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Meet the new Coordinator Cohort!

We are so honored to introduce to you our new YSI working group coordinators! Three for each working group, this global group of 63 is stepping in to serve the working groups for a two year term. Get to know them!

Africa

Herbert Mba Aki | Herbert Mba Aki began his career studying law and joined YSI without a background in economics. He joined with the intention to learn about topics in macroeconomics, political economy, and development policies to support his PhD research in Political Science. In 2019, he attended his first YSI event which left him inspired after meeting bright and talented Africans who had careers as entrepreneurs, activists, artists, and policy-makers. Herbert decided to increase his involvement in YSI and saw the Africa Working Group as a space to not only make changes in his academic framework but where he could pose questions and solutions for the economic challenges faced by the region. He now serves as coordinator for the Africa Working Group.

Petronella Munhenzva | Africa Working Group coordinator, Petronella Munhenzva, grew up in a remote area in Zimbabwe that lacked government resources and access to development. This inspired Petronella to explore the impact of state policies on people’s livelihoods on a local level. Petronella sees access to opportunities and recognition as a challenge faced by African scholars, and also notices that a lot of the theories and concepts that are used to explore African topics tend to be imported from abroad. It is very important to support local knowledge and to support the works of African scholars, which Petronella works hard to do.

Geraldine Sibanda | Geraldine Sibanda first joined YSI three years ago after speaking at a panel at the YSI Africa convening in Zimbabwe and considers the Africa working group her home within YSI. She sees a challenge for the economic field in the region to be that there is little progress made into “unpacking and understanding unique country-specific and region-specific problems and creating tailor-made solutions for them.” Geraldine is currently based at the University of the Free State in South Africa.

Behavior and Society

Leigh Caldwell | Early in his economics career, Leigh Caldwell was building models of human and organizational knowledge while writing software – but he soon realized the implicit rationality assumptions he was relying on were, well, nonsense. He decided to start looking at principal-agent problems that were tied to accuracy. When presenting his insights at a workshop, he was introduced to behavioral economics literature and he realized there was a rich source of material which shined a light on the problems he’d been looking to solve. Today, Leigh serves as one of the coordinators for the Behavior and Society Working Group!

Komal Shakeel | Komal Shakeel has been a part of YSI since our beginning in 2013 and was part of the group that created the founding principles. Back then, working groups were based on regions and she set up a working group of China and Pakistan. Eventually, she realized that this approach was too broad for her interest area. Komal wanted to support and to connect with researchers around the world who were interested in behavioral economics and so the Euro-Economics Working Group was born, which eventually evolved to the Behavior and Society Working Group. She now serves as coordinator for the group.

Iva Parvanova | Iva Parvanova is a Bulgarian researcher currently based at LSE in London. A YSI member since 2016, Iva is one of the new coordinators for the Behavior and Society Working Group. Her research interests are rooted in behavioral and experimental approaches applied to understand corruption in healthcare. A dedicated researcher on this topic, the book currently sitting on her nightstand is “Doing Harm: The Truth About How Bad Medicine and Lazy Science Leave Women Dismissed, Misdiagnosed, and Sick” by Maya Dusenbery.

Complexity Economics

Rutuja Uttawar | Meet Rutuja Uttawar! Rutuja was first introduced to economics when she stumbled on “The Economic Naturalist” by Robert H. Frank, which led her to the world of Heterodox economics and eventually led her to complexity as an approach to economic thinking. She was introduced to the Complexity Economics Working Group after submitting an abstract for the Festival for New Economic Thinking in Edinburgh in 2017. She then joined as a member and organized a reading group and now serves as one of the newest coordinators for the Complexity Economics Working Group.

Vanessa de Lima Avanci | Vanessa de Lima Avanci is currently based at Ideies in Vitória, Brazil and is a coordinator for the Complexity Economics Working Group. She first became acquainted with YSI in 2017 after attending the Innovation Bootcamp in Tallin, and later attended the Latin America convening in Buenos Aires the following year as part of the Complexity Economics Working Group.

Solomon Owusu | Solomon joined YSI and the Complexity Economics Working Group after being introduced by his friend, Danilo, in 2017. The group has been able to organize many projects and been able to build a strong, open, and transparent community. As coordinator, Solomon is excited to increase activity for the working group with more webinars, research groups and reading groups!

Cooperatives

Emi Do | Meet Emi Do, one of the coordinators for the Cooperatives Working Group who is currently based at the Tokyo University of Agriculture in Japan. Emi challenges herself not only through academia but also through trail running. She views this challenging endeavor as an excellent contrast to the arduous nature of academia. Her longest distance so far has been 115km and she’s hoping to complete a 100 miler within the next year!

Terence Tapiwa Muzorewa | Coordinator Terence Tapiwa Muzorewa first joined YSI in 2017 after attending a conference at the Free State University in South Africa. Terence admits that he fell in love with the working group! However, he has been working on cooperatives since before joining the working group and studied housing cooperatives for his PhD. Terrence is based at Midlands State University in Zimbabwe.

East Asia

Soheon Lee | Soheon Lee is one of the coordinators for the East Asia Working Group and is currently based at the Korean Embassy in Japan. Soheon first became a member of YSI in 2015 and has been actively participating as part of YSI. She joined the East Asia Working Group when it was re-established in 2017 to connect with Asia-based researchers and has met great colleges, young scholars and mentors through the working group and looks forward to meeting more!

Seung Woo Kim | Seung Woo Kim’s journey to becoming one of the coordinators for the East Asia Working Group began towards the end of his Ph.D. Seung Woo became interested in the global turn in economic history, which highlighted the problematic aspect of the Eurocentric view of the discipline. This pushed Seung Woo to research the way in which the Global South engaged in global finance and the international monetary systems as well as alternative approaches to economics. He then found the East Asia Working Group to be a space in which he could pursue various of these topics.

Rachel Ganly | Rachel Ganly is a MPhil Student in the Division of Social Science at Hong Kong University of Science and Technology. Her work explores the effect of men’s long working hours and gendered work norms on family formation in East Asia, supervised by Stuart Gietel-Basten.

Economic Development

Surbhi Kesar | Meet Surbhi Kesar, coordinator for the Economic Development Working group and a crime fiction fan! Based at Azim Premji University in Bengaluru, India, Surbhi believes that research agendas need to be global in its outlook and local in its reach. Her vision for the working group is for members to play the role of community researchers who can engage with questions of development, especially now with the challenges brought on by COVID-19.

Nurlan Jahangirli | Nurlan’s interest in Economic Development stems from his childhood in Baku, Azerbaijan. He noticed the economic struggles of the regions and from a young age held the belief that he wanted to contribute to the development of the region. This belief eventually led him to economics, and after a series of adventures, he committed to the area of development. Through the current COVID-19 crisis, Nurlan has seen how fragile economies are with regard to health crises and social problems. Because of this, he sees it as important to reframe how we view the development process. Nurlan is currently based at the University of Hamburg in Germany.

Santiago Gahn | Meet Santiago, an Argentine scholar based at Roma Tré University. He is a guitar aficionado, who favors the Blues and Jazz, and also a keen songwriter. He cites Jimi Hendrix as his biggest inspiration. He is currently working on “Towards a Theory of Economic Development” as there is currently no standardized theory of Economic Development. He sees it as important to read classical economic theories from theorists such as Adam Smith and Karl Marx and to interpret them through modern classical theory.

Economics of Innovation

Fernanda Steiner Perin | Fernanda first joined the Economics of Innovation Working Group at the Latin American convening in Buenos Aires in 2018. She later became an organizer as part of the Latin America Working Group and worked on projects related to innovation, which has led her to become a coordinator for the Economics of Innovation Working Group! With the current global situation as the COVID-19 pandemic continues, Fernanda sees a stronger need for innovation and policies to support innovation.

