Sunday, April 29, 2012

The UK hit by Double Dip Recession: The Wages of Austerity

Well, surprise, surprise. Data for UK GDP in the first quarter of 2012 was recently released. In Q1 2012 the UK economy contracted by 0.2%, which, after the contraction of 0.3% in Q4 2011, means the UK is now officially in a double dip recession.

A graph of UK GDP data can be seen here:
George Osborne, the UK chancellor (the British equivalent of the US secretary of the Treasury), is reportedly sticking to his plan of austerity, as you can see in the video below from the BBC announcing the somber news of recession. One can only marvel at those in this report who seem little more than apologists for the austerity, who contend that the overall UK economy is fine, if only it wasn’t for the pesky volatility in the construction industry.

All in all, this demonstrates the uselessness of the hapless Conservative-Liberal Democrat coalition government now ruling Britain.

Without getting too Biblical, one is tempted to say that the wages of the sin of austerity is economic death – a death seen in a disastrous double dip recession which hit Ireland recently as well.

One interesting observation is that the UK is following the path of Japan during the lost decade, a point which was not lost on the perceptive shadow chancellor from Britain’s opposition Labour party (despite his having one of the most unfortunate surnames for a politician I’ve ever seen!).

As I have noted before, Japan was hit by a collapsing asset bubble and debt deflationary crisis in the 1990s. After a stimulus in the early 1990s, in 1996–1997 the Japanese Prime Minister Ryutaro Hashimoto turned to austerity, including personal income and national sales tax increases. This plunged Japan back into recession and sealed its fate in suffering a lost decade that persisted until the early 2000s.

But precious little has been learned from this experience, so it seems.

Some more analysis of the UK and the Eurozone here from Bill Mitchell:
Bill Mitchell, “The UK Government in a Race with the Eurozone to Ruin their Economies,” Billy Blog, April 26, 2012.

Friday, April 27, 2012

A Swedish Post Keynesian Blog

A commentator has alerted me to this blog by Lars P. Syll, who seems to be influenced by heterodox Keynesianism and Institutionalism:
Lars P. Syll’s Blog, Docendo discimus
I have added this to my long list of economics blogs here.

Thursday, April 26, 2012

Steve Keen on the Eurozone

A nice interview with Steve Keen below while he was in Ireland on the 18 April, 2012.

He covers a few issues related to the Eurozone, including the Maastricht Treaty, debt deflation, and the neoliberal shambles that is the Eurozone.

Tuesday, April 24, 2012

Interview with Thomas Palley

Below is an interview with Thomas Palley on a number of issues, including his new book From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics (Cambridge, 2012):
“From Financial Crisis to Stagnation: An Interview with Thomas Palley,” April 18, 2012.

Palley, Thomas I. 2012. From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics, Cambridge University Press, Cambridge.

Sunday, April 22, 2012

Keynes’s Life, 1914–1920: WWI and its Aftermath

This is part 4 of notes and trivia on Keynes’s early life. Part 3 is here, which is drawn from D. E. Moggridge’s Maynard Keynes: An Economist’s Biography (London, 1992), and Robert Skidelsky’s John Maynard Keynes: Hopes Betrayed 1883–1920 (vol. 1; London, 1983).

Biographical details of interest and trivia:
(1) On 1 August 1914, Germany declared war on Russia; Britain declared war on Germany on 4 August 1914. Keynes, according to Skidelsky (1983: 295), had no great anti-war feeling, was not a pacifist, but wished to do something for Britain’s war effort, even though he himself did not enlist. Nor was he interested in the political origins of the conflict (Skidelsky 1983: 295).

(2) The UK had the following Prime Ministers in the war years:
Herbert Henry Asquith
1915–1916, coalition government

David Lloyd George
1916–1922, coalition government.
Both politicians are relevant to Keynes’s subsequent career and public service. Indeed, during the First World War, Keynes came to socialise with Prime Ministers and officials at the highest level of the British government.

(3) On 18 January 1915, Keynes stared work at the treasury as assistant to Sir George Paish (Skidelsky 1983: 297). Keynes attended an allied war conference in Paris from 2–5 February on the financing of the war, and helped design the system of British credits to the other allies held at the Bank of England. After May 1915, Keynes became a “member of the Treasury’s No. 1 Division, centrally concerned with the financial direction of the war” (Skidelsky 1983: 303).

(4) From June to July 1915 Keynes was seriously ill with appendicitis and pneumonia (Skidelsky 1983: 303).

(5) From 1916 Keynes believed that the war should be ended by a compromise peace treaty (Skidelsky 1983: 307).

