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Credit, Money and Macroeconomic Policy

Credit, Money and Macroeconomic Policy

A Post-Keynesian Approach

New Directions in Modern Economics series

Edited by Claude Gnos and Louis-Philippe Rochon

With recent turmoil in financial markets around the world, this unique and up-to-date book addresses a number of challenging issues regarding monetary policy, financial markets and macroeconomic policy.

Chapter 15: Instability and Uncertainty in Cognitive Capitalism

Andrea Fumagalli and Stefano Lucarelli

Subjects: economics and finance, post-keynesian economics


Andrea Fumagalli and Stefano Lucarelli INTRODUCTION The purpose of this chapter1 is, first, to describe the main features of the accumulation paradigm that many scholars have called ‘cognitive capitalism’ (CC) (Vercellone, 2006; Fumagalli, 2007; Moulier-Boutang, 2007). We shall provide a theoretical framework of CC in the third section and then discuss the conditions of stability and instability of the model in the fourth section. In CC, instability is structural. In the fifth section it will be seen that the awareness of knowledge as a distinct factor of production shows in a new light the notion of uncertainty and its role in explaining instability. The final section concludes. CC is a form of accumulation without a viable mode of regulation among entrepreneurs and workers about knowledge exploitation and capital gains allocation. On the demand side, in the absence of suitable welfare policies, the increasing polarization of income distribution risks penalizing not only aggregate demand, but also the knowledge-learning process and network economies. Excessive insecurity can negatively affect social productivity, with the risk of worsening financial gains, notwithstanding a pragmatic monetary policy. In this context, uncertainty becomes a consequence of capitalist exploitation. Thus we shall argue that it is necessary to propose a viable macroeconomic policy able to contrast the instability generated by the present form of accumulation. THE PECULIARITY OF COGNITIVE CAPITALISM A Knowledge-Based Economy As the most recent literature underlines,2 within a growth regime driven by information and communication technology (ICT), knowledge has became the key variable for understanding...

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