Rosie Collington | When Rosie Collington joined Genetic Alliance UK’s Policy and Public Affairs team back in 2016, her role was to develop and communicate responses to policy developments in genomics, health care, and health data to patients. However, it soon became evident research in these areas within political economy and socio-economics was sparse. Rosie decided to dedicate her work to understanding the economics of health data, public sector digitalization, and health innovation and promote it widely.

Dario Vazquez | Meet Economics of Innovation coordinator, Darío Vázquez! When we asked Darío what he believes the largest challenge facing the field is, he responded: “to transform the logic of innovation processes in order to guide them towards solving the great social challenges of our time.” Dario is currently based at the UNSAM in Buenos Aires, Argentina.

Economic History

Diego Castañeda | Diego Castañeda takes his economic history talents beyond academia. The new coordinator for the Economic History Working Group hosts “Mancha,” a radio show which debates politics, economics, and public life (you can listen on NoFm-radio.com!) He’s also currently producing a podcast on the economic history of pandemics and covers various different eras, from the Antonine plague that ravaged the Roman Empire to the current COVID-19 crisis.

Maylis Avaro | Meet Maylis Avaro! She is a French scholar currently based at the Graduate Institute in Geneva and one of the new coordinators for the Economic History group. She has been a member of the working group since 2018 when she first participated at the World Economic History Congress in Boston.

Alain Naef | Say hello to Economic History Working Group coordinator, Alain Naef! He is currently based at UC Berkeley in the USA. As coordinator he finds it important to keep a balance in the group between quantitative and qualitative economic history.

Finance, Law, and Economics

Luisa Scarcella | Say hello Luisa Scarcella! Luisa has been a part of YSI since our early days and attended our first plenary in Budapest. She is the new coordinator for the Finance, Law, and Economics Working Group. As coordinator, she places strong importance in keeping the group representative of the different areas of interest that exist within law and economics. She looks forward to fostering a strong online community that remains tight-knit through the current crisis until it is safe to meet in person again.

Christina Refhilwe Mosalagae| Finance, Law, and Economics Working Group coordinator, Christina’s desire to build a better world began in her early days. Christina cites her Setswana mother and her Polish stepfather as her biggest inspiration. “Through their love, sacrifice, and an appreciation for different cultures, they modeled the type of world that I want to be a part of building.” Christina is currently pursuing a Ph.D. at the University of Turin in Italy.

Limia Trifena | Meet Limia Trifena, one of the coordinators for the Finance, Law, and Economics and a boxing enthusiast! Limia first joined YSI two years ago after meeting YSI members at a conference in Berlin. Since this chance encounter, Limia has been an active member of YSI. She is currently based at the University of Warwick in the UK.

Financial Stability

Nathalie Marins | Meet Nathalie Marins! She is based at the University of Campinas in Campinas, Brazil. Nathalie is the newest coordinator for the Financial Stability Working Group, but comes with 11 years of experience in the field of financial stability!

Ádám Kerényi | We asked Ádám Kerényi what is the biggest challenge the Financial Stability Working Group now faces. For him, it’s the COVID-19 pandemic which has not only caused a tragic health crisis and triggered an economic downturn, but a liquidity and solvency crisis as well. These massive challenges to the financial system affect global financial stability. Ádám points out that central banks have remained crucial in safeguarding the stability of global financial markets and maintaining a flow of credit. He sees a need for continued international coordination to observe data, support vulnerable communities, and to contain stability risks.

Nicole Toftum | Nicole Toftum decided at the young age of 15 that she would pursue a career in the social sciences. Although she began her undergraduate years focused on politics, she later discovered Minsky and became fascinated with financial issues. She decided to focus on a multidisciplinary MA. During the 2018 YSI Latin America convening, she discovered the Financial Stability Working Group and joined right away and now serves as coordinator for the working group.

Gender and Economics

Magali Brosio | Magali Brosio first discovered the field of gender and economics when studying for her master’s while scrolling through Twitter. This inspired her to write her dissertation on the gender wage gap. Ever since then, her research interests have been within the field of gender and economics – both inside and outside academia. A proud feminist, Magali is one of the newest coordinators for the Gender and Economics Working Group.

Shakatakshi Gupta | Coordinator Shatakshi has always been interested in gender inequality issues, partially stemming from her own experiences with gender discrimination. Studying gender bias issues for her Ph.D., she realized that very few universities considered gender and economics a serious subject area and that there is a lack of coverage of the topic. Shatakshi believes that even though more people are acknowledging the role of economists in inhibiting gender discrimination, there is still a lot of work to be done.

Cicero Braga | Meet Cicero Braga, coordinator for the Gender and Economics Working Group. According to Cicero, the biggest issue facing the field is that there is limited literature on the topic. More data and mechanisms are needed to deal with the issues. Cicero is currently based at the University of Viçosa in Brazil.

History of Economic Thought

Christina Laskaridis | SOAS Ph.D. researcher, Christina Laskaridis, is a new coordinator of the History of Economic Thought Working Group. For Christina, one of the issues facing the niche field is the lack of programs that allow substantial research on the topic. “We are a small field that has been gradually cast out from many Economics departments, and links to adjacent fields are loose.” According to Christina, this creates a challenge in securing Ph.D. programs for newcomers and a lack of career opportunities which would help push the field forward. The History of Economic Thought Working Group is a great place to get started for those interested in doing research within the field.

Julia Marchevsky | Julia first became interested in the history of economic thought while pursuing her undergraduate degree. She started questioning when it was that the world began to focus on the concept of accumulating wealth and her curiosity led her to her current research interests. Christina also notes the importance of the field as she believes that understanding the progression of economic thought allows for those in the field to be better economists. Julia Marchevsky is currently based at the Federal University of Minas Gerais in Brazil.

Marius Kuster | Meet Marius Kuster, coordinator for the History of Economic Thought Working Group. The Swiss researcher is based at the University of Lausanne in Switzerland. When we asked Marius one of his secret hobbies, he told us he enjoys making music on his computer!

Inequality

Maria Cristina Góes | Meet Maria Cristina Góes! Maria was first inspired to research inequality while writing her master thesis which was inspired by Michel Kalecki’s theories. Kaleckian models explore how changes in the share of income that goes to workers can impact economic activity and employment by analyzing responses from employers and workers. Maria is the new coordinator for the Inequality Working Group and is based at Roma Tre University in Italy.

Natassia Nascimento | Meet coordinator, Natassia Nascimento! She is a Brazilian researcher currently based at UFRJ in Rio de Janeiro in Brazil! Natassia lists two fellow Brazilians as her biggest inspirations. The first is her grandmother who Natassia admires for her courage and wisdom. The second is Formula 1 legend Ayrton Senna, who was not only the best at what he did but passionate about it too.

Francisco Ardila | Francisco Ardila notes that interest in inequality skyrocketed after the 2008 financial crisis but peaked in 2013 with the release of “Capital in the XXI Century” by Piketty. Francisco notes that interest has become diluted by having inequality often being incorporated into other fields of economics and most research on inequality that is done today is really a by-product of research done in other fields. As coordinator of the Inequality Working Group, Francisco feels that inequality is an important enough subject to merit its own field, front, and center.

Keynesian Economics

Ana Bottega | Say hello to Ana Bottega! Ana first joined the Keynesian Economics Working Group in 2018 at the YSI Latin America Convening in Buenos Aires. She is one of the three new coordinators for the group. Currently on her nightstand? A literary classic – Don Quixote by Miguel de Cervantes. Ana is currently based at the Federal University of Minas Gerais in Brazil.

