Tag Archives: Banking reform

Why Amartya Sen remains the century’s great critic of capitalism


The Moral Economists: R H Tawney, Karl Polanyi, E P Thompson and the Critique of Capitalism, Author: Tim Rogan.

By Tim Rogan – Critiques of capitalism come in two varieties. First, there is the moral or spiritual critique. This critique rejects Homo economicus as the organizing heuristic of human affairs. Human beings, it says, need more than material things to prosper. Calculating power is only a small part of what makes us who we are. Moral and spiritual relationships are first-order concerns. Material fixes such as a universal basic income will make no difference to societies in which the basic relationships are felt to be unjust.

Then there is the material critique of capitalism. The economists who lead discussions of inequality now are its leading exponents. Homo economicus is the right starting point for social thought. We are poor calculators and single-minded, failing to see our advantage in the rational distribution of prosperity across societies. Hence inequality, the wages of ungoverned growth. But we are calculators all the same, and what we need above all is material plenty, thus the focus on the redress of material inequality. From good material outcomes, the rest follows.

But then there is Amartya Sen. Every major work on material inequality in the 21st century owes a debt to Sen.

But his own writings treat material inequality as though the moral frameworks and social relationships that mediate economic exchanges matter. Famine is the nadir of material deprivation.

But it seldom occurs – Sen argues – for lack of food.

To understand why a people goes hungry, look not for catastrophic crop failure; look rather for malfunctions of the moral economy that moderates competing demands upon a scarce commodity. Material inequality of the most egregious kind is the problem here. more>


How capitalism without growth could build a more stable economy

By Adam Barrett – On a finite planet, endless economic growth is impossible. There is also plenty of evidence that in the developed world, a continued increase of GDP does not increase happiness.

Back in 1930 the economist John Maynard Keynes predicted that growth would end within a century – but he was unclear whether a post-growth capitalism was really possible.

Today, mainstream economic thinking still considers growth to be a vital policy objective – essential to the health of a capitalist economy. There remains a concern that ultimately, a capitalist economy will collapse without growth.

I recently published new research that suggests a different view – that a post-growth economy could actually be more stable and even bring higher wages. It begins with an acceptance that capitalism is unstable and prone to crisis even during a period of strong and stable growth – as the great financial crash of 2007-08 demonstrated.

I found that an end to growth reduces profits for business owners.

Therefore, if it remains relatively easy for money to flow across borders, then investors might abandon a post-growth country for a fast-growing developing country. Also, businesses are beholden to shareholders keen on growth as a means to rapid profit accumulation.

Some mainstream commentators and economists are now predicting a transition to a post-growth era, whatever our environmental policy – which means the study of post-growth economics is a field which itself will grow. more>


‘No Cash’ Signs Everywhere Has Sweden Worried It’s Gone Too Far

By Amanda Billner – “No cash accepted” signs are becoming an increasingly common sight in shops and eateries across Sweden as payments go digital and mobile.

But the pace at which cash is vanishing has authorities worried.

“If this development with cash disappearing happens too fast, it can be difficult to maintain the infrastructure” for handling cash, said Mats Dillen, the head of the parliamentary review.

Sweden is widely regarded as the most cashless society on the planet. Most of the country’s bank branches have stopped handling cash; many shops, museums and restaurants now only accept plastic or mobile payments. But there’s a downside, since many people, in particular the elderly, don’t have access to the digital society.

In response, the central bank is considering whether there’s a need for an official form of digital currency, an e-krona. A final proposal isn’t expected until late next year, but the idea is that the e-krona would work as a complement to cash, not replace it completely. more>


Monopoly Now Wants You to Cheat—Just Like Real Capitalists


Cornered: The New Monopoly Capitalism & The Economics of Destruction, Author: Barry Lynn.

By Nick Cassella – The year was 1904, and Lizzie Maggie wanted to create a board game that acted as “a harsh criticism of wealth disparity.” Upset by the the inequality around her, Maggie aspired to ridicule and condemn the dire outcomes of unbridled capitalism. So she constructed the Landlord’s Game, which intended to educate players on the rules and regulations of realty and taxation. Eventually, it ended up being the precursor to the game-which-nobody-ever-finishes, Monopoly.

A long time has passed since then and it’s safe to say that Maggie’s hope has not been realized. Monopoly’s creator would look at today’s economic landscape and be disheartened.

It appears as if Hasbro is trying to draw attention to Monopoly’s original purpose by releasing a new “cheaters edition” this autumn.

The cheaters edition follows the rules of classic Monopoly, except this version encourages players to break them…They encourage players to cheat in various ways, from collecting rent on another player’s property or stealing money from the bank.



Today, inflation. Tomorrow, crisis?

By Robert J. Samuelson – Until recently, inflation seemed to be dead or, at least, in a prolonged state of remission. It was beaten down by cost-saving technologies and a caution against raising wages and prices instilled by the Great Recession. From 2010 to 2015, annual inflation as measured by the CPI averaged about 1.5 percent, often too small to be noticed.

It’s doubtful that many economists believe that inflation is now so high. Remember those erratic month-to-month swings. But the pervasive nature of the inflation suggests that supply is shrinking compared with demand.

Inflation’s rebound seems to vindicate former Federal Reserve chair Janet L. Yellen, who argued that price increases were in hibernation, not the mortuary. Now, her successor, Jerome H. Powell, faces the tricky task of containing inflation without killing the economy.