(6) Keynes appeared to be opposed to the military conscription introduced in Britain in January 1916. He applied for exemption both on the grounds of doing work of national importance (at the Treasury) and on the grounds of conscientious objection (Skidelsky 1983: 317–318).

(7) Keynes published The Economic Consequences of the Peace on 12 December 1919. It became a best seller, being translated into German, Dutch, Italian, Russian, Japanese and other languages (Skidelsky 1983: 394). It made Keynes internationally famous.

(8) Other publications of Keynes in these years included the following:
Keynes, J. M. 1915. “The Works and Life of Walter Bagehot. by Russell Barrington” (Review), The Economic Journal 25.99 (Sep.): 369–375.

Keynes, J. M. 1915. “The Economics of War in Germany,” The Economic Journal 25.99 (Sep.): 443–452.

Keynes, J. M. 1920. “Currency and Credit. by R. G. Hawtrey” (Review), The Economic Journal 30.119 (Sep.): 362–365.

Keynes, J. M. 1920. “Indian Finance and Banking. by G. Findlay Shirras,” The Economic Journal 30.119 (Sep.): 396–397.

John Maynard Keynes – Timeline.

John Maynard Keynes, Wikipedia.


Keynes, W. Milo (ed.). 1975. Essays on John Maynard Keynes, Cambridge University Press, London.

Moggridge, D. E. 1992. Maynard Keynes: An Economist’s Biography, Routledge, London.

Skidelsky, R. J. A. 1983. John Maynard Keynes: Hopes Betrayed 1883–1920 (vol. 1), Macmillan, London.

James Galbraith on Inequality and Macroeconomics Dynamics

James Galbraith gives a brief talk here on inequality and macroeconomics, at a panel entitled “The Impact of Inequality on Macroeconomics Dynamics,” at the Institute for New Economic Thinking’s (INET) Paradigm Lost Conference in Berlin (April 14, 2012).

N.B. Google has introduced a new style for posting and managing blogs: at the moment, I still don’t like it much!

Monday, April 16, 2012

Steve Keen on Minsky and Instability in Financial Markets

A short – but nice, concise and clear – talk by Steve Keen below on “Instability in Financial Markets: Sources and Remedies,” at the Institute for New Economic Thinking (INET) Paradigm Lost Conference in Berlin (held on April 14, 2012). There is also a post on Keen’s blog with a written version of the talk with graphs and a useful bibliography.

Early on (1.50) Keen confirms what I have recently said: that Minsky cannot be regarded as a neoclassical economist. It is also unfair to say that Keen simply dismisses all of neoclassical economics, for at 5.09 onwards we have an example of Keen citing good, higher-level empirical research by neoclassicals that confirms certain heterodox views, such as endogenous money theory.

Saturday, April 14, 2012

Industrial Policy in Meiji Japan

Japan’s industrial development is an interesting subject. Japan’s rapid period of industrial take-off came after 1911:
“Industrial production almost doubled between 1914 and 1919 and average profit rates for industry increased sharply … Japan thus emerged as an industrial nation during the Taisho period with a doubling of GNP from 1910 to 1930, and a quadrupling of real output of mining and manufacturing, and of employment in heavy and chemical industries” (Sorensen 2002: 92).
But even the foundation and early development of the industrial revolution in Meiji era Japan (1868–1912) in the 19th century involved significant state intervention (Noland and Pack 2003: 23).

From 1859 and 1869, Japan had been subjected to a number of unequal treaties forcing a liberal trade policy on it, in which tariffs had to be kept below 5%.

I recently had the interesting experience of arguing with a libertarian who attributed Japan’s proto-industrialisation under the Meiji to trade liberalisation in the 19th century: the trouble is that the treaties that opened up Japan were imposed by the threat of force, such as the expedition of Matthew Calbraith Perry (1794–1858) in 1854, leading to the Convention of Kanagawa (March 31, 1854). A number of other treaties followed:
(1) Anglo-Japanese Friendship Treaty, signed October 14, 1854 in Nagasaki.

(2) Ansei Treaties or the Ansei Five-Power Treaties, signed in 1858.

(3) Treaty of Amity and Commerce or the Harris Treaty between the US and Japan, signed on July 29, 1858.

(4) Treaty of Amity and Commerce between France and Japan followed on October 9, 1858.

(5) The Anglo-Japanese Treaty of Amity and Commerce, signed on August 26, 1858.
One of the most important terms of some of these treaties was to impose low import-export duties, even subject to international control, which went as low as 5% in the 1860s.

