Joseph Halevi

A Minsky Moment? The Subprime Crisis and the ‘New’ Capitalism

The International Economic Policy Institute is a bilingual, non-partisan, non-profit policy research group (the creation of this Institute is pending university approval) at Laurentian University, Ontario (Canada), which seeks to offer critical thinking on the most relevant economic and social policies in Canada and around the world. In particular, the institutes mission is to explore themes related to macroeconomic policies, globalization and development issues, and income distribution and employment policies. Our overall concern is with the social and economic dignity of the human being and his/her role within the larger global community. We believe that everyone has a right to decent work, to a fair and equitable income and to equal opportunities to pursue ones self-fulfillment. We strongly believe that it is the role of policies and institutions to guarantee these rights. In accordance with its mission, the Institute is constantly seeking to create international research networks by hosting conferences and seminars and inviting other thinkers around the globe to reflect on crucial economic and social issues. The Institute offers ongoing, honest, and critical appraisal of current policies. His current research interests include the economics of globalization, the development and crisis of contemporary capitalism, endogenous theories of money, Marxian value and crisis theory, and economic philosophy. Quarterly Review, Monthly Review and has written chapters in a number of coedited books both by himself and by other colleagues.

Minsky in the ‘New’ Capitalism: The New Clothes of the Financial Instability Hypothesis

This Companion provides a timely and engaging treatment of Hyman Minsky’s approach to economics, which is enjoying a renewed appreciation because of its prescient analysis of the slow but sure transformation of the capitalist economy in the post-war period. Many have called the global financial crisis that began in the United States in 2007 a ‘Minsky crisis’, and these original contributions demonstrate precisely why both academic economists as well as policymakers have turned to Minsky for guidance. The book brings together the foremost Minsky scholars to provide a comprehensive overview of his approach, with extensions to bring the analysis up to date.

The Argentine Crisis

Historically, monetary crises have been related to hyperinflation, from which Argentina has often suffered. Hyperinflation is generally viewed as a calamity leading to the destruction of the capitalist monetary system of circulation. In the present Argentine crisis, however, there has been a complete implosion of economic and monetary relations due to hyperdeflation. This is the strangulation of the economy by the requirement to pay an unsustainable debt.

The significance of the theory of vertically integrated processes for the problem of economic development

Abstract This paper argues that Pasinettis theory of growth provides new insights into the problem of economic development. Firstly, by using Pasinettis 1981 contribution, it is maintained that the method of vertical integration supersedes the Dobb-Sen critique of the neoclassical investment rule. Secondly, it is pointed out that the effective demand full-employment condition developed in the 1993 book is conceptually valid also for a non-industrialized country. This conclusion is compared with the Kaldor-Kalecki-Robinson view according to which Keynesian considerations apply only when the stock of capital suffices to absorb the whole of the working population. Thirdly, and finally, it is shown that the limitations of the Feldman-Mahalanobis model of growth emerge in relation to the passive role of per capita consumption demand. In this context Pasinettis major achievement is identified in the strict connection established between the growth rate of productivity and the role played by the natural wage in his system.

Asia, Japan and the Internationalization of Effective Demand

This paper examines the implications of Japanese relations with the growing economies of East and South East Asia. It is shown that, in macroeconomic terms, these relations are characterized by persistent and expanding current account surpluses in favour of Japan. Indeed East and South East Asia is becoming the area with which Tokyo obtains the largest current account surplus. The implications of these surpluses for the area are examined. In particular, it is argued that Japan’s persistent surpluses constitute an implicit factor of stagnation. Drawing on the analysis of Keynes and Kalecki, it is the contention of this paper that unless Japan and the rest of Asia maintain surpluses with the rest of the world, especially the USA, then the region will experience real anti-Keynesian tendencies. This view is contrasted with the orthodox view, as manifested in a recent OECD report, according to which Japan’s surpluses not only do not represent a problem, but also aid development elsewhere by providing much needed capital to countries where it is supposed to be scarce.

The Contemporary Significance of Baran and Sweezy’s Notion of Monopolistic Capitalism

This essay will discuss the main contributions of Paul Baran, Paul Sweezy, and Harry Magdoff in the light of, and in relation to, modern macro-economic analysis. The focus of the paper is therefore on their interpretations of the dynamics of capitalism. These interpretations, while using concepts which can be found in the main body of macroeconomic theory, are cast in an altogether different framework. The extensive use these authors make of Keynesian notions is not aimed at identifying full-employment conditions consistent with equilibrium in the product market, labor market, and money market so as then to proceed to derive the right mix of fiscal and monetary policies. The fragestellung of the Monthly Review group does not allow for the transformation of economic concepts into a set of levers to tinker with, in order to achieve results defined independently of the modus operandi of the economic system under scrutiny. If we were to limit ourselves to “tinkering theory,” there would be no room for contributions like those of the authors we have elected to discuss. Indeed, a Marxist would have nothing to add, for instance, to Frank Hahn’s critique of Monetarism based exclusively on the obvious observation that monetarists arbitrarily extend to the “real world” the postulates of General Equilibrium and omit the very restrictive conditions by which competitive equilibria can be obtained (Hahn, 1980; 1981).

Stagnation and Economic Conflict in Europe

If we compare Europe to established federal systems, as those of the United States, Canada, and Australia, fundamental differences are immediately apparent. Existing federations have emerged historically as a result of material forces. Federation has been the result of strong economic and political ties. In all these cases, fundamental political and economic power—particularly fiscal and monetary—has gravitated to the central authority, while the states retain lesser discretionary power. Such separation of roles is vital to a viable federal system. This is not the case in Europe.

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.

Magdoff-Sweezy, Minsky and the Real Subsumption of Labour to Finance

In the late 1970s a slim book was published containing the essays by Harry Magdoff and Paul Sweezy (1977) in the Monthly Review. The authors argued that US capitalism was characterised by stagnation and indebtedness, the latter overwhelmingly on the private side. The central issue was that banks were skating on thin ice and there was a connection running from monopoly capitalism to indebtedness. In a nutshell, the regime of oligopolistic capitalism generates a built in tendency towards unused capacity. The ensuing deficiency in effective demand relatively to the productive potential compels the private sector to rely on a growing debt. The central piece of that collection was a paper on the economics of banking which appears now remarkably far-sighted.

You Can’t Always Get What You Want: Why Europe is Not Keynesian-able While the US New Economy is Driven by Financial Keynesianism

The argument put forward in this chapter makes two rather unconventional points.1 Our first point is that the European Union (EU) of today is not a ‘Keynesian-able’ entity, and that for much of its post-Second World War history economic policies in the EU have not been properly Keynesian either. Our second point is that the US ‘new economy’ of today, paradoxically as it may seem at first, is thoroughly ‘Keynesian’, namely through a peculiar financial mechanism nurtured by active economic policies. We will support our argument in what follows by a historical, political, and economic narrative, which will also take into account the new role of Asia, especially of China.