Sylvio Kappes | Meet one of our new coordinators for the Keynesian Working Group, Sylvio Kappes! One of his secret talents is writing fantasy fiction. Sylvio sees that with the current climate, it is crucial that governments do everything possible to end the pandemic; he considers austerity to be a major concern. Sylvio is currently based in Maceió, Brazil.

Lilian Rolim | Lilian Rolim first became involved with the Keynesian Economics Working Group at the Budapest Plenary in 2016 when she met economists working on similar projects. Lilian believes the field needs to adjust to incorporate pressing issues such as climate change and inequality. She also finds it incredibly important for economics to be more inclusive for researchers from diverse backgrounds. Lilian is based at the University of Campinas in Brazil.

Latin America

Gabriel Aidar | For Latin America Working Group coordinator, Gabriel Aidar, one of the biggest challenges he sees is defining the focus of the group. There are many economic topics that are related to the region, but for Gabriel, it is important to create a work plan which allows for the diversity of topics to be pursued while still maintaining focus on the primary issues which the region faces today.

Giuliano Toshiro Yajima | Latin America Working Group coordinator Giuliano Toshiro Yajima hopes to build stronger academic networks within the region. While Latin American research centers and institutions are well connected to their partners in the US or Europe, they have limited ties within the region. For Giuliano, there is a lot of work that needs to be done to strengthen these connections and bolster the research on Latin American economies.

Florencia Jaccoud | Meet yogi and coordinator for the Latin America Working Group, Florencia Jaccoud. Florencia is currently based in Maastricht in the Netherlands at the UNU-MERIT and is originally from Argentina.

Philosophy of Economics

Maisa Ribiero | The philosopher’s role is to question and examine the impact of economic policies and instruments. Philosophy of Economics Working Group coordinator, Maisa Ribiero, gives us an insightful look into how economic philosophers examine economics. One of the focus areas is the tradeoff that comes with economic choices and the impact on human welfare and social justice. Economic reasoning and policies will always impact human welfare and economic philosophers specialize in weighing the ethics of the decisions. They also examine the impact and function of the structures that facilitate economic activity, and they ponder on possible alternatives. For Maisa, the philosopher is a critic of the theories and approaches used by economists. “The most valuable work in science proceeds from the basis of significant expertise on the part of the philosopher”

Merve Burnazoglu | After a visit to her sister’s private banking office in Switzerland, Merve Burnazoglu was fascinated by the connection between the graphs and equations she saw on the screen and how they represented wealth in “the real world”. For Merve, this sparked her curiosity as to how wealth is created or extracted in the real world and this inspired her to study economics. As an economist, she began to further question economic systems and society, which led her to her current research area in Philosophy of Economics.

Juan Melo | For Philosophy of Economics Working Group coordinator, Juan Melo, the biggest challenge economists face is to bridge the gap between “big picture” topics (such as inequality, discrimination, democracy and markets) and the methodological questions, modelling, and theory that economists typically use. The way Juan sees it, Philosophers of Economics have the unique opportunity to use their research to foster exchange between science and political economy, which may be a daunting task, but also a rewarding one.

Political Economic of Europe

Stefano Merlo | Stefano Merlo first became part of the Political Economy of Europe working group after presenting his dissertation at the first YSI Plenary in 2016. At the time, he was researching the account imbalances before the Euro Crisis and many researchers in the working group offered guidance, suggesting that he take a look at the EU as well. Stefano not only heeded their advice, but became more interested in the topic, and is now one of the coordinators for the group!

Salome Topuria | Meet Salome Topuria, one of the coordinators for the Political Economy of Europe Working Group! Her research background is in political economy, and she studied Political Economy of European Integration at the Berlin School of Economics and Law and is currently a PhD candidate in political science at the University of Kassel in Berlin.

Stefano Di Bucchianico | Say hello to Stefano Di Bucchianico, an Italian researcher currently based in the beautiful and historic city of Siena at the University of Siena. Stefano is one of the new coordinators for the Political Economy of Europe Working Group and is excited to set up an established schedule of activities for the group!

South Asia

Aneesha Chitgupi | Aneesha Chitgupi first joined YSI while pursuing her PhD. She wanted to explore organizations that supported and encouraged new ways of research, which led her to a YSI workshop in Kolkata, India where she participated as a YSI panelist. The rest is history and we welcome her as one of the coordinators for the South Asia Working Group.

Arun Balachandran | 24% of the world’s population lives in 3% of the world’s land area in South Asia, as noted by Arun Balachandran, making the density of its population a challenge for the region. Arun points out that most of the major issues in South Asia stem from its demographic composition but its population also has the potential to be a driver for its economic growth. He points out that South Asia has begun to adopt alternative ways of thinking and believes that the spread of people-centric economic development could be the key to the region’s growth. Arun Balachandran is a coordinator for the South Asia Working Group.

Aqdas Afdal | Aqdas Afdal was already an involved member of YSI prior to becoming a coordinator for the South Asia Working Group. He first started attending our events way back in 2015 when YSI was still in its infancy! Aqdas appreciated how the working groups would bring together some of the brightest minds from around the world to generate new ideas for a sustainable, just, and equal world.

States and Markets

Nicolas Aguila | Argentine scholar Nicolás Aguila first became involved with the States and Markets Working Group when the group was first created in 2017, which was also how he was first introduced to YSI. He is currently based in Birmingham, UK.

Esra Urgulu | Esra’s interest in development economics, industrial policy and the role of the state started before she even began studying economics! Over the past few years, she has participated in multiple panels on these topics organized by YSI and the States & Markets Working Group. She is very excited to be one of the group’s new coordinators.

João Macalós | João first fell into his current research topic – quantitative analysis of international monetary relations – during his time as an assistant lecturer. He realized that the field was underdeveloped and eventually discovered the States & Markets Working Group after being introduced by friends and colleagues. The group touched on his research interests and he has been a dedicated member ever since.

Sustainability

Felipe Botelho Tavares | Sustainability is one of the most pressing issues of our time, and according to Sustainability working group coordinator Felipe Botelho Tavares, one of the biggest challenges is working to “re-orient human and economic activities towards new paradigms of prosperity” and also to focus on ensuring a lasting quality of life and environment for future generations to come. Felipe is currently based in Rio De Janeiro, Brazil at the Brazilian Petroleum Institute.

Ariel Ibanez-Choque | Meet Ariel Ibanez-Choque, one of the new coordinators for the Sustainability Working Group! He first became involved with the topic when studying it as part of his master’s degree when he became part of a multidisciplinary and international research team focusing on sustainability and natural resources in Latin America. Ariel is currently based at the Universidad Autónoma Metropolitana in Mexico City.

Dania Clarke | Say hello to Dania Clarke, one of the newest coordinators for the Sustainability Working Group. Like many Vancouverites, Dania loves tending to her indoor plants and backcountry hiking through British Columbia’s beautiful scenery. She is currently based at Simon Fraser University in Vancouver, Canada.

Urban and Regional Economics

Kishorekumar Suryaprakash | “After the advent of neoliberalism, urban inequality has increased. Competition between global cities to attract capital have resulted in a relaxation of labour laws, environmental laws, huge tax concessions and expropriation of poor from their lands. [This has] created a major gulf between the rich and poor in cities” – Kishorekumar Suryaprakash, Urban and Regional Economics Working Group coordinator

Rafael Campos | For Rafael Campos, the Urban and Regional Economics Working Group is able to be a strong player in the exchange of ideas between young scholars around the world largely in part because of its global nature. For Rafael, this is of paramount importance since the group often addresses issues such as the role of geographic space on economic development and having members from diverse locations allows for different experiences and approaches to be heard.