It is quite bizarre to see libertarian ideologues normally so insistent on opposing force defending trade liberalisation imposed by European and American coercion. In fact, the Japanese opposition to the “Unequal Treaties” (as they were called) was a major reason for the Meiji revolution in 1868 that overthrew the Shogun.

What was the result of the treaties imposed on Japan? The answer is as follows:
“… immediately after 1859, a flood of imports, unchecked by tariffs, soon devastated the domestic economy. Japan immediately faced a balance-of-payments problem because it depended heavily on imports of raw materials and capital goods indispensable for early industrialization. While the price of rice soared, the outflow of gold that followed was aggravated by the silver standard which Japan adopted, because the price of silver steadily fell vis-à-vis gold throughout the second half of the nineteenth century. Naturally, trade revision was a continuing issue in the early Meiji years.” (Sohn 2005: 22).
Because their hands were tied by treaties forcing a low tariff policy, the Meiji rulers sought to develop Japan’s economy by other means: what we would now call state industrial policy.

One of the architects of this industrial policy was Okubo Toshimichi (Beasley 2000: 103–104), who was head of the Home Ministry (内務省 Naimu-shō), a government department under the Meiji government founded in 1873 that was responsible for economic development, until various aspects of that policy were transferred to separate departments, such as the Department of Agriculture and Commerce (created in 1881), the Railroad Ministry (created in 1890), and the Communications Ministry (1892).

One of the first concerns of the Meiji state was to boost exports to stop the outflow of gold. To this end, the Meiji government increased production of tea and silk, by introducing domestic manufacturers to Western technology (Beasley 2000: 104). Shipping services also received government subsidies and patronage (Beasley 2000: 104).

The government also abolished the various currencies of the feudal lords, and by the New Currency Act (1871) created the yen as a national currency. A national central bank was created in 1882, with a monopoly on controlling the money supply in 1884.

The Meiji government also promoted industry and economic development in the following ways:
(1) The government created and built the fundamental public infrastructure in Japan underlying the modern economy: the postal service, railroads and telegraph (Flath 2005: 190). The postal service and the foundations of the railway system were the creation of the state (Beasley 2000: 104).

(2) The Meiji rulers had created industries in the most important areas of industry in that era: iron foundries, arsenals, and some shipbuilding. By 1880, government enterprises included 3 shipyards, 5 munitions works, 10 mines, and 52 factories (Flath 2005: 190). Modern cotton spinning mills were set up by the government in 1881 when the state acquired the latest English technology (Norman 2000: 129).

(3) The government initiated the development of chemical, glass and cement industries, which were then sold off to the private sector when they became profitable (Norman 2000: 127). With this privatisation program after 1882, Japan’s economic development came to have a larger role for private enterprise.

(4) The government used subsidies to other key industries. An important sector, as seen above, was marine transportation and shipbuilding, which received 75% of all subsidies from 1897 to 1913 (Flath 2005: 192). When tariff autonomy was attained again in 1911, Japan raised tariffs on foreign ships from 5% to 15% (Flath 2005: 192). To obtain revenue the government had introduced an agriculture tax in the Land Tax Reform of 1873, and in fact Japan’s state-directed economic development did not depend on foreign capital to a great extent in the Meiji era.

(5) The government created three state-controlled banks by the end of 19th century to direct credit to industrial development (Flath 2005: 192). Between 1885 and 1915 government spending accounted for 35% of capital investment, mainly in the crucial areas of steel, ships and railways (Flath 2005: 192). Throughout the late 19th century, outside agriculture, government provided about 50% of capital investment in Japan (Nafziger 1995: 63).
Although the evidence shows an important role for private enterprise from the 1880s, this was directed and supported by government policy, exactly the same as in Japan’s post-1945 industrial policy.

In short, these Meiji industrial policies set the foundation for Japan’s take-off after 1911.


Beasley, W. G. 2000. The Rise of Modern Japan (3rd rev. edn.), Weidenfeld & Nicolson, London.

Flath, David. 2005. The Japanese Economy (2nd edn.), Oxford University Press, Oxford.

Nafziger, E. Wayne. 1995. Learning from the Japanese: Japan’s Pre-War Development and the Third World, M. E. Sharpe, New York.

Noland, M. and H. Pack. 2003. Industrial Policy in an Era of Globalization: Lessons from Asia, Institute for International Economics, Washington, D.C.

Norman, E. Herbert. 2000. Japan’s Emergence as a Modern State: Political and Economic Problems of the Meiji Period (ed. L. T. Woods), UBC Press, Vancouver.

