It's time to revive Europe's democracy - There Is A Real Alternative!

Joint press release from PRIME & the Rosa Luxemburg Stiftung Brussels Offce on the launch of new report : Bringing democratic choice to Europe's economic governance

The 60th anniversary of the Treaty of Rome offers an opportunity to reflect on what the European Union has achieved – and how problems can be solved. We share the European idea, and express our aspiration to work for a European Union which in the coming decades is truly a force for peace, prosperity, democracy and social progress. 

But despite its commitment to democratic values, one crucial area in which the European Union does not permit legitimate democratic choice is the economic sphere.

Flaky economics? Brexit, trade and the Treasury estimates

One of the more depressing aspects of the Brexit debate has been that once again the economics profession has not covered itself in glory. The predictions of economists were overwhelmingly pro-remain and not as soundly based as many assumed. Evidence viewed as pro-Brexit could be met by rudeness and we experienced this ourselves. A few economists supported the Brexit case but the middle ground seems to be under-populated, indeed hardly populated at all. This is a real problem since the general public needs neutral referees in such a difficult and fraught issue.

Bad Bank Proposal for India

There have been two main proposals to tackle the stressed asset problem of the Indian banks since the beginning of this year. Both proposals are based implicitly on the financial intermediation theory of banking. The alternative credit creation theory of banking opens up other possibilities. One such possibility, put forward here, is to create a "bad bank", with a partial Jubilee financed by zero coupon perpetual bonds.

Once more, why the "there is no money" mantra is false

This afternoon, PRIME's director Ann Pettifor is speaking at the Labour Party's 'The Future of the Scottish Economy' Conference in Glasgow.  

Ann's speech today focuses once again on the issue of why austerity is not the answer.  This raises touched on in her latest book, "the Production of Money", but the main lines of her argument were set out nearly two years ago (7 April 2015) in a blog article, "Is there no such thing as public money, only taxpayers money, as PM asserts?".  These arguments, as updated, still form the basic "speech-notes" for today.

‘Replete with folly and injustice’ – Hammond follows in Osborne’s footsteps

The media response to the Budget is always reliably low on content and high on hyperbole. Even by these exacting standards, 2017 has been a vintage year. Coverage has focused almost exclusively on the decision to raise National Insurance contributions for self-employed workers – with some side glances to the tax treatment of dividend payments. The macroeconomic implications of the budget have passed almost without comment.

Brexit and Sterling – disaster in the eye of the beholder

Many, and especially Brexit opponents, point to the sharp depreciation of sterling as evidence of imminent economic turmoil leading to disaster. For some, like David Blanchflower, former member of the Bank of England's Monetary Policy Committee, depreciation itself is disaster.

But while Brexit caused a transitory increase in the magnitude of turbulence, this comes from the system itself - financial speculation facilitated by lack of effective regulations.

Greece's still-falling GDP dispels creditors' "recovery" myth

The latest GDP figures for Greece, relating to Q4 of 2016, are disastrous. For Greece first and foremost, but also for the credibility of the EU and IMF's failed harsh austerity (but on the EU side no-debt-cancellation) policy.  Far from evidencing the long-promised recovery, they show a new decline in GDP – both on the previous quarter (after seasonal adjustment) and year on year.

Do real interest rates follow "historical norms"?

On the 'Bank Underground' website, Gene Kindberg-Hanlon makes a most welcome contribution to the evolving debate around real interest rates. Importantly, he dismisses the standard mainstream account of real interest rates conforming to economic growth:

“Global growth was much higher in the 1950s to 1970s than in the 1980s, yet real interest rates were significantly lower on average.”

And he observes that “The factors thought to account for the majority of the fall in real rates since the 1980s can explain none of the prior rise in real rates to their abnormally high level”. 

But with the conventional theory dismissed, it is replaced with a theory of real interest rate historical ‘norms’ which in turn fails to provide an adequate answer.

Greek Tragedy in European Theatre: the Economic Consequences of Depression Economics

Since 2010 the European Commission, the IMF and the Greek and European political establishment have imposed a full blown internal devaluation programme that in Greece has caused a depression unlike any seen in Europe since WWII. The main drivers of the programmes have been an exaggerated and cruel implementation of the neoliberal policy agenda, including cuts in wages and pensions, increases in taxation, the fire sale of public assets at fire prices and severe cuts in funding for an already underfunded health system.

The Karl Polanyi 1940 Bennington Lecture series in one go

Over the last week, we have posted the autumn 1940 series of Karl Polanyi's lectures as individual posts. Since they were always intended to be taken together, we have also compiled them as a single set in the attached pdf, "The Present Age of Transformation."