Simone Grabner | We asked Simone Grabner if she had any secret talents and like many of us in quarantine, she has been working on her cooking skills! She is a self-confessed foodie and loves to whip up meals for her family and friends. She is currently based at the Gran Sasso Science Institute in L’Aquila, Italy and has become a keen cook in Italian cuisine! Simone is one of the newest coordinators for the Urban and Regional Economics Working Group.

The Social Determinants of Health in the Age of COVID19

With the ongoing pandemic and economic crisis, there is much to discuss. To inform the debates taking place in the YSI community, Luisa Scarcella and Aleksandar Stojanović have kicked off a special webinar series in which to unpack some of the accompanying challenges. For the first session, Luisa invited Professor Sir Michael Marmot, Professor of Epidemiology and Public Health at University College London, Director of the UCL Institute of Health Equity, and Past President of the World Medical Association. His work reveals the interrelated nature of health and socioeconomic inequality; a highly relevant topic today.

When economists talk about health, they usually talk about the healthcare system. They don’t often talk about what makes people sick in the first place. But Marmot does, and he finds that our people’s health is closely tied to the socio-economic conditions they are in; lower socio-economic conditions lead to worse health, and increasing socioeconomic inequality yields a widening health gap. His findings are compelling:

In the developed world, general life expectancy has stagnated since WW2; that is unprecedented for peacetime. But for the lower economic classes, it’s even worse. In the UK, the life expectancy of the poor has been decreasing for a decade now. It’s no coincidence, Marmot argues, that this trend emerged in a context of harsh austerity measures. Having reduced the purchasing power of the underprivileged, healthy living is increasingly out of reach.

Other advanced economies, the US in particular, show similar trends. There, too, structural inequalities give rise to job insecurity, housing insecurity, food insecurity, racism, and violence. These disadvantages translate into worse health for the poor. So, to improve the health of the American people, a better healthcare system would only be the beginning. To actually improve public health, the US would need to address the socio-economic inequalities that underlie it.

These insights offer a fresh take on the national responses to the COVID-19 outbreak, too. Many governmental remedies are receiving criticism for ‘treating the symptom and not the cause,’ echoing Professor Marmot’s plea. On top of that, most nations’ stimulus packages do not sufficiently alleviate the economic despair of the most vulnerable groups, leading to a worsening of the socio-economic conditions that are associated with bad health. The issues Marmot points out may only accelerate during this crisis.

Marmot’s work demonstrates the interconnected nature of many of the societal challenges we study in YSI: socioeconomic inequality, societal fragmentation, the concentration of economic and political power, and ultimately human despair. As Rob Johnson commented: “We must continue trying to understand how and why the political economy produces these conditions and tolerates them.”

A recording of Professor Marmot’s webinar is available here. Marmot’s book, the Health Gap, provides a more detailed account of his findings.

Currency manipulation accusation against China not just “wrong now”, but fundamentally flawed

By Alexander Beunder. Investigative journalist. Platform Authentieke Journalistiek, the Netherlands.

Now that the dust has settled around the latest U.S.-China trade war spat, here’s something the Trump regime may want to evaluate before the next round: the fact that many economists and analysts refused to side with Trump and Mnuchin when they accused China of “currency manipulation”.

Initially, the story of Chinese currency manipulation was echoed around the world, when the Chinese yuan dropped 1,4% to the dollar on Monday, August 5. After US president Donald Trump responded by tweet that China was guilty of “currency manipulation”, the Wall Street Journal and others described how Beijing was “weaponizing the yuan”. China was obviously responding, some analysts said, to new import tariffs on Chinese products which Trump had announced a week before. The press paid even more attention to the story because of the diplomatic drama around it, as US Treasury secretary Steven Mnuchin rushed to officially declare China a “Currency Manipulator” and said to bring the matter to the International Monetary Fund (IMF).

It’s an accusation Trump (but before him, Obama) has been repeating for years. China’s central bank is supposedly keeping the value of the yuan to the dollar artificially low – by buying and holding on to dollar reserves – to make its exports cheap for the rest of the world. This creates an “unfair competitive advantage”, in the words of Mnuchin. Thanks to its cunning currency manipulation scheme, the argument goes, China enjoys a persistent trade surplus – exporting more than importing – while the U.S. suffers a trade deficit, hurting businesses and workers.

But fact-checking Trump’s statements has become a healthy habit among journalists. Several analyses quoted economists who disagreed with the latest accusations by Trump and Mnuchin. As The New York Times business correspondent Alexandra Stevenson noted, “many economists believe [China’s] currency should be weakening versus the dollar”, due to slow growth and the trade war with the U.S.. Another source, U.S.-economist Dean Baker, noted the 1,4% drop was large but “not that unusual” and can happen “without government intervention”. Even the annual review of China’s economic policies by the IMF, released after Monday’s accusations, concluded there is no sign of currency manipulation.

Still, several established correspondents agreed that the accusation was valid in the past. “China kept its currency weak a decade ago”, Stevenson wrote, but the yuan has now “strengthened to a level widely believed to be close to fair value”. Her colleague Eduardo Porter at The New York Times shared a similar view in an article which headlined, “Trump Isn’t Wrong on China Currency Manipulation, Just Late”. Bloomberg correspondent Noah Smith drew the same conclusion, noting China enjoyed a large trade surplus in the 2000s, but the “the country’s current account deficit has largely vanished”, after a peak in 2007.

Flawed economics

However, there may be something more fundamentally wrong with the currency manipulation accusation, and not just with the recent application of it by Trump and Mnuchin.

New York-based economist Anwar Shaikh and London-based economist Isabella Weber have been arguing for several years that the whole currency manipulation argument is based on flawed economics. Shaikh, an economics professor at the New School of Social Research in New York, and Weber, a lecturer in economics at Goldsmiths, University of London, published a working paper on the topic last year titled “Debunking the Currency Manipulation Argument”.

If they’re right, even the belief that China was guilty of currency manipulation a decade ago becomes questionable.

To understand what’s wrong with the currency manipulation argument we have to go back to the underlying trade theories, Shaikh and Weber explain. As currency manipulation can not be observed directly, economists look at other economic phenomena which, according to standard trade theory, are indicators of currency manipulation. A persistent trade surplus is the most important indicator because, according to standard trade theory, free trade would automatically eliminate trade imbalances. Hence, wherever a persistent trade surplus exists, it must be the result of currency manipulation, the argument goes.

The Chinese trade surplus, always positive since 1994, has been the central pillar of the currency manipulation argument, Shaikh and Weber note. Not just for academic economists; the U.S. Treasury uses persistent trade surpluses as official, legal criteria to determine whether a country is guilty of currency manipulation to gain an “unfair competitive advantage”.

But the proof is in the pudding, in this case, standard economic trade theory. If the theory is incorrect – which it is, according to Shaikh and Weber – the whole narrative collapses.

What’s wrong with the trade theory? The theory goes back to a famous model of the British economist David Ricardo (1772-1823), Shaikh and Weber explain. In Ricardo’s model and modernized versions of it, free trade ensures that, over time, no trading partner would enjoy a trade surplus or suffer a trade deficit. Imagine a country which would initially be more competitive in, let’s say, all sectors. Free trade would result in high exports and low imports (a trade surplus) attracting a massive inflow of money from foreign buyers. Such an inflow of money creates domestic inflation or an increase in the exchange rate, damaging competitiveness and eliminating the trade surplus. In a weaker, deficit country the opposite would happen: an outflow of money creates domestic deflation or a drop in the exchange rate, boosting competitiveness and exports and eliminating the trade deficit.

