The Economic Crisis & Crisis Theory II

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This panel explored causes of the Great Recession and the continuing economic sluggishness since the recession’s ended, as well as how the left can respond to this situation. In keeping with the conference theme, panelists addressed what different analyses and theories imply about the kind of socioeconomic change that is called for. Alan Freeman spoke on “Consumption, Profit and Finance: why can’t the left get it right?” He will explore why so many academic left thinkers persistently avoid normal methods of enquiry after truth. Focusing on Marx’s theory of crisis, the share of wages in US income, and the relation between finance and profitability as examples, he will discuss how prejudice and the desire to find “evidence” to support a political ...

E Peshine Smith: A Study in Protectionist Growth Theory and American Sectionalism

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NY University, PhD, 1968, Michael Hudson Peshine Smith (1814 - 82) was probably the most sophisticated of the pre-Civil War protectionists. What he attempted was no less a task than to transform protectionist economic thought from a body of disparate and often self-contradictory parts into an integrated doctrine of economic growth, and to develop political economy as a quantitative engineering science. Read the rest of my dissertation (PDF 11mb)

Set Up To Fail

Renegade Economists interview 05.09.2012 Interview with Professor Michael Hudson by Karl Fitzgerald Listen KF: We welcome to the show Professor Michael Hudson, Distinguished Research Professor at the University of Missouri-Kansas City, the leading Post-Keynesian university in America. It’s been fantastic to see, Michael, that the public profile of UMKC has really taken off with Randall Wray, yourself and Stephanie Kelton being quoted quite widely these days. Can you explain what Post-Keynesianism is? MH: The fact that we all have a very similar approach is what has enabled us to challenge the neoliberal Chicago School. Our approach is heterodox - we see that money is created, basically, on computer keyboards. When a bank lends money, they create a deposit by writing a loan. You ...

Incorporating the Rentier Sectors into a Financial Model

by Dirk Bezemer and Michael Hudson As published in the World Economic Association's World Economic Review Vol #1. ABSTRACT Current macroeconomics ignores the roles that rent, debt and the financial sector play in shaping our economy. We discuss the Classical view on rents and policy responses to the rentier sector in the 19th century. The finance, insurance & real estate sector is today’s incarnation of the rentier sector. This paper shows how financial flows can be conceptually and statistically studied separately from (but interacting with) the real sector. We discuss finance’s interaction with government and with the international economy. 1. Introduction Now that the Bubble Economy has given way to debt deflation, the world is discovering the shortcoming of models that fail to explain how ...

Veblen’s Institutionalist Elaboration of Rent Theory

Michael Hudson's new book The Bubble and Beyond has just been released and can be purchased here. Speech given at the Veblen, Capitalism and Possibilities for a Rational Economic Order Conference, Istanbul, Turkey, June 6th, 2012 Simon Patten recalled in 1912 that his generation of American economists – most of whom studied in Germany in the 1870s – were taught that John Stuart Mill’s 1848 Principles of Political Economy was the high-water mark of classical thought. However, Mill’s reformist philosophy turned out to be “not a goal but a half-way house” toward the Progressive Era’s reforms. Mill was “a thinker becoming a socialist without seeing what the change really meant,” Patten concluded. “The Nineteenth Century epoch ends not with the theories of ...

Productivity, The Miracle of Compound Interest and Poverty

The bank regulators did not urge the government to tax real estate more. That would have squeezed homeowners on their bank loans – and left less new rental income to be capitalized into new bank loans. But it would have enabled the government to reduce its heavy taxes on employment. This was not the bank regulators’ concern

The Use and Abuse of Mathematical Economics

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* I thank Hans Maks and Peter Senn for their helpful suggestions that I have incorporated into this paper. – “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.” (Hamlet, Act I, scene v) Content Mathematical economics as tunnel vision The semantics of mathematical equilibrium theory The subjectivity of statistical categories Problems, dilemmas and quandaries Mathematical economics as a distraction from economic reality The hypothetical “parallel universe” approach to economics Economics vs. the Natural Sciences: The methodology of “as if" Mathematizing the economy’s monetary and financial dimension BIBLIOGRAPHY “Whoever enters here must know mathematics.” That was the motto of Plato’s Academy. Emphasizing the Pythagorean proportions of musical temperament and the calendrical regularities of the sun, moon and planets, classical philosophy used these key ratios of ...