What’s scarier is the possibility that higher inflation and interest rates will trigger a global financial crisis — some mixture of stock market collapses, bond and loan defaults and banking failures. more>


Restoring Social Cohesion: A Project For 2018 And Beyond

By Michael D. Higgins – Addressing the changes and the fracture in the relationship between the citizen and society has been a matter of great importance for me throughout my Presidency.

It is a relationship that was fraying long before the onset of the Global Financial Crisis, but it has markedly lost cohesion in these last ten years, aggravated by a global macro-economic policy response that saw the losses in so many economics socialized while the gains of the financial sector were not just privatized, but concentrated at the peak of the wealth and income pyramid. Unprecedented programs of austerity became mainstream for citizens and countries reeling from the consequences of an era characterized by a new form of lightly regulated speculative capital.

The transition, in its day, between The Theory of Moral Sentiments (1759) of Adam Smith and his Wealth of Nations (1776) drew a more extensive debate in the eighteenth century than the changes in contemporary international economies, that are in our time presented as near inevitable, and that are being delivered as their sole policy choice to publics suffering the burden of what Pope Francis has called a ‘plague of indifference’. This includes not just the authors of policies but weary publics that are looking away, averting their gaze from deepening inequalities, the welfare of workers, the plight of migrants. He was referring to publics that, in the absence of technical literacy, felt they could not initiate change, were forced to accept what was socially damaging as ‘inevitable’.

The persistence of a failure to critique or challenge a political economy which maintains and even deepens existing inequalities of income, wealth, power and opportunity within societies and between nation-states is eroding social cohesion. more>


Bitcoin Energy Consumption Index

Digiconomist – Ever since its inception Bitcoin’s trust-minimizing consensus has been enabled by its proof-of-work algorithm. The machines performing the “work” are consuming huge amounts of energy while doing so. The Bitcoin Energy Consumption Index was created to provide insight into this amount, and raise awareness on the unsustainability of the proof-of-work algorithm.

Note that the Index contains the aggregate of Bitcoin and Bitcoin Cash (other forks of the Bitcoin network are not included). A separate index was created for Ethereum, which can be found here.

To put the energy consumed by the Bitcoin network into perspective we can compare it to another payment system like VISA for example. According to VISA, the company consumed a total amount of 674,922 Gigajoules of energy (from various sources) globally for all its operations. This means that VISA has an energy need equal to that of around 17,000 U.S. households. We also know VISA processed 111.2 billion transactions in 2017.

With the help of these numbers, it is possible to compare both networks and show that Bitcoin is extremely more energy intensive per transaction than VISA. more>


Monetary policy and Guy Fawkes lanterns

By Nick Hubble – For many dozens of years, central bankers have been managing the relationship between inflation and unemployment. Only to discover there isn’t one.

The last ten years proved the point. In fact, the relationship between inflation and unemployment has only held for a preciously short amount of time. And yet it continues to be the most influential economic theory around. That’s because it justifies monetary policy itself. The idea that governments can and must manage the economy.

I know that managing the economy through interest rates sounds like a stupid idea. But people used to believe in similar absurdities.

It’s all down to the Phillips Curve – the relationship between inflation and unemployment.

If unemployment is too high, inflation will be too low because workers aren’t cashed up enough to spend and push up prices. If inflation is too high, it’s because too many workers have too many jobs and too much income, which pushes up prices.

This theory is stupid. It ignores something called supply and demand. If prices rise because workers are cashed up and can buy more, then production increases and increases supply. That returns prices to a lower level. As commodity traders will tell you, the cure for high prices is high prices. It incentivizes supply. But to an economist, the cure for high prices is higher interest rates. Because they can’t help but meddle.

If central bankers can’t control inflation or unemployment, why put up with the problems they create? Like asset bubbles, debt booms, inequality and explicit backdoor bailouts for bankers that encourage absurd levels of risk? more>


Updates from Chicago Booth

Never mind the 1 percent Let’s talk about the 0.01 percent
By Howard R. Gold – Since the Great Recession, America’s wealthiest 1 percent have been demonized as fat cats who have grown ever richer while the middle class has stagnated. While protesters have called for the 1 percent to be taxed more heavily, economists have been digging into data to develop a better understanding of who the top earners are.

These economists have been seeking to measure income inequality and wealth inequality, and to understand the nature of the 1 percent’s income and assets.

But the data also reveal disparities within the 1 percent. The 1 percent, it turns out, have their own 1 percent. more>



21st-century Marx

By Terrell Carver – Both Stalin and Mao had helpfully provided ‘official’ accounts of Marx’s thought – with due acknowledgement to his very influential friend Friedrich Engels – and there were committed intellectuals on both sides who were more than fluent in the relevant arcana of ‘dialectical’ and ‘historical’ materialism.

Significantly, the ‘humanist Marx’ had raised the question of economics, though not in the way that 20th-century economists had made familiar, whether they were conventional micro- or macro-economists, or Marxist economists in Moscow or Cambridge. The former ‘mainstream’ economists overwhelmingly ignored Marx and dismissed Marxist economics as politically biased and lacking in rigor; meanwhile, scholars and apparatchiks well-versed in Marxist economics despised ‘mainstream’ economists as uncritical proponents of capitalism. But both sides shared many presumptions and concepts nonetheless in theorizing capitalism.

Refreshingly, the ‘humanist Marx’ had set the stage for an examination of capitalist society in ways that bypassed all these efforts in economics, of whichever opposing camp. ‘Alienation’ was neither economics nor Marxist, so it suited the New Left of the 1960s. more>