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Category: Economic Theory

Toward a New Bretton Woods Agreement

The fifteenth anniversary of the euro in 2017 offers a good occasion to reexamine what is wrong with the present international monetary arrangements and the theories used to justify them. Theoretical questions concerning the nature of money have profound implications for policy issues, including the mandates of central banks, interest rates, exchange rates, credit growth…

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The Bankruptcy of Modern Finance Theory

Outcomes are easy to measure in financial markets: you either beat the index or you don’t. And the results could not be clearer about how few people possess any real skill. A recent study found that 70 percent of actively managed funds have failed to beat their benchmark index and just 2.3 percent have delivered excess…

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The Corporate Contradictions of Neoliberalism

In The Cultural Contradictions of Capitalism—a canonical work of economic sociology in the 1970s and ’80s—Daniel Bell argued that the productive and consumptive sides of capitalism had fallen into contradiction. Capitalism continued to rely on the Protestant ethic of sobriety and delayed gratification in the sphere of production, yet, contradictorily, had come to rely on modernist hedonism and credit purchasing in the sphere of consumption. Modern capitalism needed people to be sober by day and swingers by night. What is more, the displacement of the Protestant ethic by hedonism, Bell argued, was primarily the work of capitalism itself. Its mass production urbanized the population and created an economy of abundance…

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The New Class War

The Cold War has been followed by the class war. A transatlantic class war has broken out simultaneously in many countries between elites based in the corporate, financial, and professional sectors and working-class populists. Already this transnational class conflict has produced Brexit and the election of Donald Trump to the American presidency. Other shocks are…

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Dismiss Macroeconomic Myths and Restore Accountability

Statements from past and present Federal Reserve chairmen inspire little confidence that their models provide any understanding of what is going on within the United States, never mind the rest of the world. Yet the Fed continues to rely on the same analyses as it did before the financial crisis of 2008, and it is still led…

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A Return to Political Economy

Prior to the 2008 financial crisis, it was widely taken for granted that the U.S. economy was exceptional, at least in the developed world: it was the only one of the major developed economies that could grow. The Japanese economy had stagnated in the 1990s. Europe was on the road to similar stagnation on account of its pensioner-heavy demographic profile and an overregulated business sector…

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James Burnham’s Managerial Elite

Conservative polemicists have long presented a caricature of a decadent liberal elite, and liberals have offered a competing caricature of a conservative plutocracy. But few have attempted to understand how these ostensible opponents function as elements of the same elite, or how they have participated in maintaining the broader intellectual, political, and economic status quo.…

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