A People鈥檚 Green New Deal 鈥� An Exercise in Just Knowledge Production

sakshiaravind1 Comment

In his speech before the聽聽makes the following astute observation regarding the African petite bourgeoisie and its public intellectuals:聽聽

“Our professors, engineers and economists are content simply to add a little colouring, because they have brought from the European universities of which they are the products only their diplomas and the surface smoothness of adjectives and superlatives. It is urgently necessary that our qualified personnel and those who work with ideas learn that there is no innocent writing. In these tempestuous times, we cannot leave it to our enemies of the past and of the present to think and to imagine and to create. We also must do so.”

In the same speech, Sankara continues to caution against planning for the uplifting of a nation if such plans are ignorant of, or are wilfully erasing, the disinherited masses and the wretchedness inherited by them. Sankara’s postulation, emerging from the socio-political contexts of the African continent, provides a sound theoretical foundation for knowledge production in the contemporary worlds we inhabit. The popular narratives around climate change have strived to communicate the gravity of planetary collapse and measures required to avert ecological and environmental crises worldwide. Nevertheless, the urgency of envisioning a new world shows little self-reflection as to its epistemic positions and privileges. Climate change discourses in the Global North, academic or otherwise, have largely been constrained by the desire to brave the planetary crises with limited disruption to existing race and class privileges. In terms of how the problems of climate change are identified and defined and the range of solutions to address them, the western epistemologies remain rudimentary.

Consequently, the range of green new deals or the visions for just-transition and sustainable utopias remain agnostic to the everyday realities and struggles of the Global South against imperialism and colonialism. It is unclear if Black, Indigenous, and People of Colour are better placed to partake in these futures than they are now. Max Ajl’s A People’s Green New Deal provides a refreshing and rich scholarly alternative to how an ideal green new deal should be imagined.

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Can Joan Robinson鈥檚 ideas cast some light on today’s profound economic challenges?

Carolina AlvesLeave a comment

By Carolina Alves and Jan Toporowski

Cambridge Journal of Economics Special Issue / Deadline for submitting papers via CJE refereeing process: 30th April 2022.

2023 marks the fortieth year since the passing of Joan Robinson and her one-hundred-and-twentieth anniversary. This special issue of the Cambridge Journal of Economics aims at presenting a collection of papers that reflect the extraordinary breadth of Robinson鈥檚 career and examine what insights these might offer the economics profession and policy makers to address our seemingly most intractable problems of inadequate demand, rising margins with falling competition, and widespread and seemingly intransigent inequality and its consequences. For Robinson the purpose of our discipline is in understanding the real world to enable all global citizens to enjoy life to the full. It is therefore fitting that we follow her lead and demand that we ask of ourselves whether we have done enough to address her challenges to economic theory.

Despite making her international reputation in the Marshallian tradition of economics, she came to regard her generalisation of John Maynard Keynes鈥檚 theories and their integration with Kaleckian and Marxian insights as her more substantial contribution, along with a vigorous defence of rigorous evidence-based thought over inductive mathematical modelling. Among an impressive body of work, three books by Robinson mark key moments in the evolution of her ideas: The Economics of Imperfect Competition (1933), An Essay on Marxian Economics (1942), and The Accumulation of Capital (1956) (Marcuzzo, 2003).

In 1933, she made her international reputation with brilliant work within the orthodoxy on imperfect competition, offering an internal critique of the marginalist theory of distribution. Only a decade later, her reflections on reading Karl Marx persuaded Robinson to question the Marshallian methodology, in particular its polite theory of income distribution which became so incongruous during and after the depression (Marcuzzo, 2003).1 Finally, in 1956, she had the courage to follow the logic of her argument to examine the whole neoclassical theory of income distribution and its predominant method, facing the might of the now dominant American economics profession in the [in]famous capital controversy. She had to accept the pyrrhic victory of her interlocutors accepting she was right, yet the profession moving on regardless.

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International support for聽the聽least developed countries: moving聽out of the mainstream

Dan1 Comment

Next January the next United Nations Programme of Action for least developed countries (LDCs) will launch in Doha. It will set the framework for the next 10 years of international support for the world鈥檚 46 officially poorest and most structurally disadvantaged countries, home to around a billion people.  