Miles Fletcher, W. 1996. “The Japan Spinners Association: Creating Industrial Policy in Meiji Japan,” Journal of Japanese Studies 22.1: 49–75.

Sohn, Yul. 2005. Japanese Industrial Governance: Protectionism and the Licencing State, RoutledgeCurzon, London.

Sorensen, A. 2002. The Making of Urban Japan: Cities and Planning from Edo to the Twenty-First Century, Routledge, London and New York.

Wilds, Kevin Mark. 2003. Meiji Industrial Development: A Case Study, Dissert. California State University, Fresno.

Friday, April 13, 2012

Assorted Links

Some interesting links below:
(1) “Is China the new #1?,” Naked Keynesianism, April 9, 2012.
Some interesting, critical analysis of the rise of China, with the observation that the “Chinese economy ... is partly owned and managed by a network of firms that are fundamentally from developed countries (in the top 20 above, from the US, the UK, France, Germany and Switzerland). The reverse, that is Chinese control of firms in developed countries, is minimal.”

(2) Bill Mitchell, “A Fiscal Collapse is Imminent – When? – Sometime!,” Billy Blog, April 13, 2012.

(3) Robert P. Murphy, “Origin of the Specie. Debt: The First 5,000 Years, David Graeber,” The American Conservative, April 11, 2012.
Robert P. Murphy’s review of Graeber’s Debt: The First 5,000 Years (Brooklyn, N.Y., 2011) for The American Conservative. Unfortunately, Murphy’s review seems little more than a rehash of his discredited and ignorant critiques of Graeber written last year.

(4) Mike Norman on Capital Account

Thursday, April 12, 2012

David Graeber Links, Updated

I have updated the links and videos for David Graeber below, the author of Debt: The First 5,000 Years (Brooklyn, N.Y., 2011). One addition is Robert P. Murphy’s recent book review of Graeber for The American Conservative. Unfortunately, Murphy’s review seems little more than a rehash of his discredited and ignorant critiques of Graeber written last year (see below under “II. Links”).

I. My Posts on David Graeber and Debt: The First 5,000 Years

“David Graeber on Debt and Money, Part 2,” February 9, 2012.

“David Graeber versus Robert Murphy: A Review,” January 24, 2012.

“David Graeber on the Origins of Money,” January 23, 2012.

“The Origins of Money,” January 8, 2012.

“David Graeber Videos,” January 2, 2012.

II. Links

Graeber, David, 2009. “Debt: The First Five Thousand Years,”, 20th August.
An early summary of Graeber’s work on debt.

“What is Debt? – An Interview with Economic Anthropologist David Graeber,”, August 26, 2011.
The original interview with Graeber that sparked the debate.

Gene Callahan, “Fiat Currency,” Saturday, August 27, 2011.
A summary of Graeber’s interview that sparked off a debate between Gene Callahan and Robert Murphy.

Robert P. Murphy, “Have Anthropologists Overturned Menger?,” Mises Daily, September 1, 2011.
This is Robert P. Murphy’s response to Graeber’s interview at

Robert Murphy, “David Graeber’s Response to My Article,”, September 8, 2011.
This is a summary of David Graeber’s comments on Robert P. Murphy’s article “Have Anthropologists Overturned Menger?.”

Robert Murphy, “Murphy Replies to David Graeber on Menger and Money,”, September 8, 2011.
This is Murphy’s reply to David Graeber’s comments.

David Graeber, “On the Invention of Money – Notes on Sex, Adventure, Monomaniacal Sociopathy and the True Function of Economics. A Reply to Robert Murphy’s ‘Have Anthropologists Overturned Menger?,’” September 13, 2011.
David Graeber’s final response to Murphy, published on

Gavin Kennedy, “Review Of David Graeber’s 5,000 Years of Debt (part 1),” Adam Smith’s Lost Legacy, December 5, 2011.
This is part 1 of an 8 part review you can get on this blog.

Chris Bertram, “Seminar on David Graeber’s Debt: The First 5000 Years – Introduction,” February 22, 2012.

Robert P. Murphy, “Origin of the Specie. Debt: The First 5,000 Years, David Graeber,” The American Conservative, April 11, 2012.

Robert P. Murphy, “Murphy vs. Graeber on Money, Round 2,” Free Advice, 11 April 2012.

III. Videos
David Graeber at Authors@Google

C-spanvideo interview
“Debt: The First 5,000 Years,” C-span Interview (by Doug Henwood), August 23, 2011.

Friday, April 6, 2012

Was Hyman Minsky a Post Keynesian?

