On the New Argentine Pendulum

A short paper for FIDE on the so-called Argentine pendulum. The pendulum was the phrase used by Marcelo Diamand to discuss the persistent boom and bust cycles associated with left of center developmentalist governments, and liberal governments that promoted adjustment. The suggestion in this paper is that in reality the previous pendulum was mostly political, and about constraining the left of center ability to redistribute income (higher wages), often restricting democratic institutions. The New Pendulum refers to the period that starts with the last dictatorship, in which alternative economic projects (in which deindustrialization plays a major role) explain the main oscillation. Milei is just one more movement of the pendulum. Full paper (in Spanish) here.

Tom Palley on "Israel’s genocide, US assistance, and consequences thereof"

By Tom Palley

South Africa has now presented its charge of Israeli genocide in the International Court of Justice (ICJ), and Israel has presented its rebuttal. Regardless of the ultimate judgment, a page has been turned. Israel’s actions in Gaza, assisted by the US, have changed the geopolitical landscape. The consequences stand to be dire and lasting.

The case against Israel

The case against Israel is stark and simple. The argument in descending order of import is as follows.

First, and foremost, is Israel’s disproportionate response and application of collective punishment. Hamas is a criminal terrorist organization, not a state. Israel has a right to appropriate self-defense, but it has no right to kill vast swathes of non-combatant Palestinians as it tries to combat a criminal organization. The indiscriminate killing constitutes a war crime and crime against humanity. It becomes genocidal when paired with denial of means of survival.

Second, razing Gaza to the ground and intentionally driving an entire population into the unprotected open guarantees large scale death from lack of shelter, hunger, and sickness. It echoes the Armenian genocide of 1915.

Third, the razing of Gaza fits with an Israeli plan for mass expulsion of Palestinians, a sort of Israeli final solution to the Gaza problem. Such a plan has long been popular in Israel, predates the Hamas attack, and fits with Prime Minister Netanyahu’s October 28th quotation of the Bible whereby God ordered the Israelites to eradicate the Amalekites: “Now go and smite Amalek, and utterly destroy all that they have, and spare them not; but slay man and woman, infant and suckling.” That record is suggestive of ethnic cleansing which turned genocidal in the wake of the October 7th attack.

Fourth, during the conflict, dehumanizing videos have emerged of Israelis celebrating the killing of civilian Palestinians, mocking Palestinian suffering, vandalizing Gazan shops, and desecrating mosques. Israeli Defense Minister Yoav Gallant described Palestinians as “human animals”. Dehumanization is always part of the story with genocides. Furthermore, Israel’s shooting of Israeli hostages waving a white flag who had escaped from Hamas, shows Israel’s take no prisoners tactics which violate the Geneva conventions. All are part of the mindset informing Israel’s actions.

Some claim every Palestinian is a potential terrorist and legitimate target. Not only is that grotesquely specious, it also tacitly justifies Hamas’ murders on grounds that every adult Israeli is a soldier. The horror of Hamas’ October 7th attack may explain the Israeli public’s desire for revenge and retribution, but it provides no legal justification for mass murder.

Read rest here.

Demand-led Growth In Rio

The Review of of Keynesian Economics is co-sponsoring the Fifth Conference on Demand-led Growth in Rio, next July 11 and 12.

2024 marks the 45th anniversary of Thirlwall’s classic 1979 paper that introduced Thirlwall’s law as well as the 75th anniversary of Prebisch’s manifesto on the main development problems of Latin America. These seminal works were key, for post-Keynesian and structuralist literatures, to put the balance of payments constraint at the center and as one of the main problems of long run growth and development. Furthermore, it was an important critique and alternative to the mainstream view that highlights factors of production scarcity as the only explanation to long run growth.

As a result, many demand-led growth theories often emphasize the balance of payments as the main constraint that an economy faces in the long-run. Among the various subjects that balance of payments constraint literature treat, we can name: The role of financial flows in the long run; External indebtedness; Solvency and liquidity problems; Currency hierarchy; The role of the exchange rate; The relation between balance of payments constraint and economic policy, and many others.

All these themes are related with the research lines of the Group in Political Economy at the Institute of Economics of the Federal University of Rio de Janeiro, which follows the Sraffian framework proposed by Garegnani to make the Keynesian-Kaleckian principle of effective demand compatible with the classical surplus approach. For our Group, growth is demand-led and policy (often balance of payments) constrained. In succession, inflation is a cost-push political economy phenomenon dependent upon conflicting claims over income distribution. Within this framework, macroeconomic policies are fundamental to growth, inflation, and income distribution. In capitalist economies, these policies arise from institutional arrangements as well as political power relations. The Research Group in Political Economy considers that constructing policy-relevant analysis and theoretical and applied models to better understand advanced and developing countries’ actual performance demonstrates this theoretical approach’s soundness.

Given the approach taken by the Group and in the context of the intensification of dialogue and convergence among some Post-Keynesians, Kaleckians, Kaldorians, practitioners of Modern Monetary Theory, and Sraffians, the goal of the 2024 Edition of the Workshop is to strengthen this promising trend by promoting a constructive and policy-relevant debate among these strands of critical thought. Other heterodox approaches to economics are also welcome and encouraged in fostering new contributions concerning demand-led growth analyses, models, their multiplicity of relations with monetary and financial elements and external constraints to growth.

More info here.

The Gift of Sanctions

Jamie Galbraith presented, at the EPS session at the ASSA Meetings in San Antonio, the paper published by INET. As he said there: "Despite the shock and the costs, the sanctions imposed on the Russian economy were in the nature of a gift." A type of invisible hand effect, by which the unintended effect of the policy that should supposedly benefit US allies (Ukraine) has the unintended effect of helping its alleged enemies (Russia).

From the abstract:

This essay analyzes a few prominent Western assessments, both official and private, of the effect of sanctions on the Russian economy and war effort. It seeks to understand the main goals of sanctions, alongside bases of fact and causal inference that underpin the consensus view that sanctions have been highly effective so far. Such understanding may then help to clarify the relationship between claims made by economist-observers outside Russia and those emerging from sources inside Russia – notably from economists associated with the Russian Academy of Sciences (RAS) – which draw sharply different inferences from the same facts. We conclude that when applied to a large, resource-rich, technically proficient economy, after a period of shock and adjustments, sanctions are isomorphic to a strict policy of trade protection, industrial policy, and capital controls. These are policies that the Russian government could not plausibly have implemented, even in 2022, on its own initiative.

Download paper here.