LDCs are low-income countries confronting severe structural impediments to sustainable development. Membership of the category is based on : income per capita, human assets and economic and environmental vulnerability.  

 for LDCs currently falls under three categories: trade, aid and a range of ad hoc measures broadly aimed at help with taking part in the international system, such as lower contributions to the UN budget and support for travel to international meetings like the annual UN General Assembly.  

Support is largely based on the premise that LDCs are artificially or temporarily excluded from global commerce. Preferential market access, temporary development assistance and help with participating in multilateral processes are intended to tackle this defect, in turn helping the LDCs 鈥榗atch up鈥�.  

Dating to 1971, the category is the only one recognised in UN and multilateral legal texts. There is no official 鈥榙eveloping country鈥� or 鈥榤iddle income鈥� category with associated support measures. Low income countries are not specifically targeted, and the small and vulnerable states are only recognised as a working group at the World Trade Organisation. They are not acknowledged in the legal texts. 

Although donors don鈥檛 meet aid pledges and support doesn鈥檛 go far enough, official targets are possible because the LDC group is officially recognised in the UN system and has legal bearing. An example of such a target is the commitment by developed countries to deliver 0.15-0.20% of gross national income (GNI) in development assistance to LDCs. The European Union offers duty-free, quota-free market access to LDC exports under its Everything But Arms (EBA) trade scheme for LDCs. 

The theory behind support for LDCs is implicitly based on the mainstream economics view that LDCs lag behind because they aren鈥檛 exposed enough to correct market prices and conditions. The removal of so-called distortions like overseas tariff and non-tariff barriers, alongside temporary development assistance and help taking part in the global system, is supposed to free up these economies to play a fuller role in the international economy. Economic growth will drive development and reduce poverty. 

The evidence shows that for most LDCs this theory never worked. Until the pandemic the economies of some LDCs were performing well. Up to 12 could leave the category in coming years. A few, like Bangladesh, Cambodia and Myanmar, were able to take advantage of lower tariffs for their garment exports. These three countries account for 87% of imports to the EU under EBA.  

But half were supposed to meet the criteria by 2020, according to international targets. 12 graduations falls well short. The six that have left since the formation of the category in 1971 have not all done so because of better international market access or special support measures. Commodity exports, tourism or improved health and education are mostly responsible.  

The remaining LDCs aren鈥檛 catching up.聽The gap is widening.聽The pandemic聽聽group.聽Gross domestic product (GDP)聽shrank 1.3% on average聽in 2020, with the economies of 37 contracting during the year聽and extreme poverty in the group rising by a staggering 84聽million. But even before聽Covid, average real聽GDP per capita聽for the group聽had long diverged聽from聽other developing countries聽and the聽rest of the聽world.聽聽

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World Development under Monopoly Capitalism

benjaminselwyn1 Comment

Photo: do bicycles come from? Source: WDR2020, Figure 1.1, pp. 16.

One of the main effects (I will not say purposes) of orthodox traditional economics was鈥 plan for explaining to the privileged class that their position was morally right and was necessary for the welfare of society.

鈥擩oan Robinson1

The recent period of globalization鈥攆ollowing the collapse of the Eastern bloc and the reintegration of China into the world economy鈥攊s one where global value chains have become the dominant organizational form of capitalism. From low to high tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through global value chains. According to the International Labour Organization, between 1995 and 2013 the number of people employed in global value chains rose from 296 to 453 million, amounting to one in five jobs in the global economy.2 We are living in a global value chain world.3

The big question is whether this global value chain world is contributing to, or detracting from, real human development. Is it establishing a more equal, less exploitative, less poverty-ridden world? Which political economic frameworks are best placed to illuminate and explain the workings of this world?