Hyman Minsky (1919–1996) is frequently classified as a Post Keynesian. Minsky’s financial instability hypothesis is an important insight into financial markets and business cycles; Minsky undoubtedly had an affinity with the Post Keynesian school, and his work is taken very seriously in Post Keynesian economics (most notably by Steve Keen). Nevertheless, Minsky was an idiosyncratic Keynesian and the question whether he should be categorised as a Post Keynesian is debateable. Paul Davidson has made the following argument:
“Hyman Minsky is identified [sc. in King 2002: 110] as the second American Post Keynesian … Minsky attended many ‘Post Keynesian’ summer schools in Trieste, Italy as did Kaleckians and many Sraffians who now identify themselves as neo-Ricardians. Accordingly, mere attendance at the Trieste school does not make one a Post Keynesian. Minsky often told me that he never wanted to be identified as a Post Keynesian (hence he fails King’s test of identifying oneself as a Post Keynesian). According to King, Minsky was not an advocate of incomes policies — a hallmark of Post Keynesianism in America. King states that Minsky ‘had no particular objection to aggregate supply-demand analysis or to a tax based incomes policy — but did not regard them as especially interesting or important’ … It is hard to understand why someone who thinks that Keynes’s aggregate supply and demand analysis of the principle of effective demand is neither interesting nor important can be classified as a Post Keynesian … In reality Minsky was, and always wanted to be, a mainstream Keynesian who used the Modigliani variant of the ISLM system and whose major distinction from other mainstream Keynesians was that he possessed knowledge of actual real world financial markets. His ‘inherently unstable’ financial fragility hypothesis … was based on his reading of the activities on financial markets during the period between the onset of the Great Depression and the beginning of the Second World War …. Since Minsky refused to adopt Keynes’s principle of effective demand as the basic analytical system, and instead adopted an analytical structure that relied on some of the restrictive axioms of the special case classical theory, it is difficult for me to understand why King classifies Minsky as a Post Keynesian much less the ‘second US Post Keynesian’” (Davidson 2003–2004: 252–253).
Yet it is very difficult to classify Minsky as a neoclassical synthesis Keynesian or New Keynesian either, for both these varieties of Keynesian theory were subject to heavy criticism in these papers of Minsky:
“An Introduction to Post-Keynesian Economics,” 1986.

“Beyond Post-Keynesian Economics,” 1989.

“Salient Attributes of Post- Keynesian Economics,” 1992–1993.

“The Essential Characteristics of Post-Keynesian Economics,” 1993.
It is perhaps better to say that Minsky was a heterodox Keynesian with a strong affinity for the Post Keynesian school, even if he “never wanted to be identified as a Post Keynesian” himself.

But then, I suppose, the history of economics has the odd brilliant figure (e.g., George L. S. Shackle*) who marched to his/her own drum, never quite fitting into neat classifications.

* Shackle is sometimes classified either as an Austrian or Keynesian, or hybrid Austrian-Keynesian.


There is a very interesting paper here by Matias Vernengo in which the question of how to classify Minsky (on pp. 5-6) is also raised:
Matias Vernengo, “The Return of Vulgar Economics: A Rejoinder to Colander, Holt and Rosser,” Working Paper No: 2011-14.
Matias Vernengo agrees that Minsky was a heterodox Keynesian:
“Minsky thought so much of the mainstream (standard course) that he would eliminate the course! Minsky may have been guarded about being seen as part of a particular heterodox group, not because he was cutting edge mainstream, but because he was too original to be boxed in a particular label.”

Matias Vernengo, “The Return of Vulgar Economics: A Rejoinder to Colander, Holt and Rosser,” Working Paper No: 2011-14. p. 6.


Davidson, P. 2003–2004. “Setting the Record Straight on ‘A History of Post Keynesian Economics,’” Journal of Post Keynesian Economics 26.2 245–272.

King, J. E. 2002. A History of Post-Keynesian Economics since 1936, Edward Elgar, Chelten.

Assorted Papers from Minsky on Credit, Banking and Finance

There is a very useful archive of Hyman Minsky’s papers here. Here is a selection of his papers on money, banking and finance:
“Comment on Ben Bernanke, ‘Credit in the Macroeconomy’,” 1993.

“Debt and Business Cycles,” 1990.

“Schumpeter and Finance,” 1992.

“Creation of a Capitalist Financial System,” 1993.

“Financial Structures: Indebtedness and Credit,” 1993.

“Money and the Lender of Last Resort,” 1985.

“Schumpeter: Finance and Evolution,” 1988.

“Floors and Ceilings, Endogenous Cycles, (Endogenous Breakdowns) and Wall Street 1987,” 1987.

