Paul Burkett

A critique of “catch-up” theories of development

Abstract The Asian crisis has rekindled the debate between advocates of neoliberalism, left-wing neoliberalism, and developmental-statism over the best institutions and policies for achieving economic development. However, this debate continues to generate far more heat than light. One reason is that, despite their alleged differences, all three mainstream theories share a common conception of development as “catch-up.” A second and even more important reason is that this shared conception is seriously flawed because of its technological determinism and uncritical stance towards capitalist relations of wage-labor and competition. A Marxist perspective on development dynamics is superior because it recognizes the contradictions of capitalist development and can therefore inform (and be informed by) the ongoing struggles of workers and communities for new development alternatives on national, regional, and global levels.

Exchange market pressure in Paraguay, 1963–88: monetary disequilibrium versus global and regional dependency

The relevance of the monetary approach to exchange market pressure for Paraguays small, open economy is compared to that of two competing Keynesian/structural approaches, which emphasize respectively, global and regional dependency effects. Estimation results for the three models – including formal comparisons using nonnested hypothesis tests and forecast accuracy staistics – suggest that the explanatory power of the monetary model is dominated by that of the regional dependency model, with the global dependency model having an intermediate degree of applicability. This result is intuitive given the extreme dependency of the Paraguayan economy on Argentina and Brazil.

Hyperinflation, the exchange rate and endogenous money: post-World War I Germany revisited

Abstract We re-examine the interaction of domestic and external factors in the German hyperinflation by extending Frenkels monetary model of the exchange rate to incorporate: (1) endogeneity of the money supply with respect to government debt, expected inflation and money wages; (2) the direct impact of exchange rate depreciation on the domestic price level; and (3) endogenous wage determination. Four-equation estimates support each extension of the monetary model. It appears that government deficit finance, the collapse of the exchange rate and the monetary transmission of the wage-price spiral were all crucial contributors to the price explosion.

The impact of US economic variables on Bank of Canada policy: direct and indirect responses

Abstract The impact of US economic variables on Canadian monetary policy is assessed using quarterly data for 1963-88. Canadian monetary base growth is regressed upon the least-squares predictors of 11 US and Canadian variables using a generalized least squares procedure that permits isolation of (i) direct responses by the monetary authority to its expectations of the US variables, and (ii) indirect responses to past US influences that impact upon the current fitted values of the Canadian variables. The results reveal significance of both direct and indirect US influences on Canadian policy across fixed and floating exchange rate regimes.

The determinants of international reserves in the small open economy: The case of Honduras

Abstract The strong monetary approach to the balance of payments suggests that for a small open economy with a fixed exchange rate, international-reserve losses are due to money-supply growth in excess of growth in money demand, where money demand is assumed to be a stable function of exogenously given income and world prices. This paper tests the applicability of the strong monetary approach to Honduras during the period 1960–1983. Although the strong monetary approach provides a statistical explanation of reserve movements during this period, insights into the underlying causes of reserve changes can be obtained through recognition of the importance of the income terms of trade in determining both real income and domestic-credit growth in the small open economy.

External shocks and fiscal deficits in a monetary model of international reserve determination: Honduras, 1960-83

Results from single-equation estimation of a standard monetary model suggest that central bank credit growth in excess of growth of money demand was the main source of international reserve losses in Honduras during the 1960-83 period. Further 3-SLS estimates suggest that increases in central bank credit growth were largely in response to rising external interest rates and decreases in the income terms of trade. In addition, income growth - hence growth of money demand - shows a strong positive response to the income terms of trade. The fiscal deficit is found to have an insignificant impact on central bank credit growth.

Interest rate restrictions and deposit opportunities for small savers in developing countries: An analytical view

This article argues that by forcing financial intermediaries (FI) to substitute implicit interest for monetary interest payments, deposit rate ceilings may increase the cost of savings mobilisation, especially from non‐wealthy households. This mechanism may partially explain the lack of small savers’ deposit opportunities in developing countries. A simple model is used to elucidate this mechanism, as well as the effects of financial technology, intensity of competition, and external funding on an FIs savings mobilisation operations.

Investment Fund Money and the Reproduction of Capitalism: A Marxian Approach

Investment fund money is a particular form of credit money whose nominal value is linked to the market prices of the assets held by mutual investment funds. The present paper argues — contrary to some neoclassical theorists — that investment fund money cannot (by itself) provide an adequate monetary basis for the reproduction of capitalism. The argument is based on the role of a medium of circulation of credible exchange value in the processes by which a credit crisis creates conditions for an eventual renewal of capital accumulation.

Instrumental Justice and Social Econommics: Some Comments From a Marxian Perspective: Articles

In recent years justice has been a topic of increasing interest among both social economists and Marxian social theorists. However, construc? tive communication between these two schools of thought on the issue of justice has been sorely lacking. This has been primarily due to the absence of an analytical framework within which the views of social economists and Marxians can be communicated and debated. Given the common concern of social economists and Marxists with the issue of social power, this lack of communication has undoubtedly hindered the development of an adequate analysis of the relations between power and justice ? one within which the role of social theorists in the movement toward a just society can be addressed. In this context, Steven R. Hickerson [1986] has recently formulated a most valuable analysis of social justice from a particular perspective within social economics. Since the present paper contends that Hicker? son provides an especially clear statement of a framework within which the Marxian view of justice can be communicated to social economists (and vice-versa), the next section begins by briefly summarizing Hicker sons particular instrumentalist conception of justice. The consistency of the Marxian view with Hickerson s interpretation of instrumentalism is then demonstrated, with a primary focus on the forces and relations of production. The paper concludes by briefly commenting on the impli? cations of the Marxian view for the role of social scientists in the movement toward a just society. More generally, it is hoped that the present comments may help to promote a constructive debate between social economists and Marxists on the crucial issue of justice.

On Eco-Revolutionary Prudence: Capitalism, Communism, and the Precautionary Principle

Many indigenous peoples take the position that all social policies should be entered into only after consideration of their likely implications, both environmentally and culturally, for descendants seven generations in the future. Consequently a number of seemingly good ideas for solving short run problems are never entered into because no one can reasonably predict their longer term effects. – Ward Churchill