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Louis- Philippe Rochon and Sergio Rossi

Rethinking economics is a dramatically urgent necessity in light of the damages caused by the 2008 global financial crisis, resulting from the dominance of mainstream economics. Economic policies implemented since the early 1980s in many countries have induced lower economic growth, higher rates of involuntary unemployment and more income and wealth inequalities than in the previous three decades. A decade after the beginning of this crisis, policy is still unable to provide all citizens with greater economic comforts. This volume contributes to rethinking economics by providing readers at all levels with thoughtful contributions on a range of topics.

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Edited by Louis-Philippe Rochon and Sergio Rossi

Since the beginning of the 21st century, there has been an unprecedented move towards ‘rethinking economics’. This book contributes to this worldwide discussion by providing readers at all levels with thoughtful contributions on a range of economic topics. The book includes chapters on rethinking fiscal and monetary policies, international trade, the role of the state, money, growth, the environment, development policies, energy, healthcare and more. Written by top experts in their respective fields, this book will be useful to students and faculty who want to not only rethink economics, but also to offer an alternative and coherent economic analysis to the orthodoxy.
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Steven Pressman

Policymakers have adopted two main antipoverty approaches in the United States. First, they have emphasized developing human capital, enabling workers to earn higher wages. Second, transfer programmes have provided a safety net for low-income citizens. This chapter advocates an alternative approach: using social insurance programmes to reduce poverty without creating negative incentives. It then looks at programmes focusing on three different age groups: (1) child allowances and paid parental leave, (2) unemployment and disability insurance and (3) old-age pensions. It finds these programmes effective in reducing poverty throughout the developed world, especially in Nordic countries with generous social insurance benefits.

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Esteban Pérez Caldentey

This chapter argues that the unsatisfactory performance and dim future prospects of developing economies demand rethinking the theoretical foundations of development economics by fostering a dialogue and collaboration between structuralist and post-Keynesian economics. This collaboration can be centred on five themes: (i) a methodological approach based on historical trends and measurement; (ii) the characterization of the system of economic relations around the concepts of centre and periphery; (iii) the relation between income distribution, accumulation and economic growth; (iv) the central role of demand and (v) the role of the State.

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Angel Asensio

As Keynes pointed out, economic decisions and activity under uncertainty do not tend automatically to full capacity utilization. Firms in general cannot but adapt their output to expected demand. This chapter invites us to rethink economic growth as the result of the factors that make the firms more or less optimistic regarding future aggregate demand. This is because expected demand is the driving force of output, time after time, and commands innovation and capital accumulation that, in the long run, allow for higher output in spite of the demographic constraint.

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Guillaume Vallet

The global financial crisis that burst in 2008 seriously undermined economics from an epistemological, methodological as well as philosophical perspective. In this respect, the way we think and approach economics must be reconsidered afresh. In this chapter we will show, contrary to the normal evolution of mainstream economics, that there is an interest and even an urgency of opening economics to other disciplines. This is the case in particular with sociology, but also history, anthropology and political science. As we argue, pluralism allows for greater knowledge, which can only serve to reinforce the scientificity of economics.

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Lynne Chester

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.

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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.

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Matthieu Llorca

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.

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Robert McMaster

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.