The energy regime upon which capitalism is dependent is not the object of analysis for mainstream economics. Energy is treated by mainstream economics as an abstract adjunct to the capitalist economy in the form of inter alia an intermediate production input, a market, a commodity, a relationship to economic growth or the source of production externalities such as resource depletion and pollution. This chapter posits an alternative analytical framework drawn from French Régulation theory, which, using institutions as the focus of enquiry, situates the analysis of energy within its context of use within capitalism and the processes of economic change.
Jean- Luc Bailly
Our monetary economies of production are not based upon relative exchanges described by the standard theory. Money is neither a commodity nor a positive asset; it cannot be exchanged against physical goods and services. It follows that payments do not consist of mutual transfers of commodities. In fact, each producer working for the needs for the community produces wealth for himself. Further, transactions on any markets are absolute exchanges. One of the consequences of this is that market prices do not measure wealth; rather, they are coefficients of redistribution of products.
Fiscal policy is the object of numerous theoretical controversies, notably during the two most recent crises: the 2009 great recession and the 2011–12 euro-area crisis. In such framework, we propose to rethink the use of fiscal policy through three elements. First, theoretical principles developed by Keynes and post-Keynesian authors must be put forward to focus fiscal policy on economic growth. Second, globalization offers new opportunities to use this instrument. Finally, fiscal indicators, such as the structural primary budget balance or the net public debt, must be taken into account to offer a fiscal space necessary to apply our proposals.
Standard health economics is an applied field of neoclassical economics. It has three central characteristics: first, it conceives health care interactions in terms of market exchange, albeit these exchanges frequently demonstrate “market failure”; second, it embraces homo oeconomicus: the value of actions rests solely on their outcomes, and following from this, third, health economics attempts to construct cardinal utility measures as a means of evaluation. Each of these characteristics, jointly and separately, has been subject to extensive criticisms. This chapter concentrates on one area of criticism that has not received the attention that it, arguably, merits. The standard approach usually overlooks the importance of “care” and “caring” in the provision of health and medical care. Care is challenging to define – it is instinctive, can be manifest as a range of particular activities, may be associated with a role, and therefore reflects obligations, duties and virtuous behaviour, among other properties. The standard approach cannot capture these features in its reductionist and restrictive framework. This results in the potential for an extensive misallocation of resources in the provisioning of caring services. The chapter advocates a reformed health economics founded on a concept of care – as opposed to market exchange – that properly treats the patient as a person.
Omar F. Hamouda
How can policy interventions achieve their desired goal of alleviating income disparities? Is there an established, universal economic criterion that guides what determines or how to judge “fair” distribution? The economic structure of the twenty-first century is characterized by a production pattern in which capital is slowly eclipsing labour in the creation of added value, rendering a great deal of human participation redundant. In this environment, orthodox economics has little to contribute to the question of who should get what portion of the national dividend, and income redistribution is problematic. Insight from Keynes can help in rethinking the theory of income distribution.
Rudiger von Arnim
Post-Keynesian economics (mostly) focuses on macroeconomic phenomena, whereas theories of international trade are geared towards microeconomics. The crucial dividing line is Say’s Law: standard trade theory concerns the cross-country exchange of goods and services on the assumption of full employment. In contrast, post-Keynesian analysis of cross-border activity builds on the assumption that demand is the binding constraint. This chapter reviews these themes from a critical point of view, by first broadly surveying mainstream trade theories, and second contrasting these with post-Keynesian ideas.
The neoclassical real-economic equilibrium mainly rests on the competitive-efficient-market hypothesis and regards money and finance as mere appendices. Monetary stability is related to price stability and neutral monetary policy, and financial stability to the allocative efficiency of financial intermediation. Subsequent policies assume that financial markets can self-regulate in case of shocks and do not aim to strengthen public control over the financial system. However, the recurrent crises of the last decades point out that liberalized/deregulated financial markets are prone to systemic crises fuelled by endogenous dynamics. New regulatory alternatives are then required to ensure systemic stability.
Louis- Philippe Rochon
Mainstream monetary theory rests on two arguments: inflation is determined by demand, and interest rates are used to return inflation to its target: central banks are the guardians of inflation. However, for post-Keynesians, inflation cannot be caused by demand, and there exists a poor and unreliable relationship between interest rates and aggregate demand. The whole theoretical edifice of the neoclassical approach collapses. Therefore, if monetary policy is based on a wrong interpretation of inflation and the link between aggregate demand and interest rates, the result can be and has been catastrophic. It leads to periods of crisis in aggregate demand.
Jean- François Ponsot
This chapter shows that money is more than a purely economic instrument and has consequences for the whole of society. It identifies three perspectives that better reflect the complexity of money: a macroeconomic perspective, based on the post-Keynesian endogeneity of money; an institutionalist perspective identifying money as a social link; a political-economy perspective treating money as an instrument of power and conflicts. Highlighting this three-dimensional nature of money allows us to understand the proliferation of monetary innovations and contestations in the recent past (local currencies, crypto-currencies and so on) that have emerged to challenge the established monetary order and try to reappropriate money.
The consequences of the financial crisis erupting in 2008 offer a variety of possibilities for rethinking politics. First, the liberal-democratic perspective underpinning most contemporary Western societies assumes that any problems these societies encounter can be resolved within the liberal-democratic understanding of the political. This assumption will be challenged through investigating the version of liberalism offered by Rawls. Second, the question of agent responsibility appears central to understanding the financial crisis. Yet the model of human action prevalent in most political and economic analyses does not allow this question of agent responsibility to be satisfactorily raised.