“Money and Crisis in Schumpeter and Keynes,” 1983.

Thursday, April 5, 2012

Endogenous Money: A Bibliography

The Keen versus Krugman exchange seems as good a time as any to write up a bibliography on one of the main subjects they debated: endogenous money theory.

The foundation of the modern Post Keynesian endogenous money theory is Basil Moore’s Horizontalists and Verticalists: The Macroeconomics of Credit Money (Cambridge and New York, 1988). But an excellent starting point is also P. Arestis and M. Sawyer (eds), A Handbook of Alternative Monetary Economics (Cheltenham, UK and Northampton, Mass., 2006).



Arestis, P. and M. Sawyer (eds). 2006. A Handbook of Alternative Monetary Economics, Edward Elgar, Cheltenham, UK and Northampton, Mass.

Fontana, Giuseppe. 2009. Money, Uncertainty and Time, Routledge, London and New York.

Graziani, Augusto. 2003. The Monetary Theory of Production, Cambridge University Press, Cambridge.

Kaldor, N. 1982. The Scourge of Monetarism, Oxford University Press, Oxford and New York.

Lavoie, Marc. 1992. Foundations of Post-Keynesian Economic Analysis. Elgar, Aldershot.

Moore, B. J. 1988. Horizontalists and Verticalists: The Macroeconomics of Credit Money, Cambridge University Press, Cambridge and New York.

Rochon, Louis-Philippe and Sergio Rossi (eds.). 2006. Endogenous Money: The Evolutionary Versus Revolutionary Views, Centro di studi bancari, RME Lab, Vezia.

Rochon, Louis-Philippe. 1999. Credit, Money, and Production: An Alternative Post-Keynesian Approach, Edward Elgar, Cheltenham, UK and Northampton, MA, USA.

Rousseas, Stephen. 1998. Post Keynesian Monetary Economics (3rd end.), Macmillan, London.

Setterfield, M. (ed.). 2006. Complexity, Endogenous Money and Macroeconomic Theory: Essays in Honour of Basil J. Moore, Edward Elgar, Cheltenham, UK ; Northampton, MA.

Wray, L. R. 1990. Money and Credit in Capitalist Economies: The Endogenous Money Approach, E. Elgar, Aldershot, Hants, England and Brookfield, Vt., USA.

Wray, L. R. 1998. Understanding Modern Money: The Key to Full Employment and Price Stability, Edward Elgar, Cheltenham.


Arestis, P. and P. Howells. 1996. “Theoretical Reflections on Endogenous Money: The Problem with ‘Convenience Lending,’” Cambridge Journal of Economics 20: 539–552.

Arestis, P. and I. Biefang-Frisancho Mariscal. 1995. “The Endogenous Money Stock: Empirical Observations from the United Kingdom,” Journal of Post Keynesian Economics 17.4: 545–559.

Bell, S. 2001. “The Role of the State and the Hierarchy of Money,” Cambridge Journal of Economics 25.2: 149–163.

Chick, Victoria and Sheila Dow. 2002. “Monetary Policy with Endogenous Money and Liquidity Preference: A Nondualistic Treatment,” Journal of Post Keynesian Economics 24.4: 587–607.

Cottrell, Allin. 1994. “Endogenous Money and the Multiplier,” Journal of Post Keynesian Economics 17.1: 111–120.

Dalziel, Paul. 1996. “The Keynesian Multiplier, Liquidity Preference, and Endogenous Money,” Journal of Post Keynesian Economics 18.3: 311–331.

Dalziel, Paul. 1999–2000. “A Post Keynesian Theory of Asset Price Inflation with Endogenous Money,” Journal of Post Keynesian Economics 22.2: 227–245.

Fand, David I. 1988. “On the Endogenous Money Supply,” Journal of Post Keynesian Economics 10.3: 386–389.

Fontana, G. 2000. “Post Keynesians and Circuitists on Money and Uncertainty: An Attempt at Generality,” Journal of Post Keynesian Economics 23.1: 27–48.

Fontana, G. 2002. “The Making of Monetary Policy in Endogenous Money Theory: An Introduction,” Journal of Post Keynesian Economics 24.4: 503–509.

Fontana, G. 2003. “Post Keynesian Approaches to Endogenous Money: A Time Framework Explanation,” Review of Political Economy 15.3: 291–314.

Fontana, G. 2004. “Rethinking Endogenous Money: A Constructive Interpretation of the Debate Between Horizontalists and Structuralists,” Metroeconomica 55.4: 367–385.

