Hardback
Capitalism, Macroeconomics and Reality
Understanding Globalization, Financialization, Competition and Crisis
9781784719012 Edward Elgar Publishing
The essays comprising this collection analyze the deep flaws in the methodological foundation of mainstream economic theory, and explain how these flaws make mainstream economics more ideology than sound social science. James Crotty develops alternative theories built on realistic assumptions that can explain most of the disastrous economic and financial developments of the past four decades. His work contributes to the collective creation of a solid theoretical foundation on which to build an understanding of the ‘laws of motion’ of capitalism in the post WWII era.
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Critical Acclaim
Contents
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This wide-ranging set of papers deals with crucial questions in economic theory, economic policy and economic history. The papers help explain why economic performance deteriorated dramatically in the West over the past three decades as the “Golden Age” of capitalism after World War II was replaced by global neoliberal capitalism. They show that theoretical frameworks rooted in the radical and heterodox traditions can explain this evolution and the current global economic and financial crisis, something mainstream theories cannot do.
Topics include but are not limited to:
• methodology: a critique of “positivism” is used to explain why mainstream reliance on fairy-tale assumptions should be replaced by realistic assumption sets as argued by Marx and Keynes
• Marx, Keynes and Minsky on financial market instability versus mainstream theories of “efficient” financial markets
• how Keynes’s assumption that the future is unknowable revolutionized not only macro theory but the micro theory of agent choice as well
• structural causes of the current global financial crisis
• how innovative theories of competition, globalization, capital investment and financialization inspired by Marx, Keynes and Schumpeter can be used to explain the crisis tendencies of neoliberal capitalism
• the influence of class conflict on economic policy, including in the current “austerity” regimes.
The papers in this book should be of interest to most economists and can be used in both graduate and upper level undergraduate courses. Many of these papers are accessible to anyone who reads the business press.
Topics include but are not limited to:
• methodology: a critique of “positivism” is used to explain why mainstream reliance on fairy-tale assumptions should be replaced by realistic assumption sets as argued by Marx and Keynes
• Marx, Keynes and Minsky on financial market instability versus mainstream theories of “efficient” financial markets
• how Keynes’s assumption that the future is unknowable revolutionized not only macro theory but the micro theory of agent choice as well
• structural causes of the current global financial crisis
• how innovative theories of competition, globalization, capital investment and financialization inspired by Marx, Keynes and Schumpeter can be used to explain the crisis tendencies of neoliberal capitalism
• the influence of class conflict on economic policy, including in the current “austerity” regimes.
The papers in this book should be of interest to most economists and can be used in both graduate and upper level undergraduate courses. Many of these papers are accessible to anyone who reads the business press.
Critical Acclaim
‘Crotty’s book provides solid theoretical foundations to understanding key economic topics such as growth, distribution, and instability from a heterodox perspective. The reader will have a new opportunity to rethink macroeconomic policies not only based
on short-term operational targets but mainly as long-term systemic needs. For these reasons, this book is a valuable academic source for understanding the functioning of complex, path-dependent, crisis-prone capitalist economies.’
– Juan Matías De Lucchi, Review of Keynesian Economics
‘This is a marvellous collection of essays of Jim Crotty. They are a joy to read, and provide contributions a plenty for analysing and understanding the evolution of capitalism through globalization and financialization, and developing theories alternative to the mainstream based on realistic assumptions.’
– Malcolm Sawyer, University of Leeds, UK
‘No one has written with greater clarity and insight about economic theory and capitalist dynamics in the past three decades than James Crotty. This collection, assembling his best papers in one place, is a must-have for established and aspirational political economists alike. There is wisdom on every page.’
– Gary Dymski, Leeds University Business School, UK
‘At a time when mainstream economics is being questioned across the world for its lack of relevance and inability to explain observed reality, James Crotty’s work comes as a welcome reminder of how economics can be both relevant and insightful. This body of work spanning more than four decades is still fresh and topical, and essential reading for anyone who wants to understand contemporary capitalism.’
– Jayati Ghosh, Jawaharlal Nehru University, New Delhi, India
on short-term operational targets but mainly as long-term systemic needs. For these reasons, this book is a valuable academic source for understanding the functioning of complex, path-dependent, crisis-prone capitalist economies.’
– Juan Matías De Lucchi, Review of Keynesian Economics
‘This is a marvellous collection of essays of Jim Crotty. They are a joy to read, and provide contributions a plenty for analysing and understanding the evolution of capitalism through globalization and financialization, and developing theories alternative to the mainstream based on realistic assumptions.’
– Malcolm Sawyer, University of Leeds, UK
‘No one has written with greater clarity and insight about economic theory and capitalist dynamics in the past three decades than James Crotty. This collection, assembling his best papers in one place, is a must-have for established and aspirational political economists alike. There is wisdom on every page.’
– Gary Dymski, Leeds University Business School, UK
‘At a time when mainstream economics is being questioned across the world for its lack of relevance and inability to explain observed reality, James Crotty’s work comes as a welcome reminder of how economics can be both relevant and insightful. This body of work spanning more than four decades is still fresh and topical, and essential reading for anyone who wants to understand contemporary capitalism.’
