Nikolaos Karagiannis and John E. King
The edited volume A Modern Guide to State Intervention: Economic Policies for Growth and Sustainability seeks to investigate the impact of the changing role of the state, and offers an alternative political economy for the third decade of the 21st century. It discusses various alternative theoretical approaches, sustainable growth-inducing economic policies, and proposals to address special challenges in the era of neoliberal globalization and financialization. These perspectives and policies have to be boldly and seriously considered if appropriate administrative and economic interventions towards changing the status quo of modern societies are to be pursued. With important contributions by distinguished academics, the book evaluates past efforts and policies, criticizes failed perspectives, and offers alternative strategies, policies and realistic options to address the global current socio-economic impasse.
Elsner discusses the notions of ‘complexity economics’ and ‘complex adaptive systems’, addressing briefly structures, mechanisms, critical factors and dynamic properties. By focusing on an evolutionary-institutional perspective, the author considers implied requirements for the state, and introduces the idea of new meritorics, coinciding with long-standing pragmatist-instrumentalist policy conceptions and the qualifications the state itself would need to develop.
Nikolaos Karagiannis, Zagros Madjd-Sadjadi and Joanna Bens
Karagiannis, Madjd-Sadjadi and Bens provide an overview of the state and its various functions, and discuss the changing role of government during the ‘era of change’. The authors critically examine the developmental state argument and offer important economic and politico-institutional aspects of what they believe to be desirable modern policy intervention.
Sawyer focuses on the fiscal responsibilities of governments and the nature of the objectives to be achieved through fiscal policies, examines the nature of the government budget position (deficit or surplus), and considers the difficulties and constraints of using budget position to achieve full employment. However, government spending has to be financed in the sense of the agency undertaking the expenditure being in prior possession of purchasing power.
Toporowski reviews important monetary theory and policy notions, and discusses monetary policy setting, endogeneity and the structure of financial markets. By examining the main reasons that can lead to monetary policy failure to influence economic decisions, the author strongly advocates those structural connections between financing and monetary policy that make monetary policy endogenous and are exactly the ones that are relied upon in alleviating financial instability.
Amitava Krishna Dutt
Dutt introduces fiscal policy into simple models of growth and income distribution between workers and capitalists, including models with full employment growth, classical-Marxian models, and models in which aggregate demand influences economic growth. The models are first analysed for the case of a balanced fiscal budget in which all government spending is on government consumption, and are then extended to examine government deficits and the dynamics of government debt, and public investment which affects productivity growth. According to Dutt, the models imply that fiscal policy expansion is not necessarily associated with adverse effects of growth and income distribution, and that the effects depend on the structural conditions prevailing in the economy.
Nikolaos Karagiannis and Zagros Madjd-Sadjadi
Karagiannis and Madjd-Sadjadi briefly discuss developmental intervention experiences that took place in different countries and continents, and critically examine the successful East Asian industrial growth model. Singling out important theoretical notions within the Post Keynesian and radical political economy traditions and the ‘right’ lessons, and cautiously considering the present dismal socio-economic environment, the authors offer general, but nevertheless important, realistic development policy areas based largely on the developmental state argument in a modern context while paying particular attention to public investment with a strong caring dimension.
Niechoj analyses the emergence of the modern welfare state - based on the writings of Marx and Polanyi - as a response to the evolution of a market society, and describes the provision of welfare as a collective action problem which is solved by a state that takes responsibility for welfare. The author focuses then on the character of welfare as interventionism and discusses and weighs liberal arguments against welfare.
Rossi presents the mainstream and conventional view that considers money to be ‘neutral’ on real magnitudes and attributes to monetary policy the single goal of price stability. The author then elaborates on monetary targeting/inflation targeting strategies, which have resulted in output and employment losses and have contributed to inflating credit bubbles that, eventually, led to financial crises of a systemic nature. Rossi recommends that monetary policy should aim at financial stability as well as higher employment, abandoning the dogma of central bank independence.