Fontana, G. 2004. “Hicks on Monetary Theory and History: Money as Endogenous Money,” Cambridge Journal of Economics 28.1: 73–88.

Fontana, Giuseppe and Alfonso Palacio-Vera. 2003. “Is There an Active Role for Monetary Policy in the Endogenous Money Approach?,” Journal of Economic Issues 37.2: 511–517.

Fontana, Giuseppe and Venturino, Ezio. 2003. “Endogenous Money: An Analytical Approach,” Scottish Journal of Political Economy 50: 398–416.

Howells, Peter G. A. 1995. “The Demand for Endogenous Money,” Journal of Post Keynesian Economics 18.1: 89–106.

Howells, P. 2006. “The Endogeneity of Money: Empirical Evidence,” in P. Arestis and M. Sawyer (eds), A Handbook of Alternative Monetary Economics, Edward Elgar, Cheltenham, UK and Northampton, Mass. 52–68.

Howells, Peter G. A. 1997. “The Demand for Endogenous Money: A Rejoinder,” Journal of Post Keynesian Economics 19.3: 429–435.

Jarsulic, Marc. 1989. “Endogenous Credit and Endogenous Business Cycles,” Journal of Post Keynesian Economics 12.1: 35–48.

Kaldor, N. 1939. “Speculation and Economic Activity,” Review of Economic Studies 7: 1-27.

Lavoie, Marc. 1984. “The Endogenous Flow of Credit and the Post Keynesian Theory of Money,” Journal of Economic Issues 18.3: 771–797.

Lavoie, Marc. 1985. “The Post Keynesian Theory of Endogenous Money: A Reply,” Journal of Economic Issues 19.3: 843–848.

Lavoie, Marc. 1985. “Credit And Money: Overdraft Economies, And Post-Keynesian Economics,” in M. Jarsulic (ed.), Money and Macro Policy, Kluwer-Nijhoff, Boston; Kluwer Academic Pub., Hingham, MA. 63-84.

Lavoie, Marc. 1996. “Horizontalism, Structuralism, Liquidity Preference and the Principle of Increasing Risk,” Scottish Journal of Political Economy 43.3: 275-300.

Meulendyke, Ann-Marie. 1988. “Can the Federal Reserve Influence Whether the Money Supply Is Endogenous? A Comment on Moore,” Journal of Post Keynesian Economics 10.3: 390–397.

Moore, Basil J. 1979. “The Endogenous Money Stock,” Journal of Post Keynesian Economics 2.1: 49–70.

Moore, Basil J. 1997. “Reconciliation of the Supply and Demand for Endogenous Money,” Journal of Post Keynesian Economics 19.3: 423–428.

Musella, M. 2001. “Endogenous Money and Credit,” in P. Anthony O’Hara (ed.), Encyclopedia of Political Economy. Volume 1. A–K, Routledge, London and New York. 259–261.

Paganelli, Maria Pia. 2006. “Hume and Endogenous Money,” Eastern Economic Journal 32.3: 533–547.

Palacio-Vera, Alfonso. 2001. “The Endogenous Money Hypothesis: Some Evidence from Spain (1987–1998),” Journal of Post Keynesian Economics 23.3: 509–526.

Palley, T. I., 2002, “Endogenous Money: What It is and Why It Matters,” Metroeconomica 53: 152–180.

Palley, Thomas I. 1987–1988. “Bank Lending, Discount Window Borrowing, and the Endogenous Money Supply: A Theoretical Framework,” Journal of Post Keynesian Economics 10.2: 282–303.

Palley, Thomas I. 1991. “The Endogenous Money Supply: Consensus and Disagreement,” Journal of Post Keynesian Economics 13.3: 397–403.

Palley, Thomas I. 1996. Post Keynesian Economics: Debt, Distribution, and the Macro Economy, St. Martin’s Press, New York.

Palley, Thomas I. 1997. “Endogenous Money and the Business Cycle.” Journal of Economics 65.2: 133–149.

Piegay, P. 2003. “Post Keynesian Controversies on Endogenous Money: An Alternative Interpretation,” in L.-P. Rochon and S. Rossi (eds), Modern Theories of Money: The Nature and Role of Money in Capitalist Economies, Edward Elgar Publishing, Cheltenham, UK and Northampton, Mass.

Pollin, Robert. 1991. “Two Theories of Money Supply Endogeneity: Some Empirical Evidence,” Journal of Post Keynesian Economics 13.3: 366–396.

Rochon, Louis-Philippe. 1999. “The Creation and Circulation of Endogenous Money: A Circuit Dynamique Approach,” Journal of Economic Issues 33.1: 1–21.