But the theory is fundamentally wrong, Shaikh and Weber argue. The “natural” result of a world in which trading partners enjoy different levels of competitiveness is not balanced trade. The “natural” result of free trade in such a world, they argue, is imbalance – trading partners with persistent trade surpluses and deficits.

Relying on classical economists like Adam Smith (1723 – 1790) and Roy Harrod (1900 – 1978), Shaikh and Weber present their alternative trade theory: in their version, the magical price or exchange-rate movements which would equilibrate trade in Ricardian models won’t happen. For instance, in a surplus country, large inflows of money due to excessive exports will not create domestic inflation or a rise in the exchange rate, because there’s something else that these flows of money do: move back to where they came from. Any oversupply of money a surplus country would receive would initially be saved in local banks and decrease the domestic interest rate. This would push capital towards other countries where it enjoys higher returns – indeed, to the deficit countries where the interest rate has increased due to an outflow of money.

Hence, a likely outcome of free trade is that surplus countries become creditors, and deficit countries become borrowers, and there are no automatic price or exchange-rate movements which would balance trade accounts.

This is, Shaikh and Weber note, an accurate description of the financial relation between the US and China, as China has become the largest creditor of the US. The only peculiarity, they explain, is that China’s public central bank is doing the lending (buying dollar assets) because Chinese capital controls prevent private investors from fulfilling this role. But these operations “might only mimic what would be the outcome of free capital and trade flows”, Shaikh and Weber explain. To label these monetary operations as the main instrument of a cunning currency manipulation scheme, as Mnuchin and others do, is unwarranted in their view.

So, if Shaikh and Weber are right, global imbalances in trade are simply natural outcomes of the free market, not of government interference. And if that’s the case, the currency manipulation arguments holds no water, as “we cannot infer from trade imbalances and from China’s purchase of reserves that the currency has been manipulated”.

No, Shaikh and Weber can’t exclude the possibility that China has intervened in the value of the yuan for purposes of competitiveness. Their main point is that the conventional criteria used by academics and the US Treasury to determine this – trade surpluses and deficits – tell us very little.

Perhaps more importantly, their message is to look at free trade itself to understand the roots of the trade deficit of the US and trade surplus of China. The real reason is surprisingly simple: “It is the lower costs in China that drive its trade surplus”, Shaikh and Weber conclude. It’s not Chinese currency manipulation which, as Trump complained in 2015, “makes it impossible for our companies to compete”. It’s simply Chinese competitiveness. It’s an argument which may be harder to swallow for those convinced of the everlasting power and competitiveness of the US economy.

Politics, not economic science

However convincing their debunking of the economic evidence may be, Shaikh and Weber are well aware that in the political arena the economic evidence plays a secondary role. U.S. presidents like Trump repeat the accusation of currency manipulation because of politics, not economic science, they note.

It’s been a “general pattern” in US foreign policy for some time, Shaikh and Weber write, to accuse trading partners of currency manipulation when they are running a trade surplus with the US, typically followed by the “demand that they enter into bilateral negotiations on a wide array of market liberalization policies”. Booming economies like Korea, Taiwan, Hongkong and Singapore faced the same accusation of currency manipulation in the late eighties and nineties, Shaikh and Weber note. China has repeatedly been accused of currency manipulation by the US Treasury since the nineties, Weber adds by email, with increased intensity “since the rapid expansion of the US-China trade imbalance following China’s accession to the WTO in 2001”.

So the return of the currency manipulation argument today, at a time when the US and China are fighting over the terms of a new trade treaty, is not surprising. But it is alarming, Weber says, as the unfounded accusation “is another step towards escalating the trade war”.

This article was also published by Rethinking Economics.

New Economic Thinking in the Context of Climate Change

Climate change is posing an increasing threat to life on earth. A few months back, we organized a special session at the INET YSI North America Convening to discuss how economics can serve society and help address climate change. We were honored for Kate Aronoff and Shouvik Chakraborty to moderate our debate.

We are happy to share the contributions of the participants. Summary and introduction by Shouvik Chakraborty.

Economic Questions: Complex Economic Theories Explained in Simple Ways

Several exciting, valuable economic theories become difficult to comprehend by individuals who have not had the training in the discipline of economics. However, it is essential that those theories, and the powerful implications they have for the broader social goals, are brought to the attention of everyone in a manner which excites them for those causes. The panel on Economic Questions essentially does that – explaining complex economic theories in simple words!

The two most emerging issues in the current world economic order which have captured the imagination of young scholars are inequality and climate change. The papers discussed in the panel on Economic Questions at the YSI North America Convening (Feb 22-24, 2019) dealt with both these crucial problems.

Kevin Cashman’s piece “There is no Alternative” to Managing the Economy, and the Climate’ argues the importance of industrial policy and economic planning and management to address these problems. He makes a strong case for global cooperation to tackle both these problems of inequality and climate change.

Johnny in his piece, “A Feminist Approach to Mitigating Climate Change” argues for more female participation in the discipline of economics and also in the policy circles, which he argued had a significant positive impact.

“Tackling urban homelessness in the US the Green Way,” a piece written by Atthulya Gopi, argues that the affordability crisis of housing market is forcing homelessness in the east and west coast of the United States, and also, thereby, contributing negatively to the environment.

Carlos Maciel’s piece, “The Green Job Guarantee – How to Tackle Climate Change and Unemployment,” proposes that a job guarantee program specifically linked to activities related to environmental sustainability will simultaneously achieve the goals of more jobs and attain sustainability.

Maximilian Seijo’s piece “Ecological Theory for a Green New Deal” argues for a cooperative reorganization of ecological relations through further centralization of legal authorities by strengthening the institutions of democracy.

Tackling Urban Homelessness the Green Way

The US housing affordability crisis is driving more and more of the working poor to live out of cars and squatter homes- the solution seems to be creating more affordable homes in both urban and suburban areas where there is a high level of homelessness amongst the working poor but this means more carbon emissions and pollution in urban areas the long run. A green alternative needs to be found if both homelessness and pollution are to be solved simultaneously.

By Athullya Gopi | The US housing affordability crisis is driving more and more of the working poor to live out of cars and squatter homes- the solution seems to be creating more affordable homes in both urban and suburban areas where there is a high level of homelessness amongst the working poor but this means more carbon emissions and pollution in urban areas the long run. A green alternative needs to be found if both homelessness and pollution are to be solved simultaneously.

Homelessness is a growing global phenomenon. In the United States (US), its rampant increase is most evident in urbanized areas along the East and West coasts. Homelessness in the US does not only occur as a result of an individual’s perceived social and economic problems such as mental health and substance abuse issues or the stagnation of incomes, it is also the result of long-standing imperfections in the private US housing market that prevent everyone in the economy who demands housing as a dependable and primary source of shelter from accessing it. Such market imperfections limit the number of affordable housing units supplied by the private sector to urban low or very low income households – often making such individuals or households highly susceptible to homelessness as both incomes stagnate and rents or home values spike. An ideal long-run solution to reducing this type of homelessness is to employ federally mandated policies designed to increase the supply of available affordable housing units to those needing dependable shelter. The idea of increasing the number of physical dwelling spaces in already congested and polluted urban areas, however, implies an added burden to carbon emissions and energy utilization in cities at a time when careful consideration needs to be given to the latter. Is there a green solution to solving homelessness caused by the housing affordability crisis in the US?

