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Professor Mark Blyth on…

Written By: - Date published: 11:26 am, October 18th, 2017 - 22 comments
Categories: business, capitalism, Economy, Globalisation - Tags: , ,

This isn’t dry. It’s concise and it’s easy enough to read between the lines.

In seven minutes, Mark Blyth explains why post WWII Capitalism (but only in Europe, N America and what we might call the developed west) adopted a Social Democratic economic order, why that failed and why it was allowed to fall in the late 70’s.

In the same seven minutes he covers off 19thC Liberalism, explains why it was reintroduced to advanced economies in the late seventies and why it was not allowed to fall in the wake of the 2008 GFC.

Michal Kalecki is the economist referred to at the beginning of the interview and this is the seven page paper he wrote in 1943 outlining the inevitable failure of any Capitalist economic programme seeking to maintain full employment.

22 comments on “Professor Mark Blyth on… ”

  1. Philj 1

    He has many videos on YouTube. Professor Richard Wolff is another worth watching. There are plenty Alt Economists around, just not in our MSM.

    • Bill 1.1

      I wouldn’t say that Blyth is an “alt economist” in the way that term’s usually used.

      He offers analysis, not prescriptions.

      • Nic the NZer 1.1.1

        If you actually listen to what Blyth is saying about inflation (which is basically the NAIRU story about unemployment being held below its ‘natural’ rate causing accelerating inflation, its a very main stream story. If you then go looking for that in Kalecki he actually rejects this story directly in paragraph 1.3 of his discussing. Blyth also leaves out key details of this event, such as that it started following decades of full employment following OPEC doubling of Oil prices, and energy independence started being part of political discourse at this time. He also doesn’t mention there are good reasons to believe Kalecki developed many of the ideas in The General Theory prior to Keynes whose main contribution was to write them up.

        Unfortunately the most original thinking possible inside the main stream is still basically missleading.

  2. Brigid 2

    He links low interest rates to low inflation as is the situation now, but doesn’t include high interest rates in the causes of high inflation in the 70s and 80s. Businesses may need to increase their prices as their costs increase; banks have never had that excuse for their need to increase interest rates because the mortgages they create cost them nothing.

    • Bill 2.1

      High interest rates protect the “worth” of the loan in a high inflation environment. No excuses needed.

      But the primary driver behind inflation in the 70s (it’s argued) was employers seeking to preserve their profit margins in a world where fairly empowered workers were able to secure worthwhile wage demands.

      And investment dropped because returns become less certain in a high inflation environment.

      Class war in other words.

      • Brigid 2.1.1

        What do you say is the worth of the loan though when the loan has been created by the stroke of a pen?

        • Nic the NZer 2.1.1.1

          Your somewhat conflating two things here Brigid. The bank money which is created by a loan is in the form of accounting entries in a commercial banks own accounts. They will make a payment on demand (where payment goes between banks) using high powered money in the inter bank accounts (operated by a central bank) which they don’t control. Banks do incur costs when lending.

          Its just that most people understand and behave as if, when they have money in a bank account that this is money. Thats why central banks take an interest in the contents of commercial bank accounts when looking at monetary aggregates.

          • Brigid 2.1.1.1.1

            What are the two things I’m conflating? I mentioned loans as in mortgages, nothing else. I’ve not said banks incur no costs.

            Incidentally ‘your’ is the possessive form of ‘you’, an adjective, and is generally followed by a noun.
            Therefore,
            “Your somewhat conflating two things here Brigid. ” doesn’t make sense.
            You’re is what you should’ve written which is a contraction of ‘you’ and ‘are’.

            • Nic the NZer 2.1.1.1.1.1

              Ok, so to answer your (rhetorical ) question directly, the loan is valued at the interest payments the borrower will make to repay it. Though without knowing the future that is an estimate at best.

              I think if your honest at this point in the discussion you might recognise that your claim, “because the mortgages they create cost them nothing.” Is contrdicted by your claim ” I’ve not said banks incur no costs.” They do obviously incur costs, eg make payments as a result of their lending.

              Anyway, thanks for the grammar lesson.

              • Brigid

                I think if you’re honest at this point, you would accept the grammar lesson was not well learned.

      • Nic the NZer 2.1.2

        “But the primary driver behind inflation in the 70s (it’s argued) was employers seeking to preserve their profit margins in a world where fairly empowered workers were able to secure worthwhile wage demands.”

        Coupled with OPEC’s oil price hikes (a political protest) which bought these two shares of income into conflict, of course.

  3. Ed 3

    Watch from 33.55 for his view of NZ, Canadian and Australian house prices and Chinese buyers.

  4. Ovid 4

    Professor Blyth appeared on my radar within the past month or so – I can’t recall why – probably something I read here, but he makes a compelling case.

  5. CHCOff 5

    The supranational globalist model is an iteration of the failed communistic supply side monopoly centrally planned super state model of economic administration, the effects of which are an aberration of nature’s bounty for man (& woman), both socially and environmentally.

    Technology and population is inevitably making this recurring issue, harder to avoid as much as various rigid power structures try to.

    While government driven trade pacts ‘can’ provide beneficial top down structure in economy, they create certain imperatives back towards the centrally planned super state model that they ‘may’ be temporarily relieving a prior problem of.

    A different push would be to enable different elements of an economy to represent themselves in trade opportunities and innovations, via bureaus throughout their local economy that are connected to national sovereign trade guilds in the united nations, who in conjunction with their networks of bureaus from their respective national economies that they represent the elements of, create trade deals and arrangements between themselves in liason with each other, from small opportunities to large.

    That would help keep the impulse of technological capitalism’s supranationalism, from disastrously separating itself from real market signals and the complexity of societal factors that create them, as such things like the TPPA, are wanting to further deteriorate in essence.

  6. Nic the NZer 6

    While Kalecki explains why there might be push back against full employment there is nothing inevitable about it succeeding politically. Otherwise this is an excellent post.

  7. cleangreen 7

    Good show Bill;

    In the last 90 seconds Prof Blyth said “in the last ten yrs we have been living on life support” with cheap money after 2007″.

    So when will the “weasel pop”????

    A very fragile economic system the banks have left us in now.

    Just as today it was annouced that EX PM Sir John Key has been voted as the new Chair to the board of the ANZ bank, well here we go again!!!!!

  8. Pat 8

    “….n the same seven minutes he covers off 19thC Liberalism, explains why it was reintroduced to advanced economies in the late seventies and why it was not allowed to fall in the wake of the 2008 GFC.”……not allowed to fail…yet,

    timely post Bill… Blyth is one of those rare individuals who cut away all the bullshit…like Al Bartlett and Kevin Anderson.

  9. geoff 9

    a scotsman with strong opinions, weird! ;P

  10. DH 10

    It’s curious he refers to the inflation of the ’70s and seems to say little about the massive inflation of this generation. “Low inflation” is the biggest scam of all, except for a brief period post-GFC we’ve never had low inflation these last few decades.

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