Rochon, Louis-Philippe. 2000. “The Creation and Circulation of Endogenous Money: A Reply to Pressman,” Journal of Economic Issues 34.4: 973–979.

Setterfield, M. 2000. “Expectations, Endogenous Money, and the Business Cycle: An Exercise in Open Systems Modeling,” Journal of Post Keynesian Economics 23.1: 77–105.

Shanmugam, B., Nair, M. and Ong, W. L. 2003. “The Endogenous Money Hypothesis: Empirical Evidence from Malaysia (1985–2000),” Journal of Post Keynesian Economics 25.4: 599–611.

Wray, L. Randall. 2003–2004. “Loanable Funds, Liquidity Preference, and Endogenous Money: Do Credit Cards Make a Difference?,” Journal of Post Keynesian Economics 26.2: 309–323.

Wednesday, April 4, 2012

Keen versus Krugman: The Great Debate!


I have been a bit slow in posting about this subject. As many people probably already know, there has been something of an epic debate between Paul Krugman and Steve Keen, on a number of issues, but, above all, the subject of endogenous money.

One annoying thing I find: Steve Keen is a Post Keynesian, influenced by Hyman Minsky’s financial instability hypothesis. Steve Keen is not, strictly speaking, an MMT macro-economist, though it is true that there is a great deal of overlap between Post Keynesianism and MMT (for the emergence of MMT from Post Keynesianism, see here). Nor is endogenous money theory an invention of MMT: it goes right back to the 19th-century Banking school (Wray 1998: 32–33), was held by Wicksell and Schumpeter, entered Post Keynesian economics as early as the work of Joan Robinson and Nicholas Kaldor (although the classic text is the later work of Moore 1988), and is of course supported by MMT too. There is no doubt that a number of the old American Institutionalists (like John Kenneth Galbraith) supported endogenous money theory as well, as do many other modern heterodox economists (e.g., James Galbraith). (As a matter of historical interest, the great Post Keynesian economist Nicholas Kaldor used endogenous money theory to smash the monetarism of Milton Friedman and its vulgar supporters.)

A review of the debate in this video on RT, with an interview with Steve Keen. Some silly stuff at the beginning, but one can skip through this and start at 1.59.

For those interested in following the actual debate, see these links:
Steve Keen, “Instability in Financial Markets: Sources and Remedies,” INET Conference Paper, April 12-14, 2012.

Paul Krugman, “Minsky and Methodology,” 27 March, 2012.
Krugman’s comments on Keen’s paper.

Paul Krugman, “Banking Mysticism,” 27 March, 2012.
Krugman’s second comment on Keen’s paper and banking.

Steve Keen, “Krugman on (or maybe off) Keen,” Steve Keen’s Debt Deflation, 29 March, 2012.
Keen’s first response.

Nick Rowe, “The Supply of Money is Demand-Determined,” 1 April, 2012.

Scott Fullwiler, “Krugman’s Flashing Neon Sign,” 2 April, 2012.

Paul Krugman, “Things I Should Not Be Wasting Time On,” 2 April, 2012.

Paul Krugman, “A Teachable Money Moment,” 2 April, 2012.

Steve Keen, “Ptolemaic Economics in the Age of Einstein,” 2 April, 2012.
Keen’s second response.

Paul Krugman, “Oh My, Steve Keen Edition,” 2 April, 2012

Steve Keen, “Oh My, Paul Krugman,” 3 April, 2012.
Keen’s third response.

John Carney, “Paul Krugman vs. MMT: The Great Debate,” NetNet, 3 April, 2012.

“The Keen/Krugman Debate: A Summary,” Unlearning Economics, 3 April, 2012.
An excellent review of the debate from Unlearningeconomics. Very useful.

Dan Kervick, “Bring Back Fiscal Policy,” April 4, 2012.

“Not so Keen on Krugman,” Naked Keynesianism, April 4, 2012.


Moore, B. J. 1988. Horizontalists and Verticalists: The Macroeconomics of Credit Money, Cambridge University Press, Cambridge and New York.

Wray, L. R., 1998, Understanding Modern Money: The Key to Full Employment and Price Stability, Edward Elgar, Cheltenham.

Tuesday, April 3, 2012

Skidelsky on Keynes and the Crisis of Capitalism

This is an excellent lecture by Robert Skidelsky (Emeritus Professor of Political Economy at the University of Warwick) recorded on 7 October, 2009, on Keynes, a critique of neoclassical economics, and the financial crisis of 2008 and resulting global recession.