There is an informative review of a book published by the Yale University Press (which as far as I can detect is not yet available in the UK) by the British economist and biographer of John Maynard Keynes, Robert Skidelsky: Money and Government: The Past and Future of Economics.
Although Robert Sidelsky has been both a Conservative peer and a cross-bencher, he has also endorsed much of what Corbyn says, so when recently interviewed I’m sure he reflects what he has recently written: “Because money is used to represent resources, how it is created will always be political”. And, “By saying taxes fund spending, the government is obliged to kowtow to financial forces. It is in fact another branch of neoliberal deceit.” And he worries that people are not concentrating on what they have in common.
So I think this is already good – especially from somebody who is not generally amoung the usual suspects. This is an economist who knows, broadly how society works.
But the review here is even better – from
Skidelsky treats these great monetary battles primarily as struggles over ideas. Yet he is aware that behind ideas lie interests, and that the division of economic ideas into binary oppositions reflects the class opposition between creditors and debtors—one dominant and the other oppressed, but each always necessary to the existence of the other. The fact that ideas follow the interests that can pay for them accounts for much of the recurrence of spurious and indefensible ideas in economic thought.
The gold standard and the quantity theory of money have been succeeded in our day by rational expectations theory and dynamic stochastic general equilibrium modeling (don’t ask), and by their policy stepchild, inflation targeting. These are the doctrines of repute and respectability, the touchstones of academic and professional advancement in our time. They share an almost eschatological [end of the world – I had to look it up!] preoccupation with the condition of things in the long run—the economists’ version of the prophets’ paradise to come—and a willingness to absorb (or more accurately to inflict) pain and punishment in the present.
This is austerity. And this is, quite remarkably also, with its pain for a better future, Protestantism.
The future is going to be worth the pain – except that the pain is unequally distributed. It probably always was. And the long run of the future may indeed never happen (for what it is worth, according to the Office for Budget Responsibility debt as a percentage of national income is reckoned to be in the current financial year at the highest level since 1966 so the promised land has still to arrive..). What Galbraith calls “intellectual sadism”, he could also have called in fact, political sadism. Or perhaps more accurately, a re-run of old story Protestantism.
Economists in this respect are unlike modern doctors. The arsenals of pain relief and fever reduction play little role in [economists’] toolkit—and where they do (“stimulus programs”) they are often treated as having long-term costs that offset the benefits in the short term. Our social doctors generally prefer to let events take their course, on the assumption that the patient always recovers.
I think he might have suggested that this is a wonderful paradigm for the idea that the market always works – much as viruses always of course fight it out to the complete benefit of the suffering patient….
…the facts point to an intractable problem: those whose attention cannot be shifted by the collapse of their own worldview are simply beyond reach. This is a problem for the universities, who are stuck with entire departments of stranded intellects, enclosed upon themselves, well-funded by outside sponsors, and a danger to the sound instruction of students and to the future of the world. In the decade since the financial crisis, not one so-called top economics department has hired a single senior professor who had accurately foretold the calamity to come. It should be evident, by this point, that this is not accidental.
If political economy is to have a future, it must therefore come from outside the presently walled fortresses of high-end academe. Salt water and fresh water—the “mainstream” shorthand for Harvard, MIT, Stanford, and Chicago—are sterile. The backwaters, on the other hand, are full of life. Post-Keynesians, New Pragmatists, Biophysical Economists, Institutionalists, and especially Modern Monetary Theorists are scattered throughout the diaspora of liberal arts colleges and second-tier state universities, as well as in universities abroad, from Australia to Poland to Brazil. They have been busy. Skidelsky is aware of these movements, and indeed he participates in them [My italics].
A deeper question also remains concerning the scope of political economy in the future. Financial instability isn’t merely about money and markets. It’s about the governance of banks, about supervision and countervailing power, about defining and enforcing public purpose, about achieving social balance between public and private needs. Political economy must cover the great questions of social stabilization—of preserving and reviving the welfare state—which touch deeply on inequality and on the future of nation-states and international unions, as in Europe. It must address the paramount issues of resource depletion and climate change, and the pressing requirements of achieving and preserving peace.
This, for me, is really good stuff. Texas is not usually my favourite state but clearly The University of Austin is considerably more reflective!