This chapter is an introduction to the most important topics regarding the crude oil market. Several data and facts of the market are briefly presented. An outstanding feature of crude oil at the core of public debates is its character as a fossil and non-renewable fuel. The chapter enlightens what this means in economic terms and how it is connected to the investigation at hand. As another issue, recent research on the oil market has, to a great part, focused on the driving forces of the oil price. In particular, our interest is in the question of whether economic fundamentals are the only factors influencing the price or whether speculation may also be effective. Finally, the role of OPEC and its potential power to impact on the oil market is considered.
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Stephen A. Marglin
The central question this paper addresses is the same one I explored in my joint work with Amit Bhaduri 25 years ago: under what circumstances are high wages good for employment? I extend our 1990 argument in three directions. First, instead of mark-up pricing, I model labor and product markets separately. The labor supply to the capitalist sector of the economy is assumed à la Lewis to be unlimited. Consequently the wage cannot be determined endogenously but is fixed by an extended notion of subsistence based on Smith, Ricardo, and Marx. For tractability the product market is assumed to be perfectly competitive. The second innovation is to show how disequilibrium adjustment resolves the overdetermination inherent in the model. There are three equations – aggregate demand, goods supply, and labor supply – but two unknowns – the labor–capital ratio and the real price (the inverse of the real wage). Consequently equilibrium does not even exist until we define the adjustment process. The third innovation is to distinguish capital deepening from capital widening. This is important because, ceteris paribus, wage-led growth is more likely to stimulate the economy the greater the fraction of investment devoted to capital deepening. A final section of the paper shows that US data on employment and inflation since the 1950s are consistent with the theory developed in this paper.
Amit Bhaduri and Srinivas Raghavendra
This paper generalizes the principle of effective demand to incorporate banking and finance as two distinct sectors. The traditional commercial banking sector is regulated and the modern shadow banking sector is mostly an unregulated provider of financial services. Through a stylized model the interconnectedness between the two sectors is analysed. The analysis shows how an almost infinite supply-side capacity of finance is created and explores its relation to the level of aggregate demand in the real economy. The impact of finance on the real economy is explored in both profit- and wage-led regimes at different levels of interconnectedness between commercial and investment banking.
Steven P. Dandaneau
How will land-grant universities fulfill their democratic mission in an era of declining public support? A case study of Milton S. Eisenhower's presidency of Kansas State College (1943–1950) explores the entrenched ideological tensions with which land-grant university leaders must still contend, and through historical analysis illustrates key elements in their past successful navigation. Recognized today more often for his fraternal relationship to the 34th President of the United States, this paper argues that Milton Eisenhower, four times a university president and a long-time public servant in his own right, is a leader from whom much can be learned. It is argued, furthermore, that today's public higher-education leaders face challenges similar to those faced by Eisenhower, the resolution of which will determine whether the democratic heritage articulated in the Morrill Act of 1862 is preserved or abandoned.
What Can Be Done About Wealth Inequality?
Roger A. McCain
Sketches the plan of the book. Argues that wealth inequality is the basis of many other economic problems, noting that concentrations of wealth inevitably become concentrations of political power; this concentration of political power makes political democracy increasingly difficult to sustain; concentration of wealth inevitably creates instability and differences of social status, and inequality of wealth is the major cause of income inequality.
The standard neoclassical method for building macroeconomics upon a microeconomic foundation has proven unable to anticipate and account for actual issues, especially the financial and economic crisis that burst in 2008. In this chapter we show that it would be appropriate to return to the method once used by classical writers, who considered the economy as a whole and referred to institutions and production conditions as the cornerstone of economic activity. This was also Keynes’s method, in developing the concept of a monetary economy of production. We show that a renewed analysis of the economy as a whole would open up a range of new perspectives on macroeconomics.
Louis- Philippe Rochon and Sergio Rossi
Rethinking economics is a dramatically urgent necessity in light of the damages caused by the 2008 global financial crisis, resulting from the dominance of mainstream economics. Economic policies implemented since the early 1980s in many countries have induced lower economic growth, higher rates of involuntary unemployment and more income and wealth inequalities than in the previous three decades. A decade after the beginning of this crisis, policy is still unable to provide all citizens with greater economic comforts. This volume contributes to rethinking economics by providing readers at all levels with thoughtful contributions on a range of topics.