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Articles from Syndicated Column "Against the Current" (for Project Syndicate)
How Much Is Enough?
Robert Skidelsky
Project Syndicate
| Friday, November 20, 2009
The economic downturn has produced an explosion of popular anger against bankers’ “greed” and their “obscene” bonuses. This has accompanied a wider critique of “growthmanship” – the pursuit of economic growth or the accumulation of wealth at all costs, regardless of the damage it may do to the earth’s environment or to shared values.
John Maynard Keynes addressed this issue in 1930, in his little essay “Economic Possibilities for our Grandchildren.” Keynes predicted that in 100 years – that is, by 2030 – growth in the developed world would, in effect, have stopped, because people would “have enough” to lead the “good life.” Hours of paid work would fall to three a day – a 15-hour week. Human beings would be more like the “lilies of the
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Keynes versus the Classics: Round 2
Robert Skidelsky
Project Syndicate
| Tuesday, October 13, 2009
LONDON – The economist John Maynard Keynes wrote The General Theory of Employment, Interest, and Money (1936) to “bring to an issue the deep divergences of opinion between fellow economists which have for the time being almost destroyed the practical influence of economic theory…” Seventy years later, heavyweight economists are still at each other’s throats, in terms almost unchanged from the 1930’s.
The latest slugfest features New Keynesian champion Paul Krugman of Princeton University and New Classical champion John Cochrane of the University of Chicago. Krugman recently published a newspaper article entitled “How Did Economists Get It So Wrong?” There was nothing in mainstream economics, Krugman wrote, “suggesting the possibility
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Is Stimulus Still Necessary?
Robert Skidelsky
Project Syndicate
| Sunday, September 13, 2009
London – Have stimulus packages brought the world’s traumatized economies back to life? Or have they set the scene for inflation and big future debt burdens? The answer is that they may have done both. The key question now concerns the order in which these outcomes occur.
The theory behind the massive economic stimulus efforts that many governments have undertaken rests on the notion of the “output gap.” This is the difference between an economy’s actual output and its potential output. If actual output is below potential output, this means that total spending is insufficient to buy what the economy can produce.
A stimulus is a government-engineered boost to total spending. Government can either spend more money itself, or try to
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Fictional Sovereignties
Robert Skidelsky
Project Syndicate
| Wednesday, August 19, 2009
London – A year ago, tiny Georgia tried to regain control over its breakaway enclave of South Ossetia. The Russians quickly expelled the Georgian army, to almost universal opprobrium from the West. South Ossetia, together with Abkhazia (combined population 300,000), promptly declared their “independence,” creating two new fictional sovereignties, and acquiring in the process all the official trappings of statehood: national heroes, colorful uniforms, anthems, flags, frontier posts, military forces, presidents, parliaments, and, most important, new opportunities for smuggling and corruption.
So far, only Russia and Nicaragua recognize the independence of Abkhazia and South Ossetia. Russian recognition was widely seen as retaliation for
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Economic reform needs a dose of reality
Robert Skidelsky
Project Syndicate
| Monday, July 13, 2009
Mainstream economics subscribes to the theory that markets "clear" continuously. The theory's big idea is that if wages and prices are completely flexible, resources will be fully employed, so that any shock to the system will result in instantaneous adjustment of wages and prices to the new situation.
This system-wide responsiveness depends on economic agents having perfect information about the future, which is manifestly absurd. Nevertheless, mainstream economists believe that economic actors possess enough information to lend their theorising a sufficient dose of reality.
The aspect of the theory that applies particularly to financial markets is called the "efficient market theory," which should have been blown sky-high by last
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