The rapid growth of urbanization is most evident in the rising number of people living in cities – by 2030 it is estimated that at least 27% of the world population will be concentrated in cities with a population of more than 1,000,000. It is also clear that the rapid growth of urbanization is increasingly becoming a contributor to global climate change – although cities only account for less than 2% of the earth’s surface 71 to 76% of the world’s carbon emissions originate from urban areas. The impact of climate change is being increasingly felt in urban areas including its homeless. Since 2016 the number of homeless individuals in urban areas perishing from being unsheltered in extreme climate conditions has been increasing.

However, it is not just in urban areas that homelessness is growing. Poverty and homelessness have been increasing in suburban areas in the US over the last 15 years. With homelessness on the increase as a social ill not necessarily constrained by population density or geography more and more households/individuals who find themselves chronically unsheltered as a result will also be directly exposed to the increasingly devastating effects of climate change. A sustainable and joint solution needs to be found to address both problems, one that envisions more eco-friendly homes for those who need them as a source of shelter when they have no recourse to one.

To start formulating such a joint solution we must begin with understanding the source of growth in homelessness over the last few decades. While foreclosures in the post-recession era have largely been responsible for people losing their owner-occupied homes, the source of homelessness relating to economic conditions extends beyond mere market forces that are freely operating. In the United States, the private housing market is an imperfect one, meaning that there are constraints imposed upon it that prevent demand and supply of housing from fully clearing. The imperfect housing market leads to renters being priced out of housing that is affordable when they are faced with either income shocks (like being made redundant when the economy goes down) or rental price shocks (when an upturn in the economy leads to a surge in property prices and therefore rents). This leads to a growing number of individuals/households that are at risk of becoming temporarily homeless. The Department of Housing and Urban Development (HUD) refers to such individuals as “transients”. Modern-day representations of homelessness are no longer restricted to the visibly homeless woman forced to live in her car while working as an adjunct professor and the army veteran who can only afford housing through a gofundme crowdfunding campaign. The housing crisis is one that is increasingly an affordability crisis.

The imperfect market leads to demand for housing persistently remaining relatively higher than the supply of available housing at any point in time. Often this mismatch between housing demand and supply is the result of the relative inelasticity (low sensitivity to price changes) of housing supply. Generally speaking when the price of a good or service increases, the supply of housing should respond over time by increasing too and vice versa. Housing supply, however, is relatively quite slow to respond to price signals due to a number of factors that do not directly impact the housing market. For example state regulations regarding land use vary across the United States and often favor the use of land in urban areas for commercial purposes rather than for housing, making it difficult to quickly increase housing supply in such areas in response to a sudden surge in housing real estate prices.

Additionally, the increasing use of housing real-estate as sources of investment leaves more and more units either vacant or used in a way that allows investors to gain higher than market returns – such as converting them to “AirBnB” units. This indicates that the market is biased towards those in the economy who demand housing real-estate as an investment good rather than as a basic form of shelter. This bias towards housing investors is clearly seen in urban areas by the rising levels of gentrification in cities – a way of making housing investments more attractive and therefore valuable to investors. Ultimately the existence of this bias means that richer entities/households that can afford to purchase or rent more than the one unit of housing they need for shelter gain access to the additional units they demand more readily than the relatively poorer households that need at least one unit for basic shelter. With a ‘sticky’ housing supply and a bias in how demand for housing is met, poorer households are ever more at risk of transient homelessness and not receiving at least the single unit of housing they require to meet their need for basic shelter.

Furthermore federal government safety nets for low income and very-low income households have been declining over the years instead of increasing: there have been no significant increases in federal housing voucher funding to make housing more affordable and more public housing units have been retired or demolished than built between 2000 and 2016 leading to an overall drop of around 200,000 units during this time. All of this implies a greater need for more physical housing units to be supplied outside of the imperfect private sector – to be made available ideally through federal government-led policy intervention that creates housing for the growing population of working poor that are most likely to be made transiently and then chronically homeless.

Increasing the supply of affordable housing to meet the real demand for housing as a source of shelter is only one half of a joint solution – the second half must resolve how to achieve this in a sustainable manner without adding to pollution levels. In this regard, special emphasis needs to be made on urban as opposed to rural areas mainly because the former are focal points of energy and durable goods consumption, both of which contribute significantly to the overall carbon footprint. For example, concentrated energy consumption in urban areas tends to create enough heat to change their surrounding microclimates, even causing them to differ in temperature on average by more than 1 degree Celsius than neighboring rural areas. Urban areas also generate undesirable runoff patterns in water – the way urban landscapes are constructed means that less water gets filtered back to replenish the local water table. At the same time urban areas, because of their warmer microclimates, generate more rainfall, meaning that run-off containing pollutants from industrial sites occurs more quickly and intensely than rural industrialized areas and significantly reducing water quality.

Innovative sustainable construction methods are becoming more popular. One example of a green construction standard is the Living Building Challenge, a green building certification program that outlines how sustainable built-up structures that are net water and energy positive (i.e. water is re-treated onsite and that more energy is generated onsite than consumed). This building standard was successfully used in a sustainable affordable housing project is present in Minneapolis. In 2015 two local nonprofit organizations, Aeon and Hope Community launched “the Rose”, a 90 unit mixed-income apartment complex with half the units assigned as affordable housing at a monthly rent of around $636 for a single bedroom apartment. What is remarkable is that the per square foot cost of constructing the Rose was less than a half that of a similar conventional high-end sustainable building. While it was 20% more expensive and more complicated to build than a comparable code-compliant building the Rose was intended to offer long-term cost-effectiveness by being up to 75% more energy efficient.

Affordable housing is largely not a favorable investment option for real-estate developers and so its sustainable development must be incentivized through policy change – one option would be through tax credits. However future policymakers must remain cautious about private investors using green building techniques in the name of climate change to deliberately ramp up property values.

Such an example appears in a case study of a multifamily residential property development supported by the City of Portland Oregon Department of Environmental Services. The latter is responsible for managing the city of Portland’s wastewater and stormwater infrastructure. In the Barrington Square Apartments project, the property owner retrofitted stormwater controls with greener technology that enabled the removal of more than 350,000 gallons of runoff with pollutants. While at first glance it appears that the Environmental Services Department that supported the project successfully promoted the implementation of green technology in the private sector to clean up of the environment, the project report indicates that the property owner was motivated to make these changes to increase the value of the property itself – an idea that is counter-intuitive to the expansion of sustainable affordable housing.

About the Author
Athullya is originally Indian, born and brought up in the United Arab Emirates. She joined the Levy Masters Program in 2016 after leading a successful career in credit insurance. The choice to swap her role as the head of commercial underwriting with that of a full-time student came after being inspired to see how Economics works in the real world. She now works at the Institute for New Economic Thinking in New York.

Ecological Theory for a Green New Deal

When then Representative-elect Alexandria Ocasio-Cortez (D-N.Y.) joined the Sunrise Movement’s protest in the office of incoming speaker Nancy Pelosi, she catapulted a radical climate policy into public consciousness. Known as the Green New Deal, the policy would enable a just transition away from the high-carbon production that exacerbates climate change. Given this renewed interest in the potential of transformational federal spending, including on programs like the federal job guarantee, which many have argued will be one of the central components of a Green New Deal, it is necessary to reexamine the state of ecological theory in order to provide a philosophical foundation for our era’s new, centralized approach to ecology.

By Maxximilian Seijo

Since the first Earth Day, on April 22, 1970, ecological theory has favored a theoretical approach which is skeptical of centralized authorities. Most evident in the path-breaking work of the Norwegian philosopher Arne Næss, his “deep ecology” movement, among other things, prioritized “local autonomy and decentralization” over any centralized mediation of ecological relations. This perspective is based on a philosophical approach that reduces abstract relations with legal and political authorities unto immediate material connections. Such a reduction creates a limited ecological theory, which in Næss’ own words asserts that “the vulnerability of a form of life is roughly proportional to the weight of influences from afar.” Næss’ view that distanced relations introduce a metaphorical weight upon ecologies is anathema to a Green New Deal, which aims to utilize centralized and abstract monetary issuances or legal decrees to create more just, egalitarian relations between humans and the environment. In this essay, I offer an alternative to Næss’ deep ecology which accords to the centralization and collectivity needed to achieve such transformative socialist goals.

