The economic crisis, that our unknown. It is presented as the current recession, alternating the prediction of a close out from it to a reading that indicates the long term the temporal dimension. At the same time, the oscillation between hope, by mainstream economic theory, to get out in continuity with the past and the belief that "nothing will ever be the" marks the public discussion. In an interview with George Lunghini begins a survey on how authoritative Italian economists address the nature of the current crisis. Scholar known to readers of "the manifesto," Lunghini proposes to read the crisis in a historical perspective is that of critical analysis of capitalism.
The fundamental questions to which economists seeking an answer can be summarized thus: what is the nature of this crisis is a crisis in financial or real, cyclical or systemic? It makes sense to compare with the crisis of '29?
An economic system capitalist - a monetary economy of production, in the language of Keynes - is unthinkable without money, without banks, without finance, therefore, in the structure of the real elements and assets / liabilities are closely intertwined. Between the actual items and monetary items but there is a hierarchy in the sense that a capitalist economic system could reproduce without crisis, to use the language of Marx, if the distribution of the social product was such as to not generate crises of implementation, "overproduction "(a relative overproduction: compared to purchasing power, not to the needs), and if money, banking and finance were only functional in the process of production and reproduction of the system, and instead gave rise to crisis sovraspeculazione and hoarding.
In the language of Keynes, crisis would not be if actual demand, consumption and investment, and the demand for money on the ground were such speculation - by accident or design - to ensure a balance of full employment. Now it is unlikely that this case will give automatically, hence the need for a systematic design of economic policy. In short, the capitalist system - the "market" - is unable to regulate itself. In all of this has an essential role in the rate of profits, as shown by the classical economists, but above all Marx, tends to fall. When the rate of profits is likely to generate crises of realization, since there is associated low wages and unemployment, and a time so as to generate hoarding crisis, the capitalist system undergoes a crisis that, if you want you can call systemic. So it was in the crisis of '29 (whose roots date back to 1870), so it is today. In both cases - and what I merely, as the comparison between the '29 and now - the crisis occurred after a failed attempt to counter the falling rate of profit with a process of globalization, reduction world market. I add only that the European response to the crisis of '29 was the Nazi-Fascism.
As he played, in their inability to assess the likelihood of the crisis, the mainstream economists' predilection for formalizing mathematics, at the expense of knowledge of the history of economic analysis - and history in general?
In itself the use of mathematics in economic analysis is not blameworthy, so when it wants to deal with questions in mathematical form that does not permit, or when it comes to issues important because they allow a mathematical treatment. Of gender issues in economics, there are many. Visiting the London School of Economics last year, Queen Elizabeth had asked him - royal white - how come only a few economists had predicted the crisis. Ten prominent British economists have also written a letter to the Queen, in which they write that one of the main reasons of the inability of the profession to give early warnings of impending crisis is inadequate training of economists focused on mathematical techniques: so that the economy - the economics - has become a branch of applied mathematics.
The signatories of the letter also points out that the unsuspecting American Economic Association was established in 1988, a post-graduate teaching committee in the U.S. economy. The commission, in its conclusion, he expressed the fear that 'post-graduate training programs can produce a generation with too many idiot savants, trained in techniques but ignorant of economic issues important. Education of economists, add the signatories of the letter is omitted economic history, philosophy and psychology, and are not put into question the questionable belief in "rationality" universal nor the 'efficient market hypothesis " . For this reason you are not given due weight to warnings about not quantified the potential instability of the global financial system. There is a type of opinion other than that which can be drawn on immersing himself in literature and history, which can not be adequately expressed in mathematical models. In short, mathematics decontextualizes its objects, and in the economic field that carries the risk of reductionism and the false neutrality. The only antidote is knowledge of history and awareness - awareness of the proud - the political dimension of economic analysis.
authoritative commentators have long pointed out that the free movement of capital and bustling (the result of liberalization and deregulation of finance) mini the very basis of economic democracy, that democracy itself. Believes that the role of politics today, would only be that of market regulator or should go further?
There is no doubt that the free movement of capital, free to the extent and in its present form, is dangerous for democracy and economic So for democracy in general. It is the thesis of the "virtual senate", a thesis on which insisted Noam Chomsky (who borrows from B. Eichengreen) and it seems to me difficult to refute. This virtual senate is made up of lenders and investors who continually undergoing review the policies of national governments, and if they judge that "irrational" those policies - because contrary to their interests - voting against them with capital flight, attacks hedge or other measures against those countries (and in particular the various forms of social status).