This e-publication comes with introductions by PRIME's Jeremy Smith and Ann Pettifor, and also by the distinguished economist and daughter of Karl Polanyi, Professor Kari Polanyi-Levitt. These introductions draw attention to the strong contemporary relevance of Polanyi's lectures.

 

Lecture 5: Marxism and the Inner History of the Russian Revolution

In our bird’s eye view of the last quarter century, we dated the setting in of rapid and radical change with the beginning on the Nineteen-thirties. The ‘Twenties we described as a conservative period still mainly dominated by Nineteenth century ideals.

Superficially, it might seem as if an exception would have to be made for the  Russian Revolution. But in actual fact, this great event was no more than the continuation of the French Revolution on Russian soil. It was only with the Five Year Plans and the collectivization of the farms that something essentially new entered into the history of Western civilization.

Lecture 4. Is America an Exception?

Within the last decade [this lecture was written and delivered, we recall, in 1940 - ed] free institutions have succumbed to the impact of sudden change in most of the countries where civilisation bore the imprint of the Industrial Revolution.

Must America go the same way? Or is there hope that she might be able to master her own future?

Lecture 3: The Breakdown of the International System

The failure of the international economic system was ultimately due to the same inherent weaknesses which characterized the national systems under a market economy. The view which makes autarchy responsible for the breakdown can hardly be upheld. On the contrary, it might be more justly argued that it was the failure of the international system which gave rise to autarchy.

Lecture 2: The trend towards an integrated society

Nineteenth century society was based upon the two pillars of liberal capitalism and representative democracy. The economic and the political sphere were separate. This is the clue to its rapid downfall. For the expectation that such a state of affairs could be anything but transitory was an illusion. A society containing within its orbit a separate, self-regulating and autonomous economic sphere is a utopia.

Lecture 1: The Passing of 19th Century Civilization

The subject matter of these lectures is a vast and unique event: the passing of 19th century civilization in the short period that elapsed between the first and the second wars of the 20th century.

At the beginning of this period, 19th century ideals were paramount, indeed their influence had never been greater; by its close hardly anything was left of that system under which our type of society had risen to world leadership. 

The Present Age of Transformation - Introduction by Kari Polanyi-Levitt

The recovery of five lectures under the title The Present Age of Transformation, delivered by Karl Polanyi in Bennington College in 1940, is indeed serendipitous. It invites a comparison of the collapse of the 19th century liberal economic order in the Great Depression and its transformative consequences, with the contemporary unraveling of its neoliberal reincarnation and the rise of right-wing populist politics in the Atlantic heartlands of capitalism.

“Market-Utopia”-  lessons from the past, implications for our future

This week PRIME is publishing (as individual posts) the set of five lectures given by Karl Polanyi in autumn 1940 at Bennington College, Vermont, and entitled "The Present Age of Transformation". The lectures, together with introductions from PRIME's Jeremy Smith and Ann Pettifor, and from Professor Kari Polanyi-Levitt, have also been put together for ease of reference into a pdf "publication". We begin with the PRIME editors' introduction.

Our Polanyi week - the 1940 Bennington College Lectures

This week is PRIME’s Polanyi week.  We are re-publishing – because of their topical as well as historical significance – a set of five lectures given by Karl Polanyi in autumn 1940 at Bennington College, Vermont, and entitled “The Present Age of Transformation”. The first three essays briefly prefigure the main themes of his major work, “The Great Transformation”, published in 1944.  

We are publishing each of the lectures as individual posts, and have also compiled them into a pdf “publication”, including introductions from Professor Kari Polanyi-Levitt and PRIME's Jeremy Smith and Ann Pettifor.

Masters of the Universe

Today the New York Times reports that the Japanese conglomerate SoftBank will buy an American private equity firm, Fortress Investment Group, that oversees $70 billion in assets.  Fortress specialises in dealing with 'distressed assets' - i.e. assets procured cheaply because of forced sales, bankruptcies or other misfortunes. As the NYT explains, Fortress is "an entity that is regulated - if relatively lightly compared with, say a bank." 

 

"The production of money": Ann Pettifor's LSE lecture

PRIME's director Ann Pettifor gave a lecture on 8th February 2017 on "The Production of Money" at the LSE, at the invitation of the Department of Economics and the Centre for Macroeconomics.  The lecture was recorded by the LSE, and can be listened to as an audio podcast.  Her new book (of the same title) is published by Verso and is available from the Verso website.  Read on for the written text of Ann's lecture, which we also link to as a pdf.

The written version of the lecture is set out below, and is also available as a pdf here.