– Jayati Ghosh, Jawaharlal Nehru University, New Delhi, India
Contents
Contents:
Introduction
PART I: METHODOLOGY AND THEORY AS IF REALITY MATTERED: FRIEDMAN VS. KEYNES, MARX AND MINSKY
1. The Realism of Assumptions Does Matter: Why Keynes-Minsky Theory Must Replace Efficient Market Theory as the Guide to Financial Regulation Policy
2. Are Keynesian Uncertainty and Macrotheory Compatible? Conventional Decision Making, Institutional Structures and Conditional Stability in Keynesian Macromodels
3. The Centrality of Money, Credit and Financial Intermediation in Marx’s Crisis Theory: An Interpretation of Marx’s Methodology
PART II: UNDERSTANDING THE GREAT FINANCIAL CRISIS OF 2007-2008
4. If Financial Market Competition is Intense, Why are Financial Firm Profits so High?: Reflections on the Current “Golden Age” of Finance
5. Structural Causes of the Global Financial Crisis: A Critical Assessment of the “New Financial Architecture”
6. How Bonus-Driven “Rainmaker” Financial Firms Enrich Top Employees, Destroy Shareholder Value and Create Systemic Financial Instability
PART III: KEYNES, THE “KEYNESIANS” AND “NEW KEYNESIANS” ON INVESTMENT THEORY
7. Is New Keynesian Investment Theory Really “Keynesian”?: Reflections on Fazzari and Variato
8. Owner-Manager Conflict and Financial Theories of Investment Instability: A Critical Assessment of Keynes, Tobin and Minsky
PART IV: COMPETITION, GLOBALIZATION, ACCUMULATION AND FINANCIALIZATION IN THE SPIRIT OF MARX, SCHUMPETER AND KEYNES
9. Rethinking Marxian Investment Theory: Keynes-Minsky Instability, Competitive Regime Shifts and Coerced Investment
10. Core Industries, Coercive Competition and the Structural Contradictions of Global Neoliberalism
11. The Neoliberal Paradox: The Impact of Destructive Product Market Competition and Modern Financial Markets on Nonfinancial Corporation Performance in the Neoliberal Era
PART V: RADICAL THEORY, CLASS CONFLICT AND POLICY IN THE US AND ABROAD
12. Was Keynes a Corporatist?: Keynes’s Radical Views on Industrial Policy and Macro Policy in the 1920s
13. Class Conflict and Macropolicy: The Political Business Cycle
14. The Great Austerity War in the US: What Caused the US Deficit Crisis and Who Should Pay to Fix It?
15. Was IMF-Imposed Economic Regime Change in South Korea Justified: The Political Economy of the IMF
Index
Introduction
PART I: METHODOLOGY AND THEORY AS IF REALITY MATTERED: FRIEDMAN VS. KEYNES, MARX AND MINSKY
1. The Realism of Assumptions Does Matter: Why Keynes-Minsky Theory Must Replace Efficient Market Theory as the Guide to Financial Regulation Policy
2. Are Keynesian Uncertainty and Macrotheory Compatible? Conventional Decision Making, Institutional Structures and Conditional Stability in Keynesian Macromodels
3. The Centrality of Money, Credit and Financial Intermediation in Marx’s Crisis Theory: An Interpretation of Marx’s Methodology
PART II: UNDERSTANDING THE GREAT FINANCIAL CRISIS OF 2007-2008
4. If Financial Market Competition is Intense, Why are Financial Firm Profits so High?: Reflections on the Current “Golden Age” of Finance
5. Structural Causes of the Global Financial Crisis: A Critical Assessment of the “New Financial Architecture”
6. How Bonus-Driven “Rainmaker” Financial Firms Enrich Top Employees, Destroy Shareholder Value and Create Systemic Financial Instability
PART III: KEYNES, THE “KEYNESIANS” AND “NEW KEYNESIANS” ON INVESTMENT THEORY
7. Is New Keynesian Investment Theory Really “Keynesian”?: Reflections on Fazzari and Variato
8. Owner-Manager Conflict and Financial Theories of Investment Instability: A Critical Assessment of Keynes, Tobin and Minsky
PART IV: COMPETITION, GLOBALIZATION, ACCUMULATION AND FINANCIALIZATION IN THE SPIRIT OF MARX, SCHUMPETER AND KEYNES
9. Rethinking Marxian Investment Theory: Keynes-Minsky Instability, Competitive Regime Shifts and Coerced Investment
10. Core Industries, Coercive Competition and the Structural Contradictions of Global Neoliberalism
11. The Neoliberal Paradox: The Impact of Destructive Product Market Competition and Modern Financial Markets on Nonfinancial Corporation Performance in the Neoliberal Era
PART V: RADICAL THEORY, CLASS CONFLICT AND POLICY IN THE US AND ABROAD
12. Was Keynes a Corporatist?: Keynes’s Radical Views on Industrial Policy and Macro Policy in the 1920s
13. Class Conflict and Macropolicy: The Political Business Cycle
14. The Great Austerity War in the US: What Caused the US Deficit Crisis and Who Should Pay to Fix It?
15. Was IMF-Imposed Economic Regime Change in South Korea Justified: The Political Economy of the IMF
Index