Recent critical scholarship has applied monopoly capital concepts and categories to the analysis of global value chains. John Bellamy Foster and others have illuminated how global value chains represent the latest form of monopoly capital on a world scale.4 John Smith shows how surplus-value transfer and capture鈥攆rom workers in poorer countries to lead firms in northern countries鈥攊s portrayed by mainstream economists as 鈥渧alue added鈥� by those firms.5 Intan Suwandi analyzes how global value chains are enabled by, and also intensify, differential rates of worldwide labor exploitation.6

Mainstream advocates of global value chain-based development tend to ignore such critical analyses, and continue to preach the benefits of global value chain integration by drawing on examples and data that support their claims. However, it says much about the anti-developmental dynamics generated by global value chains when a World Bank report advocating global value chain-based development actually provides data that supports the analyses of the aforementioned critical authors.

Here, we interrogate the data used and the claims made in the World Bank鈥檚聽World Development Report 2020, titled聽Trading for Development in the Age of Global Value Chains聽(WDR2020, or 鈥渢he report鈥�).7聽While the report portrays global value chains as contributing to poor countries鈥� development through job creation, poverty alleviation, and economic growth, we reveal how its data shows the opposite.8

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Inner-city pressure and living somewhere in-between聽

afroeuropeanstudiesLeave a comment

On a cold winter鈥檚 day in 2014, I sat awkwardly in the office of the person managing a high-rise apartment building in Johannesburg鈥檚 Central Business District (CBD). The building is a former office block that has been renovated by the city鈥檚 largest private affordable housing company and is currently rented as residential accommodation. Affordable housing is commercial rental housing that caters to people who earn too much to qualify for state-subsidised housing, otherwise known as social housing, but too little to purchase their own properties on the regular market. Rents in the building in which this incident took place range from R1325 (拢65 or Ksh9695) for a studio room to R3589 (拢174 or Ksh26261) for a 2-bedroom apartment. I was in the building to interview the manager about the ins and outs of her job, and to then interview tenants living there. However, our interview was interrupted by a distraught tenant. She was visibly upset, and I soon realised that she had been locked out of her apartment. Unfortunately, this was not an exceptional situation. The housing company, like others working in Johannesburg鈥檚 inner-city, use lock-outs, or the threat thereof, to ensure that tenants pay their rent. , I had frequently heard about the threat of lock-outs, but this was my first time witnessing the effects of one actually being enforced. Several building managers had told me that they find ways to avoid having to implement them, negotiating with tenants or giving them advanced warning so that they have time to scrounge money together to make a payment and stave off punishment. In this case, however, all efforts to prevent the lock-out had failed. It was the middle of the month, and rent, usually due on the 1st, still had not been paid. The building manager therefore had no choice but to adhere to the demands of her job, even though this had obviously disturbing and upsetting consequences. However, to mitigate the harm caused to the tenant and her young child, the manager, who also lives in the building, arranged for them to sleep in her own apartment that night, whilst they tried to locate some funds to begin repaying the debt. In this case, the pressures induced by fluctuating fortunes and a ruthless cost-recovery business model, as well as the strain to personal relations and consciences this induces, became stark.  

Although people living in affordable housing generally have stable salaries and employment, as the incident above shows, they too can experience downturns in luck, lose money and jobs and find themselves out on the street. Thus, whilst the plight of chronically un(der)employed people and those living in informal settlements is cause for concern and rightly receives much critical attention, it is important to bear in mind that the middle-classes too are caught between . In what follows, I trace the (pre-covid-19) experiences of people living in social and affordable housing in inner-city Johannesburg. As will become clear, their lives are shaped by economic pressure, as they work hard to pay their rent and forgo other forms of social interaction whilst striving to get by. At the same time, they also encounter other forms of pressure, as they contend with difficult and unpleasant environments and navigate spaces marked by fear of crime and concerns about safety.  

Other pieces in this blog series have argued that pressure can be theorised as an imbalance between (real or imagined) economic demands and concomitant abilities to fulfil them. However, imbalances also extend beyond economic concerns and encompass desires about living situations, ease of daily life, and safety and security. In inner-city Johannesburg, pressure emanates from the fact that the prevailing urban reality does not match people鈥檚 aspirations for central accommodation that is close to jobs, schools and social services, but also provides comfort, peace of mind and liveable environments. Faced with this mismatch or imbalance between aspirations and reality, people are forced to live in-between, to reside somewhere and make do, whilst aspiring to be elsewhere, but simultaneously knowing that there are few avenues through which this aspiration can be realised. The cumulative effects of this pressure is a form of resignation and detachment, a sense of living in-between and accepting what one can get from a vastly unequal socio-economic landscape.  

