Why did the economists of the so-called "mainstream" seem to fail to foresee the global economic crisis that exploded in 2008? And why do they appear to have difficulty in putting forward an interpretation of it that is consistent with the theoretical foundations of their models? These two questions have echoed insistently since the outbreak of the crisis, not only in academic circles but also in the mass media, and appear to reflect increasingly widespread dissatisfaction with the dominant paradigm of economic theory.
Many believe that the global recession now underway may constitute an historic watershed for the evolution of economics and therefore that an authentic change of paradigm is called for, rather than only minor adjustments to the dominant approach. Since the start of the crisis, there has indeed been a profusion of contributions from alternative areas of economic study, and in particular from those adopting a critical stance with respect to mainstream economic theory. This collection puts forward promising reinterpretations of the primary schools of heterodox political economy, stringent critiques of the conventional readings of the recession, new schemes of theoretical and empirical analysis of the crisis, and proposals for economic policies alternative to those hitherto adopted.
This book contains a selection of some of the most recent contributions to the critique of mainstream economic theory and policy, and discusses the origins and possible evolutions of the current economic crisis. The collection should be of interest to students and researchers focussing on macroeconomics, monetary economics, political economy and financial economics.
Preface Malcolm Sawyer. The Global Economic Crisis: An Introduction Emiliano Brancaccio and Giuseppe Fontana Part 1: Economic Theory 1. On the Supposed Completeness of the Mainstream Theories of Crisis Emiliano Brancaccio 2. Economy and Economics: The Twin Crises Alessandro Vercelli 3. The Great Recession and the Third Crisis in Economic Theory Riccardo Bellofiore and Joseph Halevi 4. As If Nothing Were Going to Happen: A Search in Vain for Warnings about the Current Crisis in Economic Journals with the Highest Impact Factors Andrea Imperia and Vincenzo Maffeo Part 2: Labour, Distribution and Profit Trends 5. Changes in Income Distribution, Financial Disorder and Crisis Aldo Barba and Massimo Pivetti 6. Income Distribution and Borrowing: Tracking the U.S. Economy with a "New Cambridge" Model Gennaro Zezza 7. Changes in Functional Income Distribution in Italy and Europe Antonella Stirati 8. Low Wages, Consumer Credit and the Crisis: A Monetary Theory of Production Approach Guglielmo Forges Davanzati and Riccardo Realfonzo 9. Back to the Future? The Tendency of the (Maximum) Rate of Profit to Fall: Empirical Evidence and Theory Stefano Perri Part 3: International Economic Relations 10. The International Circuit of Key Currencies and the Global Crisis: Is There Scope for Reform? Lilia Costabile 11. Globalisation and the Great Crisis Ernesto Screpanti 12. The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded Andrea F. Presbitero and Alberto Zazzaro 13. Notes on Europe, German Mercantilism and the Current Crisis Sergio Cesaratto Part 4: Economic Policy 14. Privatization, Reproduction and Crisis: The Case of Utilities Bruno Bosco 15. Property Rights in the Knowledge Economy: An Explanation of the Crisis Ugo Pagano and Maria Alessandra Rossi 16. Employment and Income Distribution from a Classical-Keynesian Point of View: Some Tools to Ground a Normative Analysis Enrico Bellino