Bill Lucarelli

German neomercantilism and the European sovereign debt crisis

The causes of the recent sovereign debt crisis within the eurozone are examined from the perspective of the peculiar institutional framework inherited from the Maastricht Treaty of 1992. The article argues that German neomercantilism is at the very core of Europes descent into a seemingly irreversible phase of stagnation. In the absence of fiscal federalism, the sovereign debt crisis will only worsen, pushing the eurozone into a possible phase of debt-deflation.

The Economics of Financial Turbulence

This challenging book examines the origins and dynamics of financial–economic crises. Its wide theoretical scope incorporates the theories of Marx, Keynes and various other Post Keynesian scholars of endogenous money, and provides a grand synthesis of these theoretical lineages, as well as a powerful critique of prevailing neoclassical/monetarist theories of money.

Financialization and Global Imbalances: Prelude to Crisis

The concept of “financialization” has informed recent analyses of the contemporary dynamics of monopoly capitalism. In the wake of the global financial crisis in 2007-08, the strategic role of finance and its capacity to destabilize the real economy and push it to the brink of economic depression has rekindled debates over the historical causes and institutional forms which have characterized this phase of capitalist evolution. In other words, to what extent have the neoliberal policies pursued by most OECD countries over the past 30 years contributed to the emergence of this finance-led regime of accumulation? More specifically, what are the implications of the extraordinary build-up of private debt, which has financed private consumption and fuelled successive asset price and stock market euphoric bubbles over this period? At the same time, the problem of growing global imbalances between the surplus countries/regions and the deficit countries/regions has emerged as a major source of financial instability. It will be proposed that the breakdown of the mechanisms, which have supported the dynamics of financialization, have set the stage for the current global capitalist crisis. JEL codes: B5, B14, B16, B23

Marxian theories of money, credit and crisis

The aim of this paper is to provide an overview of recent interpretations of the essential properties of capitalist money within the Marxian literature. It argues that Marx’s original theory of money provides a coherent analytical framework by which more recent theories of endogenous money and credit creation can be assimilated. It distinguishes the various forms and functions of money and how these have evolved historically, and proposes that the original Marxian theory of commodity money provides a sound foundation with which to interpret the emergence of finance capital and monetary circuits of credit. Given this it is thus possible to examine the modern dynamics of recurrent financial crises from the standpoint of the general laws of capital accumulation.

Japan's Stagnationist Crisis

The severe economic stagnation in Japan over the 1990s and into the present decade, is one of the most portentous developments in the recent history of world capitalism. In this article, Joseph Halevi and Bill Lucarelli account for the Japanese stagnation in terms inspired by the work of Paul Baran, Paul Sweezy, and Harry Magdoff. MR readers will find this article, which deals with the complicated issue of exchange rate fluctuations and their effect on national economies, more difficult than most articles that we publish on economics in the magazine. Yet we include it here because of its obvious importance and its clarity in describing a very complex set of global economic changes.—the EditorsThis article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.

Endogenous Money: A Note on Some Post-Keynesian Controversies

Keyness theory of liquidity preference sought to illuminate the essential properties of money under the conditions of uncertainty that often lead to involuntary unemployment. Subsequent Post-Keynesian literature built upon this concept to show that a deregulated financial system could induce phases of endemic financial instability and crises. Keyness finance motive provides an important starting point in Post-Keynesian theories of endogenous money. This article examines the controversies between two major contending analytical approaches, the Horizontalist and Structuralist schools.

The Euro: A Chartalist Critique

Abstract: The aim of this article is to develop a Chartalist critique of the prevailing economic theories that have informed the original design of the Eurosystem. In order to understand the structural dynamics of the current crisis, it is necessary to examine the longstanding internal contradictions that the system has inherited from its inception under the Maastricht Treaty of 1992 and the neoliberal strategy, which has governed its evolution. In its bare essentials, the euro lacks the backing of a coherent sovereign power. More specifically, the article argues that this national/supranational dichotomy prevents a more unified response to the current debt crises engulfing the peripheral countries of the Eurozone.

The Break-Up of the Eurozone?

The euro project is now at the threshold of disintegration as the fault-lines between the core/surplus countries and the peripheral/deficit countries experience a profound rupture. In the absence of political union or fiscal federalism, these centrifugal forces appear to be irreversible. It is difficult to envisage the current system, with its internal contradictions, surviving the crisis that now engulfs the entire eurozone. The present crisis is to a large extent the continuation of the longstanding neoliberal policies favoured by Germany, which have informed the creation of the euro. This article examines the historical context of the debt crisis and the institutional design of this flawed monetary edifice.

Circular and Cumulative Causation

Recent debates, which have informed modern growth theories, have centered on the issue of technical progress. In the original Solow/Swan model, most of the growth was attributable to exogenous technical change, or the so-called Solow residual. As a result, neoclassical growth theories were based on a model in which the greater part of the sources of growth occurred “outside” the model. Technology was analogous to a black box. The problem for the new growth theorists was to endogenize technical progress. However, the basic analytical framework remained essentially neoclassical. In other words, the growth process continued to be a peculiarity of the neoclassical production function with all of its special and restrictive assumptions. Neoclassical and general equilibrium models have been subjected to quite rigorous critiques by post-Keynesian theories. The general rationale for these critiques is that the heuristic assumptions, which inform neoclassical theories of growth, are designated to be entirely unrealistic. In order to account for the “stylized facts,” post-Keynesian approaches emphasize the law of increasing returns, endogenous technical change and the role performed by effective demand as the major sources of long-run, sustainable growth. A more dynamic theory of circular and cumulative causation informs these critiques.

Understanding Development Economics

economic conditions of North Korea are explained in great detail, as is the position of China, Russia, the United States, Japan and South Korea regarding Korean reunification. In Chapter 7 a thorough description is given about the changes in attitudes of North Korean citizens towards the ruling political elite, explanations are given about how the reunification would be beneficial for both North Korean and South Korean citizens and why the Korean Peace Fund may be the only no-risk, cost-effective, efficient and peaceful solution for the present situation. In Chapter 8 an imaginative description of the reunification signing ceremony is provided in great detail. In Chapter 9 a possible scenario is given for all of the steps necessary after reunification, such as the exchange of money for weapons, the introduction of banking and other legal institutions, a unified military, a public transportation system, economics and the issue of tourism. The Epilogue of the book summarises and accentuates the great achievements the Korean Peace Fund could bring once created, including plaudits for the leaders who brought the peace to Korea. The political and security stakes are high and so is the cost of the plan. The author is convinced that the benefits of peace will outweigh the monetary cost. Iverson’s argument is based on a calculation that money is persuasive and that international elites are rational actors. Some will disagree with this perspective. However, the author considers the Korean Peace Fund necessary in order to break the political stalemate that creates confrontation and which could lead to war. If a North Korean leader accepted this plan for reunification, he would be hailed a heroic leader who brought prosperity and peace to his people. Other leaders who opted for reform, like Gorbachev in 1990 and former South Korean President Kim Dae-jung, were recognised with the Nobel Peace Prize.