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Kalecki and the Problem of International Money
Get PDFThis chapter presents in broad outline the elements of the ‘Oxford critique’ of the Bretton Woods proposals of Keynes and White, and Kalecki’s proposals for overcoming what he regarded as the limitations of the two. Kalecki collaborated in this with Ernst (‘Fritz’) Schumacher and with Thomas Balogh. They were concerned mainly with the foreign exchange constraint on full employment that would have arisen if governments resorted to deflationary measures, to build up foreign exchange reserves, taking them out of international circulation. But they were also concerned with the central concept in the Keynes and White Plans which did not allow for the foreign trade imbalances required to industrialise the developing countries
Capitalist Money
Get PDFThe chapter outlines the fundamental principles of Kalecki’s monetary economics. These are that in a capitalist economy, money belongs ultimately to capitalists, to whom it reverts when workers consume, and the function of the price system is to distribute the resulting accumulations of money among capitalists. For individual capitalists money originates through production and exchange, but also through the credit creation of banks. Additional money is not necessary to finance economic growth or investment, since these can be accommodated by an increase in the velocity of circulation of money. Money is therefore endogenous to the system, if not to individual capitalists. The function of fiscal policy and debt management is to recycle money from idle balances into circulation in the real economy, or to stabilize money holdings
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'Dr. Kalecki' on Mr Keynes
No full textThis chapter presents Kalecki’s interpretation of the General Theory, contained in his review of the book from 1936. The most striking feature of this interpretation is that, despite criticizing a great deal of Keynes’s analysis, particularly regarding the determinants of investment, Kalecki was highly impressed by Keynes’s theory showing the effect of changes in investment on global employment, income and production levels. Kalecki’s review and restatement of the key ideas of the General Theory is superior to the original due to a clearer and more concise account of the causes of changes in investment and their influence on the short-run equilibrium position, taking into consideration the distribution of income between capitalists and workers. But the review also criticized Keynes’s methodology and does not even mention key elements of his analysis (notably his monetary and financial analysis)
Open Market Operations in Emerging Markets. The Mexican Experience
No full textThis chapter discusses the experience of central bank open market operations in emerging countries that have become integrated into global financial markets and experience high international capital mobility. We argue that the operational procedures of central banks in emerging countries must allow for the weakness and shallowness of financial markets that are subject to large international capital movements. In such a situation open market operations remain central to the implementation of monetary policy, while non-market mechanisms are ineffective. This is explained in terms of the Latin American financial markets and the origins of inflation in these countries. The argument is developed using the example ofMexican monetary policy after the 1994 crisis. It is argued that in that period operational instruments had different results even though the objectives of central banks’ monetary policy remained the same as in more financially advanced economies
Finance and industrial policy: beyond financial regulation in Europe
No full textThe 2008 global financial crisis, together with the experience of de-industrialization across Western Europe over the last three decades, has focussed attention on financial regulation and industrial policy.
Industry and finance policies have largely been discussed separately, and this book argues that the two should be considered together, in both analysis and policy formulation that deals with critical questions of how finance has intervened in industrial restructuring and how it might better serve the real economy. Moreover, policy debates have paid relatively little attention to the heterogeneous economic structures and growth trajectories of European economies, and the interconnectedness and interdependencies of growth paths that present specific challenges to policy and highlight the need for cooperation across the region.
This book brings together leading scholars and policy makers to contribute to policy debates in three ways. First, it includes current discussions of banking policy, regulation, and reform to reassert the need for financial institutions that will back up and finance an industrial policy to revive the European economy. Second, it reviews the role of industrial and investment policy in supporting innovation, creating jobs, and generating sustainable economic growth. Third, it advances alternative policy proposals aimed at generating sustainable economic growth and employment in Europe. Part I analyses the nature of growth, industrial, and economic restructuring in relation to finance in the lead up to the crisis, at regional, national, and sector levels. Part II presents alternative and progressive policy proposals for growth and employment in Europe in light of the analysis presented in Part I
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