"Greek Tragedy in European Theatre; the Economic Consequences of Depression Economics", CELMR, Discussion Paper in Economics, No 17-1, February 2017

In view of Keynes intellectual heritage this essay highlights why one should expect that policies springing from the classical orthodoxy, such as internal devaluation, are futile and indeed counterproductive in restoring economic activity. But before this it will be instructive for the subsequent discussion to briefly review the current outcomes of the internal devaluation policy agenda in the EU and Greece almost a decade after the 2008 events.

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"Balance Sheets after the EMU: an Assessment of the Redomination Risk", OFCE Working Paper 2016-31, October 2016

The probability of a partial or complete break-up of the euro has risen over the last years. Such an event could create a balance sheet problem for economic agents, since the redenomination process could introduce significant currency mismatches between the asset and liability sides. We propose a new assessment of this redenomination risk, by country and by main institutional sector, for two scenarios: a single country exit and a complete break-up. Our main conclusion is that, even though the problem has to be taken seriously, its order of magnitude should not be exaggerated. Only a few sectors are at significant risk: public debts of Greece and Portugal, financial sectors of Greece, Ireland and Luxembourg. In particular, the consequences for the nonfinancial private sector should be manageable. We provide policy recommendations aiming at limiting the risk ex ante, and mitigating the consequences ex post.

"The investment-profit nexus in an era of financialisation and globalisation. A profit-centred perspective.", Post Keynesian Economics Study Group Working Paper, 1614, July 2016

During the past decades, the link between profits and domestic investment has weakened in the biggest high-income economies. The present contribution explores this relaxation of the profits-investment nexus through a profit-centred perspective. Focusing on the impact of the origins and uses of profits, we study the investment behaviour of non-financial corporations in relation to their profits at the macro level since 1980, a period marked by financialisation and globalisation. We contrast three competing hypotheses – the Revenge of the Rentiers, the Financial Turn of Accumulation and Globalisation – and test them through a macro panel data analysis for France, Germany, Italy, Japan, the United Kingdom and the United States over the period 1980-2012.

 

"European growth models and working class restructuring. An International post-Keynesian Political Economy perspective.", Environment and Planning A, May 2016

This paper builds on post-Keynesian macroeconomics, the French Regulation Theory and a Neo-Gramscian International Political Economy approach to class analysis to propose an International post-Keynesian Political Economy approach that is used to offer an empirical analysis of European growth models and working class restructuring in Europe between 2000 and 2008. We will distinguish between the ‘East’, the ‘North’ and the ‘South’ and structure our analysis around industrial upgrading, financialisation and working class coherence. We find an export-driven growth model in the North, which came with wage suppression and outsourcing to the East. In the East, the growth model can be characterised as dependent upgrading, which allowed for high real wage growth despite declining working class coherence. The South experienced a debt-driven growth model with a real estate bubble and high inflation rates resulting in large current account deficits. Our analysis shows that class restructuring forms an integral part in the economic process that resulted in European imbalances and the Euro crisis.

"Difference-form Persuasion Contests", Journal of Public Economic Theory, August 2016

We explore the equilibrium properties of two types of “differenceform” persuasion contest functions derived in Skaperdas and Vaidya in which contestants spend resources to persuade an audience. We find that both types of functions generate interior pure strategy Nash equilibria unlike Baik and Che and Gale with characteristics different to existing literature. For one type of function, we find that the reaction function of each player is “flat” and nonresponsive to the level of resources devoted by the rival so that the “preemption effect” as defined by Che and Gale is absent. Further, the equilibrium is invariant to the sequencing of moves. For the second type of function, which applies when there is asymmetry among contestants with regard to the quality of evidence, we find that the reaction functions of the stronger and weaker players have gradients with opposite signs relative to Dixit and therefore their incentive to precommit expenditures in a sequential move game is also different. For both types of functions, the extent of rent dissipation is partial. From the equilibrium analysis, we are also able to establish the potential effects of some specific factors affecting persuasion such as evidence potency, the degree of truth, and bias on aggregate resource expenditures and welfare.

