Wednesday, June 14, 2017

Nick Johnson — Minsky on stagflation and the limits to state intervention


Minsky shows his Austrian side.
This sort of evolutionary view of the capitalist economy is admittedly not very Keynesian, and seems to go against much of Minsky’s writing. But Minsky did study under Joseph Schumpeter who coined the phrase ‘creative destruction’; some economists use this idea to legitimise the positive impact of economic cycles on the evolution of the economy, as productivity increases with the failure of weaker firms and the survival of stronger ones in a process of ongoing structural change.
The Political Economy of Development
Minsky on stagflation and the limits to state intervention
Nick Johnson

20 comments:

Schofield said...

So no government spending can have a positive influence on productivity?

Neil Wilson said...

I'm going to sound like a stuck record here, but it is another example of why the Job Guarantee is important.

The Job Guarantee allows you to then use government intervention to put the squeeze on businesses and force them to innovate or close. If they can't innovate then there is no point having profit making operations running that function and it can transition to the public sector to be served on the basis of Social Value, not Market Value.

Pump priming props up parasite operations.

Ralph Musgrave said...

I throw up every time I hear that Austrian idea that recessions are necessary in order to get rid of “malinvestments” as they call them. Austrians don’t seem to have caught up with the fact that even when the economy is in steady full employment mode, there are hundreds of unprofitable firms going bust every week and hundreds of new firms setting up or expanding.

Neil says "Pump priming props up parasitic operations". So there's something wrong with expanding demand in a recession?

Bob Roddis said...

1. Of course, there is no such thing as "social value", except in the eye of the local Khmer Rouge Kommandant.

2. If folks are buying lots of whatever, it appears that such stuff must have "social value" for them. Who are you to complain?

3. Violence violence violence. use government intervention to put the squeeze on

4. Let's use violence to solve problems that do not actually exist! How cruel.

Bob Roddis said...

Make sure you throw up only on yourself, Ralph. Recessions are not "necessary". They are inevitable.

Neil Wilson said...

"So there's something wrong with expanding demand in a recession?"

There's a lot wrong with maintaining operations in the private profit sector simply to protect the jobs they provide. That ties up scarce capital that is no longer driving forward innovation and automation.

Once you get to the point where wage rises don't drive productivity improvement but look to push prices, there is no point having the function run on a capital basis. You're getting nothing of value for having risk capital involved.



Neil Wilson said...

"Of course, there is no such thing as "social value""

So the lady volunteering at the food bank is providing nothing of value then and Ken Lay delivered huge value because the market paid him and it is never wrong.

What a charming anti-social person you are Bob.

Schofield said...

http://www.taxresearch.org.uk/Blog/2017/06/14/a-farewell-to-austerity/

Bob Roddis said...

the market paid him and it is never wrong

I never said that “the market” is never wrong. Wasn’t Mr. Lay engaged in fraud? Fraud, pollution and the initiation of violence must be swiftly punished. Absent fraud, pollution and the initiation of violence, it is none of your business what other people do with their lives.

You, being the anti-social know-it-all, want to make everyone’s business your business. Because you know best.

Schofield said...

Well good to hear Roddis you won't be violently opposing a majority who collectively organize to establish rules for their well-being.

Bob Roddis said...

a majority who collectively organize to establish rules for their well-being

Like the majority Nazis vs. the Jews? Like the majority southerners vs. the slaves? Like the majority Morlocks vs the Eloi?

Yes, that is certainly a firm basis for organizing society on a moral basis. How foolish of me to have never thought of it.

Magpie said...

Bob Roddis said...

"Absent fraud, pollution and the initiation of violence, it is none of your business what other people do with their lives."

Schofield said...

"Well good to hear Roddis you won't be violently opposing a majority who collectively organize to establish rules for their well-being."

Bob Roddis said...

"Like the majority Nazis vs. the Jews? Like the majority southerners vs. the slaves? Like the majority Morlocks vs the Eloi?"

Not quite, Bob. More like the majority of us vs. the minority of parasites attached to our veins. Or like us vs. the coterie of psychopathic sycophants of the parasites.

Don't need to answer whose side you took. We already know.

Neil Wilson said...

"want to make everyone’s business your business."

Service to others is the price you pay for your room here on earth, and that service is social service. Other people's business is my business if they want the carrots I've grown. If you don't conform to the group reciprocation norms, then you don't get any carrots.

It's called 'outlawing'. I appreciate some excessively individualistic Americans love the idea of outlaws. But that's largely because it is the only way they'll ever be wanted.

MRW said...

Neil, FYI.

The term “outlaw” in American history comes from those who were willing to be judged outside of American law.

It was understood in the 19th C that the Constitution was a ‘social contract’ that the group, as a “society,” agreed to honor, governed as a ‘nation of laws’ which is the basis of the US Constitution. That meant that those who accepted (and swore to, or who were born into) this social contract would honor, protect, and uphold the [blah-blah-blah] conditions therein. The laws. The whatever.

HOWEVAH.

If someone desired to live outside these societal rules, they were deemed an “outlaw.” Outside the laws of the United States (which at that time DID NOT include the entirety of the land as we presently recognize it), and therefore its protection. And would not be recognized or protected by the Constitution of the United States of America. Or its enforcers, like the army or its police forces.

So if someone were to scuff their chin at the so-described American law, they were deemed an “OUTLAW.”

If an American ‘citizen’ killed a deemed outlaw, he or she was not punished with murder from the American legal POV. If an American ‘citizen’ stole from a deemed outlaw, he or she could not be charged with theft from the American legal POV.

Probably 1000 people out of 320 million here know this historical info at the present time.

MRW said...

In other words: outlaw means: Out. Law. Outside of law.

Bob said...

Today they call themselves Sovereign Citizens ;)

MRW said...

Aren't you Canadian? Just curious.

Bob said...

I am, eh.

Ralph Musgrave said...

Neil claims above that "expanding demand in a recession" (my phrase) equals or tends to equal "...maintaining operations in the private profit sector simply to protect the jobs they provide".

Since when? Expanding demand results for the most part in customers “demanding” more goods and services which employers supply at a price customers are prepared to pay. That’s free markets. What’s wrong with that?

Of course, mixed up with that there is always a certain amount of corruption (e.g. “maintaining” the jobs of those who have bribed politicians, etc). But for the most part expanding demand simply results in more viable jobs.

All pretty obvious that, isn't it?

Schofield said...

"Like the majority Nazis vs. the Jews? Like the majority southerners vs. the slaves? Like the majority Morlocks vs the Eloi?"

What on earth did your parents do to you to turn you into a holier-than-thou Libertarian who can't identify with a majority of other human beings who want to have institutional based democratic process in their lives? Don't tell me they were highly authoritarian and directional in your upbringing! That they made little effort to make you an independent and analytical human being so that you could compute the Nazis weren't truly democratic!