Wednesday, July 19, 2017

Interview with Geoff Harcourt

Although this is an old interview with the Post Keynesian economist Geoff Harcourt from May 2007, it is a fantastic interview, retelling much of the history of Post Keynesian economics:

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  1. Hi LK. A little off topic, but in regards to social democratic policy, I wondered what your take would be on the likes of someone like Johan Norberg, saying that Sweden was enriched by free market laissez-faire, as opposed to social democracy.

  2. Not sure if LK would agree, but for the sake of a response here's what I think.

    Libertarians often cite our modern lifestyle as proof of the validity of neo-liberal economic policies, since these policies have been ascendant in Western nations since the 1980's.

    They look at economic growth and productivity figures and correlate these with the low taxing, deregulating, privatising agendas that have held sway since the 80's - and proclaim that it was all THEIR doing.

    Under almost any analysis, these claims fall flat. The single greatest driver of wealth and productivity since 1945 is technology. Period. The real difference between social democratic and market fundamentalist nations is simply the degree to which the benefits of this productivity have been evenly distributed within countries. Nordic states have done this well - the US and UK have not.

    So given this regular pattern, Mr Norberg's argument is surprising - and yet not.

    Surprising in that he attributes Sweden's economic development to a period when neo-liberal forces held sway there, even though per capita GDP continued to grow strongly overall thereafter. Sure, there are fluctuations (as there are for most countries) but over the long term Sweden's per capita GDP grew just as quickly after 1970 as it did before.

    What's not at all surprising for a libertarian is that Norberg attributes all economic growth and productivity improvements to (neo-liberal) government policy. This is pure tosh - and hypocritical tosh as well since libertarians are the first to ridicule the idea that intervention by government can improve market outcomes. As above, the biggest driver for productivity since WW2 has been technology. And the development of new technology has far more to do with culture than with the level of government intervention in the economy.

    Indeed, there is a strong case put forward by the American writer Mark Krikkorian that open borders policies designed to provide cheap onshore labour actually retard technology development. This makes sense; why invest in developing a new labour saving device if you have a strong supply of immigrant labour willing to work for under minimum wages? In this scenario, neo-lib economic policy acts as a hand-brake on technological progress and keeps our standard of living lower than it might otherwise be.

    In summary, Norberg parrots the corporate line about neo-liberal globalism = affluence, but it doesn't stack up. He selectively attributes growth to government policy where it suits his argument and ignores cases where it doesn't. More importantly, he effectively ignores technology as the driver of human development, only recognising it as a derivative of the development spawned by 'enlightened' (sic) public policy.


    1. Thanks for your response, good points! Do you have sources for figures regarding 70s growth etc? If so, I'd appreciate recommendations. The point about open border policy is interesting, although I tend to think the issue is perhaps more domestic (as in regarding the structure of institutions/privatisation/etc) than international, although the two obviously connect. That said, borders are still reasonable. The problem is that immigration isn't the only source of low wages and technological stagnation (I think). Would you say that domestic neoliberal policies, leaving aside the international issue momentarily, are harmful in the same way? I'd be interested to hear your thoughts :)