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The聽frailties聽of聽diaspora bonds聽

Aleksandr V. GevorkyanLeave a comment

The interest in聽diaspora bonds聽is sustained by the theoretical potential聽聽in聽poor economies by raising funds from聽expatriate communities, often labor migrants, living abroad.聽At the start of the COVID-19 pandemic in 2020,聽as聽developing nations聽faced聽sudden reversals聽in聽capital flows, diaspora bonds聽聽to聽counter聽the international capital markets鈥櫬爒olatility.聽A year later, the聽聽by the international institutional investors may prompt聽renewed calls for tapping into diaspora. But聽is the alternative scheme so easily deployable?聽

Diaspora bonds are sovereign debt securities issued by countries appealing to the altruistic motives of their cultural and national diasporas across the world. Historically, there have been several attempts to leverage the diaspora premium, with Israel and India running the most effective . 

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The聽Geopolitics of聽Financialisation聽and Development: Interview with Ilias Alami

Ilias ALAMI3 Comments

This聽interview聽was originally聽published in German in the special issue on聽financialisation聽and development policies of the journal聽Peripherie, September 2021, No. 162/163. Frauke Banse and Anil Shah聽(both based at Kassel University)聽spoke with political聽economist聽Ilias Alami聽(Maastricht聽University)聽about聽some of his recent work聽on the relationship between geopolitics, financial flows for development and emerging forms of聽鈥榮tate capitalism,鈥櫬燼s well as related new imperialist formations. The聽interview was conducted via email in May 2021.聽聽

The interview covers a聽series聽of聽International Political Economy聽topics.聽Ilias聽first locates the emergence of the聽Wall Street Consensus in the long and turbulent histories of the relation between finance and development聽as well as in聽secular聽capitalist transformations. He then聽outlines聽some of the conceptual tools he鈥檚 developed聽in his work聽in order to make sense of the聽contemporary聽interconnections聽of money and finance聽and the reproduction of聽imperialism and race/coloniality.聽Next,聽he situates these interconnections within broader scholarly debates about聽financialisation聽and聽highlights聽the similarities and differences between ongoing sovereign debt crises in the global South and the so-called 1980s 鈥楾hird World debt crisis.鈥� Finally,聽Ilias聽discusses the聽recent聽emergence of new forms of聽鈥榮tate capitalism鈥櫬燼nd their聽complex relation聽to the extension聽and deepening聽of market-based finance.聽

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Capital accumulation and the trend towards normal capacity utilisation in the United States

sjgahnLeave a comment

In this post we show that an increase in aggregate demand first generates an increase in   the use of productive equipment and then an increase in productive capacity. This suggests we do not need to worry about inflation after a fiscal or monetary stimulus to boost aggregate demand, but can rather expect higher investment in the long term along with utilisation returning to its pre-shock levels.   

A stylised fact that characterises modern economies is that part of the installed productive capacity is persistently idle. By productive capacity I mean the productive equipment (mostly fixed capital goods) in existence, together with that part of the workforce which is required to operate it. As we can see in Figure 1, in countries as diverse as Belgium, Finland or Lithuania, the effective utilisation of installed capacity often gravitates below 100%, and around 80% on average worldwide.

Figure 1. Installed capacity utilisation by country (1998Q1-2017Q4).

Source: see Appendix I.

The academic consensus is that there are large margins of idle capacity planned by entrepreneurs. The reasons why entrepreneurs plan to operate with idle capacity vary according to the school of thought considered. At the risk of making a drastic simplification, we can say that while some authors think that entrepreneurs do so in order not to lose market share in the face of changes in demand, others tend to think that there is a rate of utilisation of installed capacity that does not accelerate inflation (Non-accelerating inflation rate of capacity utilisation, NAICU).

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