Democratic governments thus have a double vote: their citizens and the virtual senate, which normally prevails. This is a led to the liberalization of capital movements, reckless, in turn effect the dismantling of the Bretton Woods system in the seventies: are the obvious consequences for economic democracy (the most affected are the weakest among citizens of different countries) and So for democracy in general.
I believe that economic policy should go beyond the simple regulation of markets, but even if it was limited to this should be a shared design of economic policy and financial markets. A new plan Keynes - who had well understood the risks of uncontrolled movement of capital - it does not seem in sight.
Many scholars believe that the solution of the crisis can not be that Washington-Beijing axis. It is conceivable that the European model of social status, even if one can speak a European model, can be a reference for alternative economic policies as the "Washington Consensus", as the Chinese state capitalism? Or is there a risk that the future economic-political world in Europe (with the southern hemisphere) is confined to a marginal position?
I fear that the European model of welfare state is no longer a model even for Europeans. The welfare state is one of the greatest inventions and institutional policies of the past century, the destruction of a most serious responsibility of European governments in recent decades. The responsibility is all the more serious, since even before it has a cultural policy. Even in Europe has had a virtual senate, but also has a weighted membership uncritical, ahistorical and do not require the circumstances, the imperial liberalism: that has nothing to do with the liberal tradition, even before the Social-Democratic Europe. In truth there never was a true European model of welfare state, the national variants had different stories and articles. What still stands as a model intellectually - in model design direction to be taken for example, and they should look first to the last Keynesians now - is the "Social Philosophy" which could conduct the General Theory of Employment, Interest and Money by Keynes.
Today, as then the "defects" of the more obvious economic society in which we live are the inability to ensure full employment and an arbitrary and inequitable distribution of wealth and income (which are among the main causes of the current crisis). To remedy these defects, Keynes offers three lines of action: a redistribution of income via taxation (progressive income taxes and high inheritance taxes), euthanasia of the rentier, and certainly not small, state intervention in ' economy. The redistribution of income would increase the average propensity to consumption and therefore demand effective. The euthanasia of the rentier, then the "cumulative and oppressive power of the capitalist to exploit the scarcity value of capital," would also reasonable investment and low profitability in the eyes of deferred accounts, which are normally high social return on investment.
As regards the involvement of the state, according to Keynes of The end of laissez faire, "the most important action does not relate to those activities which private individuals already play, but to those functions that fall outside the range action of individuals, if no one takes those decisions are not taken by the state. The important thing for the government is not doing what people already do, and do a little 'bit better or a' worse, but do what you do not at present of all. " If the defects reported by Keynes had been amended with the measures he mentioned, this crisis would not be there (sometimes counterfactual reasoning are effective), and on the other hand I fear it is unlikely that this social philosophy is put into practice in the world today West. So out of the crisis
Washington-Beijing axis? Some negotiation between the U.S. and China is imposed by the new structure of international division of labor, but what is the strategy of Beijing? The world recognizes that China is emerging as a great power, but it's a shame - he wrote recently, the Economist - That still does not always act as such.
The current increase in public expenditure does not affect social spending (education, health, pensions and unemployment benefits), but the rescue of banks, finance companies and large groups. What happens, however, squeezing the earnings (real wages and pensions): an intervention on the supply side rather than demand, it is the right strategy to overcome the crisis, returning to acceptable levels of unemployment?
the need for a redistribution of income via taxation, the desirability of euthanasia of the rentier, and the need for active intervention of the state have already said. The supply-side policies are part of this theoretical paradigm, whose acceptance by governments has led to the current crisis. Unemployment and the fear of losing their jobs trigger a vicious circle: consumers and businesses reduce their costs, generating new employment cuts. As long as wages and employment will not be traced at least to the levels of ten or twenty years ago, the crisis is over.
What is the price that future generations will have to endure in the face of forms and size of debt that governments have used today in an effort not to wreck the world economy?
If that debt had been contracted to provide education, health and assistance to citizens, future generations should not bear any price, as compared with that debt would be today and tomorrow those structures and those services. The price you pay is the lack of those facilities and those services, because of a debt that was contracted for the benefit of those individuals that have caused the current crisis.
Cosma Orsi, "the manifesto," November 18, 2009
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