not driving the crisis (as I noted in May, I still don't the current account is the cause of the crisis; same post as above, btw).

The fact that this is a global phenomenon (the depreciation of currencies of developing countries) suggests that the hike of the interest rate in the US plays a role. It seems also that the financial deregulation and the financial position of some developing countries explain why they are having more trouble than others (e.g. Brazil, which is in the middle of a serious economic and political crisis, but sitting on top of US$ 380 billion in reserves). I haven't found more recent data (this from the World Bank goes only to 2016), but the graph below shows the short-term debt to international reserves ratio; the reverse of the Guidotti-Greenspan rule).
Clearly the ratio has been growing in both countries (mildly in Turkey) and is higher in Argentina. Argentina has also increased its debt exposure in dollars, and somewhat incredibly the central bank has announced that it will retire debt in pesos, and will use precious reserves in dollars for that (apparently with support from the IMF). This suggests that they are clueless about the causes of the crisis. The only solution at this point is higher interest rates (and in domestic currency to reduce demand for dollars) and significant restrictions on the foreign exchange market.

Sunday, August 5, 2018

Nancy MacLean on constitutional economics and the conservative movement


Author of a great book on James Buchanan, that is certainly worth reading. The whole thing is related to Buchanan's constitutional economics and how it underpins the Koch's strategy to take over the country (and Pence is their guy, btw). The American Legislative Exchange Council (ALEC) that has been so influential in the far- right conservative movement take over of US politics at the State and local level (see this old piece in The Atlantic, or this in The Nation) has a plan for a constitutional convention and for 10 Libertarian Amendments that she discusses in the video (towards the end, 3:30 minutes into it), that has for the most part gone unnoticed (NYTimes had a piece on it a couple of years ago here). In all fairness, I didn't pay much attention until she said balanced budget amendment. I always thought that the best shot conservatives had at entitlement reform (read privatization of social security) was with a neoliberal democrat as president (in the mold of Clinton and Obama). But it seems that they are pushing for other ways too.

PS: The book she refers to is by Mark Levin and the 11 amendments are these (according to Wikipedia, I haven't read the book, but will try to):
  1. Impose Congressional term limits
  2. Repeal the Seventeenth Amendment, returning the election of Senators to state legislatures;
  3. Impose term limits for Supreme Court Justices and restrict judicial review;
  4. Require a balanced budget and limit federal spending and taxation;
  5. Define a deadline to file taxes (one day before the next federal election);
  6. Subject federal departments and bureaucratic regulations to periodic reauthorization and review;
  7. Create a more specific definition of the Commerce Clause;
  8. Limit eminent domain powers;
  9. Allow states to more easily amend the Constitution by bypassing Congress;
  10. Create a process where two-thirds of the states can nullify federal laws;
  11. Require photo ID to vote and limit early voting.

Saturday, August 4, 2018

Institutions and Economic Development in Latin America


Almost a decade ago, The Economist had a cover story about the Brazilian economy taking off. Everything seemed fine, with the Brazilian economy on the verge of surpassing Britain and France, and on its way to economic development. Among the reasons given for the Brazilian success was the fact that the country had “established some strong political institutions.” But many other factors were cited, like fiscal restraint, an independent central bank, openness to foreign direct investment, and the rise of local transnational corporations. The Economist essentially reproduced a few of the policies of the so-called Washington Consensus as the main driver of the Brazilian success. And institutions played a central role, in particular the institutions that allowed for the market economy to thrive.

Read rest here.

PS: This was a short blog post for the UC Press and LASA blogs that I forgot to link to before.

Financialization and the low burden of public debt

Financialization is a fuzzy concept. There are many definitions, and none is clear cut, at least to characterize the changes of the l...