"The Profits of Financialization", Monthly Review, Volume 68, Issue 03, July-August 2016

The financialization of capitalism has been marked by the sustained rise of financial profits. In the United States, financial profits as a proportion of total profits rose enormously from the early 1980s to the early 2000s, collapsed during 2007–09, and subsequently recovered, but without reaching previous heights. During this period, the trend of the average rate of profit has been largely flat. The relative rise of financial profits in spite of stagnant average profitability represents a theoretical and empirical conundrum. We will argue that the answer should be sought partly in financial expropriation, but also in public interest rates kept at extraordinarily low levels. In this light, the rise of financial profits represents a vast public subsidy to the financial system characteristic of financialization.

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"Uneven Development Patterns in Global Value Chains", Paper Prepared for the SASE 28th Annual Conference, UC Berkeley, 24-26 June 2016

Two different groups are currently using the Global Value Chains (GVC) framework. On the one hand, policy institutions provide the standard measurements of GVC involvement and realize cross-country analysis to formulate policy recommendations. On the other hand, scholars from various disciplines elaborate on GVCs and GVC-related concepts (Antràs, 2014; Milberg and Winkler, 2013; Ponte and Sturgeon, 2014; Yeung and Coe, 2015a). Unfortunately, the former group (policy institutions) is often conducting its measurements with at best a rough and imprecise link to the recent achievements of academic theorists. As stated by Gereffi, “much of the literature that uses the GVC moniker misses the point and doesn’t apply the framework consistently” (Gereffi, 2014, p. 27). Meanwhile most of the academic scholars have not yet managed to address the theoretical challenges associated with new empirical discussions and policy debates. Since critical views on GVCs are usually made by theorists, there is a need to forge concepts that could be mobilized in order to provide empirical support to critical approaches to GVCs.

This contribution proposes to overcome this disjuncture between theory, on the one side, and macro, multi-country measurements, on the other. It offers some original findings concerning the relation between countries’ GVC participation and economic and social upgrading.

The second section addresses the limitations of GVC theorization and measurement and proposes to conceptualize GVCs as a specific form of the division of labor, distinct from both a market-led social division of labor and the internal organization of labor inside of firms. One achievement of this definition is to allow for a precise delimitation of the frontiers of GVCs and, accordingly, to propose more appropriate measures of GVC participation and value capture than currently employed (section 3), along with presenting some stylized facts based on these measures, which do not support the narrative of international institutions concerning GVC participation and economic upgrading (section 4). We then draw on various strands of literature to delineate 3 country development patterns depending on the modalities and intensity of GVC participation and independently of the products traded (section 5). Relying on trade data and standard indicators of economic and social upgrading (investment rates, value capture, median income, labor share, Gini index, employment rate) from the OECD, the IMF, the Luxembourg Income Study, UNCTADstat, the World Bank and supplemental sources, we realize a principal component analysis for 51 countries between 1995 and 2008 (section 6). Our results discussed in section 7 challenge the dominant narrative of a clear positive relation between GVC participation and social and economic upgrading, and instead describe a much more nuanced and contrasted relationship that reflects the unevenness of development patterns along GVCs.

"Contested Political Persuasion", forthcoming in R. Congleton, B. Grofman, and S. Voight (eds), Oxford Handbook of Public Choice

We show how contest and rent-seeking functions can be thought of as persuasion functions that can be derived in a Bayesian setting. Two contestants (such as lobbyists or politicians) produce evidence for a decision-maker (such as an agency head or a voter) who has prior beliefs and possibly other biases and engages in Bayesian updating. The probability of each contestant winning depends on the resources and organization of the contestant, on the biases of the decison-maker, on the truth as well as on other factors. We discuss how this approach can be applied to lobbying government at its three branches (legislative, executive, and judicial, the latter in terms of litigation); political campaigning; general policy formulation and advocacy in the wider media; and ideological struggles.

"Myths and Self-Deceptions about the Greek Debt Crisis", Revue d'economie politique, Vol. 125, November/December 2015

The long-running Greek public debt crisis has been accompanied by an information war that has obscured many important aspects of what has occurred. The misconceptions, self-deceptions, and myths associated with the crisis have been at least partly responsible for the obviously inadequate response to the crisis that has not only damaged the economy and society of Greece, but has also harmed the euro zone project. I argue against seven such myths about the effects of default, the primary cause of the crisis, the likely effects of an exit from the euro zone, the bargaining power of the Greek government in its negotiations with the EU/ECB/IMF troika, and other related issues. I also discuss the context of the wider retreat of democracy in the European Union and its future prospects.

