Ann Pettifor is a director of Prime Economics, which advocates for a more Keynesian view of macroeconomics, and has been involved in development and environmental economics for many years. In The Production of Money: How to Break the Power of the Bankers (Verso, 2017) she correctly identifies that ‘money enables us to do what we can within our limited natural and human resources’, and so ‘creates economic activity’ rather than being a result of it. It does this by creating the finance needed for productive employment and investment. Bank finance ensures that there is never a ‘shortage of money’ and so we are only limited by humanity’s capacity and the physical ecosystem. Yet when 95% of the money in existence has been created by the commercial banking system, whose aim (quoting Michael Hudson) ‘is not to minimise the cost of roads, electric power, transportation, water or education, but to maximise what can be charged as monopoly rent’, this power must be rigorously regulated. So much should be uncontroversial today and I have written about this here. Continue reading The Production of Money: How to Break the Power of Bankers – by Ann Pettifor
Yet it’s still Keynes from whom we have most to learn. Not Keynes the economic engineer, who is invoked by his disciples today. But Keynes the sceptic, who understood that markets are as prone to fits of madness as any other human institution and who tried to envisage a more intelligent variety of capitalism. John Gray, BBC News Magazine, 22/7/2012.
Seeing this reminded me that I had forgotten to put up this piece that went on LabourList on 14th August last year.
In his thoughtful analysis on LabourList of our current economic predicament, Anthony Painter quoted Nobel Prize-winning economist Paul Krugman’s view of the eclipse of Keynesian economics. I think Anthony is slightly off the mark to see Krugman’s point as being that ‘it’s difficult to find people to fund debt and deficits on the scale that’s required’. In fact, public spending is limited less by the need to find funding, than by the ability of that spending to properly utilise resources (particularly labour) that the private sector does not. The failure of most of his fellow-economists and almost all policymakers to understand this is the real essence of Krugman’s lament. Continue reading Keynes is all we need