Næss’ philosophy can be traced to the works of Spinoza, Whitehead, and Heidegger. Where Spinoza and Whitehead seem to reinforce, in varying degrees, Næss’ decentralized ontological materiality, Heidegger offers a more capacious ecology which, while still problematic in some ways, I argue must nevertheless be the foundation for an alternative ecology of just centralization.

In his 1946 essay, “What Are Poets For?” Heidegger offers one particularly prescient formulation of his approach to ecology. “Plant, animal, and man—insofar as they are beings…are ventured,” Heidegger writes. (100) Ventured, for Heidegger, is the state of being thrown into a shared and egalitarian ecology, what he simply dubs “being.” In addition to establishing equality for ecological beings, Heidegger also articulates some form of innate ecological centralization. “Being, which holds all beings in the balance, thus always, draws particular beings toward itself—toward itself as a center,” he argues. (101) After formulating ecological equality and some form of centralization, Heidegger laments that the presence of this center has not been recognized. He calls this all-mediating center, “an-unheard of center,” and with it, further obscures the legal relationship between governance and ecological relations which persists even when it is not avowed.

At this point, the reader might be thinking, “what does this have to do with a Green New Deal?” To explain why these arcane philosophical conceptions of centralization are relevant, we must go to the word ecology itself. Ecology, from the Greek oikos, means “dwelling.” (145-147) One of the central tasks of human production is to establish such a “dwelling” of our own, from the planetary to the household scale. We produce to afford such dwellings. This production, as the constitutional and neochartalist theories of money and law have demonstrated, is always undergirded by centralized legal authorities, whether through legal currency issuance, property rights, or taxes and fines. This means that our ecologies, whether human-to-human, human-to-environment, or environment-to-environment, are mediated by governance. Despite what Næss would suggest, I argue that this is a good thing, as it means that we can collectively reorganize ecological relations through centralized legal authorities, through democracy.

From this standpoint, I will approach a later Heidegger essay, entitled, “The Question Concerning Technology,” which points to a similar conclusion. In the essay, Heidegger attempts to establish the causal mechanisms of production. He writes, “wherever ends are pursued and means are employed, wherever instrumentality reigns, there reigns causality.” (5) He breaks this productive causality into four categories: the material, the form or category, the end goal, and the means of bringing the production into being. Further, Heidegger suggests that these four causal mechanisms of production depend on each other, and that “in this connection, [they] bring about means to obtain results, effects.” (3) What Heidegger has done in this essay is establish that production itself is dependent upon a lubricating abstract “connection.” I claim that this abstract ecological relationality is law. It is the centralized legal medium of money that enables all exchange.

Approaching the question of ecological theory on these legal terms leads to the question of Bitcoin. Bitcoin represents the fantasy of ecological decentralization on money’s terms. Dangerously reminiscent of Næss’ philosophical commitment to the weight of abstract influence, Bitcoin is a commodified abstraction that must be mined, as it was designed as materially finite. As a result of both its decentralized network design and this artificial finitude, Bitcoin is contributing to immense environmental damage across the world. In other words, offering the inherent centrality of ecological relations in the legal mediation of production is not merely an arbitrary theoretical path forward, but a specific affront to the theoretical frameworks that are accelerating our abandonment of ecological justice.

Grounding ecology in the legal mediation of money is not what contemporary ecological theorists do. For example, in his recent book, noted ecological theorist Sean Cubitt writes that “ecological crisis, it is argued here, is not the fault of individuals but of the communicative systems, most of all the tyranny of the economy, of money as the dominant medium of twenty-first century intercourse between humans and our world.” (7) I understand why Cubitt takes this position. The issuance of money has incentivized extractive economic production for generations, but allowing that trend to solidify into a determined truth is not how we fix our ecological quandaries. Rather than fetishize money’s historical limitations, we need to embrace its democratic potential, we need to use its full legal power in the name of a Green New Deal, for all our sakes.

About the Author:
Maxximilian Seijo is a graduate student at the University of South Florida. He is the co-host of @moneyontheleft (a podcast that mobilizes Modern Monetary Theory to reclaim money’s collective possibilities for leftist politics and culture) and Digital Media Fellow at the Modern Money Network.

The financial crisis was a Minsky moment but we live in Strange times

This is the story of Susan Strange and Hyman Minsky, two renegade economists who spent a lifetime warning of a global financial crisis. When it hit in 2008, a decade after their deaths, only one rocketed to stardom.

By Nat Dyer.

When Lehman Brothers went belly up and the world’s financial markets froze in the great crash of 2008, the profession of economics was thrown into crisis along with the economy. Mainstream, neo-classical economists had largely left finance and debt out of their models. They had assumed that Western financial systems were too sophisticated to fail. It was a catastrophic mistake. The rare economists who had studied financial instability suddenly became gurus. None more so than Hyman Minsky.

Minsky died in 1996 a relatively obscure post-Keynesian academic. He was only mentioned once by The Economist in his lifetime. After 2008, his writings were pored over by economists and included in the standard economics textbooks. Although not a household name, Minsky is today an economic rockstar named checked by the Chair of the Federal Reserve and Governors of the Bank of England. One economist summed it up when he said, “We’re all Minskites now”. The global financial crisis itself is often called a “Minsky moment”. But not all radical economic thinkers were lifted by the same tide.

Susan Strange was more well-known than Minsky in her lifetime (see Google ngram graph below). One of the founders of the field of international political economy, she taught for decades at the London School of Economics. Alongside her academic work, she raised six children and wrote books for the general public warning of the growing systemic risks in financial markets. When she died in 1998 The Times, The Guardian and The Independent all published an obituary for this “world-leading thinker”.

The two renegade economic thinkers, although working in different disciplines, had much in common. They both gleefully swam against the tide their entire careers by studying financial instability. They were both outspoken outsiders who preferred to teach economics with words rather than equations and were skeptical of the elegant economic models of the day. They were big thinkers haunted by the shadow of the 1930s Great Depression. They both died a decade before being vindicated by the 2008 financial crisis. And, they read each other’s work.

The New York Times called Susan Strange’s 1986 Casino Capitalism “a polemic in the best sense of the word.” Calling attention to financial innovation and the boom in derivatives, the book argued that, “The Western financial system is rapidly coming to resemble nothing as much as a vast casino.” Minsky, in his review, said that the title was an “apt label” for Western economies. Strange provided a much-needed antidote, he said, to economists “comfortable wearing the blinders of neoclassical theory” by showing that markets cannot work without political authority. He probably liked the part where Strange praised his ideas too.

Casino Capitalism hailed Minsky’s ‘Financial Instability Hypothesis’ way before it was fashionable. Strange singled out Minsky as one of a “rare few who have spent a lifetime trying to teach students about the working of the financial and banking system” and whose ideas might allow us to anticipate and moderate a future financial crisis. Minsky’s concept of ‘money manager capitalism’ has been compared to ‘casino capitalism’.

But, put Susan Strange’s name into Google News today or ask participants at meetings on economics about her and you don’t get much back. They will sometimes recognise her name but not much more. Outside a small group, she’s a historical footnote, better remembered for helping to create a new field than the force or originality of her ideas. It is as if two people tipped the police off about a criminal on the run but only one of them got the reward money.