A Programme of Social and National Rescue for Greece

By the middle of 2015 the EMU is approaching a state of complete failure. Growth is stalling, deflation has become a real threat and unemployment stands at more than 10 per cent with rates of more than 25 per cent in Southern Europe. The failure of the EU to tackle the Eurozone crisis is becoming obvious. The root of the problem lies in the great gap of competitiveness in favour of Germany that has been generated by German neo-mercantilist policies since the first days of the Euro. Put briefly, Germany has systematically suppressed growth in domestic wages to obtain huge surpluses in its international transactions. The gap in competitiveness remains glaringly wide, while Germany has emerged as a major lender in Europe.

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"European Growth Models and Working Class Restructuring before the Crisis", Post Keynesian Economics Study Group Working Paper, 1508, July 2015

This paper builds on post-Keynesian macroeconomics, the Regulation Approach and a Neo-Gramscian International Political Economy approach to class analysis and offers an empirical analysis of European growth models and working class restructuring in Europe between 2000 and 2008. We will distinguish between the ‘East’, the ‘North’, and the ‘South’ and structure our analysis around industrial upgrading, financialisation and working class coherence. We find an export-driven growth model in the North, which came with wage suppression and outsourcing to the East. In the East the growth model can be characterised as dependent upgrading, which allowed for high real wage growth despite declining working class coherence. The South experienced a debt-driven growth model with a real estate bubble and high inflation rates resulting in large current account deficits. Our analysis shows that class restructuring forms an integral part in the economic process that resulted in European imbalances and the Euro crisis.

"The Sraffian multiplier for the Greek economy: Evidence from the Supply and Use Table for the year 2010", Centre of Planning and Economic Research, No 142

This paper estimates the "static Sraffian multiplier‟ for the Greek economy using data from the Supply and Use Table for the year 2010. It is found that (i) an effective demand management policy could be mainly based on the service sector; and (ii) the whole economic system, and especially its industry sector, is heavily dependent on imports. The results seem to be in accordance with the observed deep recession of the Greek economy and, furthermore, suggest that a change in its intersectoral structure is necessary.

"The Spanish Economy Today: A Deep Structural Crisis", International Workshop "Asymmetries in Europe: causes, consequences, remedies", Pescara (Italy)

This study takes a non-orthodox perspective: on the one hand, because it chooses to focus on demand (rather than on supply) and, in particular, because it examines foreign sector demand as the key factor in explaining the processes of economic growth and crisis; and, on the other, because it considers the euro (and the EMU) to be a problem without remedy for its country members. Indeed, for both economic and democratic reasons, the best thing that these countries can do is to start dismantling the system.

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"Seeking an alternative development paradigm for Greek agriculture", Agrarian South: Journal of Political Economy 4(I)

In the current global economic crisis, Greece has implemented austerity policies which have resulted in an unprecedented social catastrophe. An alternative development paradigm based on the reorganization of production for the benefit of popular forces must give considerable importance to agriculture. Greek agriculture has been transformed by neoliberal policies and the imperialist integration project of the European Union. This is reflected in changes in production orientation, the concentration of farmland and livestock, the deepening of agro-food dependence, rural depopulation and the shrinking incomes of small farmers. The outbreak of the financial crisis has intensified this condition, revealing essentially the crisis of the former developmental paradigm. The main question which arises is whether there is an objective possibility for a small country like Greece to take up the challenge of an alternative route. This article argues that, despite the many transformations, there remain objective possibilities for an alternative agricultural model based on production cooperatives and democratic social planning that will take into account domestic food requirements and the protection of small farmers.

"Financial hegemony and the unachieved European state", Competition & Change, Vol. 19, Iss. 2, April 2015

This article addresses a classic problem in the social sciences: what allows for or, on the contrary, prevents, the emergence of democratic institutions, i.e., of modern democratic statehood. This problem is tackled in relation to the internal socio-political logic of the European integration process. Drawing on the political economy of the French Regulation School and Poulantzas’s approach to the modern democratic state, the authors argue that the absence of state-like, democratic institutions at the EU level is the outcome of a cumulative process of exclusion of labour and a monopolization of the agenda by transnational and financial capital, preventing the institutional crystallization of conflicting European class relations.