Financialisation – the cause of the crisis?

I have to return to this issue that I raised in a previous blog (A financial or economic crisis?, 15 June 2010), because there are so many radical economists who are arguing that the causes of the Great Recession do not fit a ‘classical Marxist’ explanation based on a decline in profitability. No, according toContinue reading “Financialisation – the cause of the crisis?”

Keynesians versus Austerians

There is major policy battle going on between the economic advisors of the major capitalist governments meeting at the G20 summit this week.  Most advisors want action to cut government spending because of the humongous rise in public sector debt in nearly all the G20 economies. This debt (owed to the banks who bought itContinue reading “Keynesians versus Austerians”

A financial or economic crisis?

The debate among leftist economists has been on for some time.  Can the Great Recession be described as a financial crisis – namely that it was caused by instability and collapse in the financial sector and then spread to the rest of the capitalist economy? Or was the Great Recession caused by a crisis inContinue reading “A financial or economic crisis?”

Coalition cuts

The new coalition government of the Conservatives and Liberals is getting ready to impose the biggest cut in government spending since 1980s (under Margaret Thatcher’s regime).   Already, David Cameron has been preparing public opinion with the claim that Britain’s government finances are much worse than the previous New Labour government had claimed and that theContinue reading “Coalition cuts”

Economic recovery or a new recession?

Stock markets have fallen sharply during May, undoing all the gains for the year to date.  And stocks took another dive in June as the fear that the capitalist economic recovery was in jeopardy and the top 20 capitalist countries could slip back into a  new or ‘double-dip’ recession. What worries the stock market isContinue reading “Economic recovery or a new recession?”

The Keynesian answer: support the speculators

The other branch of mainstream economics apart from the neoclassical/monetarist school are the Keynesians.  They seem to have deserted the old ‘liquidity preference’ element of Keynesian theory for an explanation of this crisis, namely that money gets stuck in the financial sector as individuals hoard cash and banks do not lend it onto the realContinue reading “The Keynesian answer: support the speculators”

Vulgar economics in despond

Mainstream economics was nonplussed by the financial crash of 2007-8 and the subsequent Great Recession of 2008-9.  The doyen of the neoclassical school, Robert Lucas, confidently claimed back in 2003, that “the central problem of depression-prevention has been solved”.  And leading Keynesian, Oliver Blanchard, now chief economist at the IMF, told us as late asContinue reading “Vulgar economics in despond”

How the official strategists were in denial

Now that the Great Recession is over, we can review how successful the official leaders of capitalist economic strategy were in forecasting the financial crisis, in dealing with it when it came and what they learnt afterwards.  The answers are unsurprisingly depressing. Before 2007, no official strategist of economic policy forecast any crisis.  US FedContinue reading “How the official strategists were in denial”

The bankruptcy of mainstream economics

Apologies for not having any new posts for a while but I’ve been working on a paper covering the various arguments by different schools of economics to explain why the Great Recession of 2008-9 took place. What is revealing is that mainstream economics (and by that I mean the economic theories of the official strategistsContinue reading “The bankruptcy of mainstream economics”