So, why did Strange’s reputation sink after the global financial crisis when Minsky’s soared?

Professor Anastasia Nesvetailova of City, University of London, one of the few academics who has studied both thinkers, believes it is due, in part, to their academic departments. “Minsky may have been a critical economist but he was still an economist,” she told me. Strange studied economics, but then worked as a financial journalist before helping to create the field of international political economy, now considered – against Strange’s wishes – a sub-discipline of international relations. Economics is simply a more prestigious field in politics, the media and on university campuses, Nesvetailova said, and Minsky benefited from that. “Unfortunately, [Strange] remains that kind of dot in between different places.”

As we live through a political backlash to the 2008 crisis and the IMF warns another one might be on the way, Strange’s broader global political perspective is a bonus. In States and Markets, she sets outs a model for global structural power which brings in finance, production, security and knowledge. Her writings predicted the network of international currency swaps set up by the Federal Reserve after the global financial crisis, according to the only book written about Strange since 2008. Her work foreshadowed the global financial crime wave. And, she argued repeatedly that volatile financial markets and a growing gap between rich and poor would lead to volatile politics and resurgent nationalism, which is embarrassingly relevant today. The financial crisis may have been a ‘Minsky moment’ but we live in Strange times.

This global political economic view explains why Strange criticised Minsky and other post-Keynesians for thinking in “single economy terms”. Most of their models look at the workings of one economy, usually the United States, not how economies are woven together across the world. This allows Strange to consider “contagion”: how financial crises can flow across borders. It’s a more real-world vision of what happens with global finance and national regulation. Her greatest strength, however, also reduced her appeal in some quarters as it means Strange’s work is less easy to model and express in mathematics.

Minsky found fault in Strange too. She should have more squarely based her analysis on Keynes, he said and showed the trade-off between speculation and investment. Tellingly, his critique is at its weakest when engaging with global politics. Strange unfairly blamed the United States for the global financial mess, Minsky wrote, even though it was no longer the premier world power. Minsky was only repeating the conventional view when he wrote that in 1987 but it was bad timing: two years later the Berlin Wall fell ushering in unprecedented US dominance.

In her last, unfinished paper in 1998 Strange was still banging the drum for Minsky’s “nearly-forgotten elaboration of [John Maynard] Keynes’ analysis”. Now it’s her rich and insightful work that is nearly forgotten outside international relations courses. A jewel trodden into the mud. Just as Minsky is read to understand how “economic stability breeds instability”, let’s also read Strange to appreciate her core message that while financial markets are good servants, they are bad masters.

About the author

Nat Dyer is a freelance writer based in London. He has an MSc in International and European Politics from Edinburgh University. He was previously a campaigner with Global Witness, an anti-corruption group. He tweets at @natjdyer.

Google Ngram showing the frequency of references to Susan Strange (red) and Hyman Minsky (blue) from 1940 to 2008

Strange was more referenced in her lifetime than Hyman Minsky. Google Ngram’s search only goes up to 2008. After 2008, we would likely see a hockey stick spike for Minsky and Strange continuing to fall.

Why Inflation Targeting?

By Juan Ianni. Why does mainstream economics recommend the application of Inflation Targeting (IT) regimes? Is it because of its sophistication? Are there other ways of addressing inflation? Perhaps a historical analysis of the roots of what is now the dominant stabilization regime can shed light on these questions.

Although the concept “financialization” is still up to debate, some economists like Chesnais (2001) argue that, since 1970, capitalism has mutated toward a “financialized” model of accumulation. According to Fine (2013), financialization is the derivation of the use of money as a credit other than the use of money as capital. Other authors believe that financialization is the determining structure of other (political, social, economic) structures. Long story short, this would mean that changes in social relationships produce new economic (and non-economic) structures, which replicate the mode of production (or “the dominant structure”). But what does that mean?

The French school of regulation can answer that question. According to the theory they developed, every accumulation pattern (for instance, “financialized” capitalism) needs a mode of regulation. The latter consist of a set of institutions (or policies), which enable social and economic reproduction by solving conflicts (inherent to every accumulation pattern) between agents of the society. Therefore, institutions will appear, disappear and relate in a non-random way, structuring a certain institutional configuration related to the accumulation pattern.

Boyer and Saillard are two of the most influential theorist of the French school of regulation. In one of their articles (Boyer and Saillard, 2005), they identify five core conflicts between agents in every accumulation pattern. Nevertheless, two are enough to understand the emergence of Inflation Targeting regimes: the “wage-labor nexus” and the “valorization of wealth”. While the first conflict refers to the dispute over the economic surplus between the worker and the capitalist, the latter refers to the prevailing mode of accumulation and valorization of wealth.

In their opinion, financialized capitalism is characterized for having the “valorization of wealth” as the central conflict to solve (or stabilize) within a particular set of institutions. In the contrary, the “wage-labor nexus” is the “adjustment” conflict. This means that accumulation will no longer be led by an equal distribution of the production surplus between workers and entrepreneurs. On the contrary, financialized capitalism will ensure a way for wealth to be valued related to credit (and not capital), no matter how damaging that could be to workers.

With the gestation of financialized capitalism (along with its respective institutional configuration process) and the centrality of the “valorisation of wealth” conflict, the New Macroeconomic Consensus was established as a theoretical paradigm. In order to legitimize and deepen this institutional configuration, it propiated the emergence and propagation of Inflation Targeting regimes as a conceptual apparatus regarding anti-inflationary policy-mix.

As these regimes consider inflation as an exclusive consequence of an excess in aggregate demand, contractive monetary policies are “always needed”. In the case of IT, they must constantly ensure a positive real interest rate, which fits perfectly with the need of a way to value wealth. What is more, it decreases inflation by incrementing unemployment, which shows how the “wage-labour nexus” is the adjustment conflict.

However, it is well known that inflation is a multi-faceted problem. Empirical research shows that in addition to an excess in aggregate demand, inflation can be the consequence of the distributive conflict, international prices, inflationary inertia, etc. The way IT address this phenomena (setting a high real interest rate, increasing unemployment, and letting the exchange rate float) shows how it is the perfect piece for the financialized capitalism puzzle. However, since the existence of very close interconnections between the international monetary systems and the national financial markets (what Chesnais call the “financial globalization”), IT’s effectiveness has lowered.

In addition, when the main cause of inflation is not related to an excess in aggregate demand, IT’s efficiency falls. Vera (2014) argues that using IT demands a strong reliance on the unemployment channel (that is to say, to stop inflation, unemployment needs to increase), which has adverse side effects on both employment and income distribution.

Given these drawbacks, some economic schools have developed other tools to tackle inflation, which may be both more efficient and effective. To that end, a different policy mix in which real exchange rate targeting is combined with income distribution targeting can be structured. In this case, the nominal exchange rate could be set to sustain a balanced external sector, whilst income policies could preserve a more equitable distribution of income. Consequently, a low level of inflation is sustained while the “disciplinary effect” of unemployment is avoided.

In conclusion, Inflation Targeting is not the mainstream policy instrument because of its results or theoretical coherence; after all, it has needless consequences regarding employment and income distribution. The main cause of IT’s popularity is that it assures the reproduction of an institutional configuration related to the “dominant structure”: financialized capitalism. Explaining this process, in addition to noting alternative stabilization regimes, should motivate the design and application of economic policies more consistent with increasing employment and a more equitable income distribution.

About the Author: Juan Ianni just completed a bachelor’s degree in Economics, and has a an interest in political economy and macroeconomics. He is currently studying alternative political schemes to tackle inflation, which is a big challenge for his home country, Argentina.