Please select from the titles below:
- `The End of a Perfect Day': `Horses for Courses' and Policy Proposals
- Forms of Life and `Horses for Courses': Introductory Remarks
- The Macroeconomics of New Labour
- Labour's Fiscal Policy: Which Horse for Which Course
- Investment Performance, Capital-Widening and Economic Policy
- The Source of Endogenous Money
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`The End of a Perfect Day': `Horses for Courses' and Policy Proposals (p.7)
By G C HarcourtI `retire' in September 1998; so, in this paper I try to put a structure on my approach to economics, especially when formulating policy, and relate it to the various influences on my development over the years: religious, political and economic. I call the approach `horses for courses': each issue is treated as situation-specific, that is to say, there are no preconceived ideas or general theory about underlying structural relationships and their interrelationships. I illustrate the approach by reference to various policy proposals and political activities with which I have been associated over the past 40 years and more.
Forms of Life and `Horses for Courses': Introductory Remarks (p.21)
By F ComimThe object of the paper is to discuss Geoff Harcourt's `Horses for Courses Approach' (HCA) to economics in conjunction with Wittgenstein's concept of `Forms of Life'. It addresses the problems of coherence and arbitrariness in post-Keynesian thought, suggesting the HCA as an explanation for coherence among diversity of practices and activities. The coherence is found not at the level of substantive or methodological elements but at a philosophical level. A Wittgensteinean reading of the HCA suggests the argument that theories are different not because they are incoherent but because theories express elements comprised of different activities and contexts.
The Macroeconomics of New Labour (p.39)
By P Arestis and M C SawyerThis paper focuses on two particular aspects of economic policy pursued by the new Labour government, which we label one of new monetarism. The first concerns the role of the operational independence of the Bank of England and the use of interest rates as the major instrument of economic policy and directed to the control of inflation rather than any regard for the level of unemployment. The second concerns the policy focus on the labour market with an apparent acceptance of the notion of the non-accelerating inflation rate of unemployment and the neglect of the role of aggregate demand and of the creation of productive capacity. Policies on fiscal rectitude, adoption of the so-called golden rule, the virtual abandonment of fiscal policy and the handing over of monetary policy to the Bank of England represent a comprehensive rejection of Keynesian economic policies. The thrust of policy forgets two essential requirements for full employment, namely sufficient aggregate demand and adequate productive capacity.
Labour's Fiscal Policy: Which Horse for Which Course (p.59)
By D Mair and A J LaramieThe publication of the Code for Fiscal Stability (CFS) sets out the principles on which the Labour Government intends to conduct fiscal policy. However, there are major weaknesses in the orthodox public finance theory on which much of the CFS is predicated. In particular, there is a lack of congruence between its micro- and macroeconomic elements which raise doubts about the ability of fiscal policy to achieve stated policy objectives. This paper sets out the framework of a dynamic Kaleckian macroeconomic approach to taxation in which the micro- and macroeconomic elements are fully integrated. Kalecki's theory of taxation is integrated with his theories of investment and business cycle. Recent changes in income distribution are seen to have been important in influencing the level of investment. Without a radical change in the thinking behind it, the authors are pessimistic about the scope for fiscal policy in the UK.
Investment Performance, Capital-Widening and Economic Policy (p.93)
By C Driver, E Karakitsos and M BunyardFixed investment as a share of GDP has declined over a long period in many G10 countries. The aim of the paper is to provide a theoretical framework for explaining this. The model emphasises the negative effect on investment of uncertainty about the effects of a policy response to an output gap. When government contracts demand to close an output gap that is the result of an initial decline in fixed investment, it tends to exert a cumulative depressive effect on capacity and growth. Since this involves a dynamic process the mechanisms at work are illustrated through a theoretical simulation approach.
The Source of Endogenous Money (p.101)
By P G A HowellsIn the post-Keynesian approach to money, endogeneity has its origin in the demand for loans which in turn arises from firms' requirements for working capital whenever the cost and/or volume of planned output increases. Banks meet all creditworthy demand for loans and the central bank supplies the necessary reserves. Thus, bank lending (and the supply of new deposits) depends critically upon the `state of trade'.
However a number of institutional changes have recently taken place in the UK which call this sequence into question. Household demand has taken over from corporate demand as the major component in the aggregate demand for bank credit. Furthermore, we know that total transactions (including those on assets, intermediate and secondhand goods) have grown much more rapidly than GDP during the 1980s. If credit is required for all types of transactions, we might therefore expect the demand for loans to depend more directly on total transactions than on those related to output alone.
This paper documents those institutional changes and considers some of the implications.
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