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Hassan Bougrine

Throughout their long and distinguished careers, Marc Lavoie and Mario Seccareccia have written about almost every important issue in economics, from public policy to money and banking, inflation and unemployment to sports. However, their central and common contribution has been focused on three interrelated topics, which they considered crucial for understanding the economy and acting on it. These topics are: money, interest and unemployment. Indeed, as young scholars in the early 1980s, their first published works dealt specifically with these topics (Lavoie, 1982, 1984, 1985; Seccareccia, 1983, 1984; Lavoie and Seccareccia, 1988). Over the years, their views on money, interest and unemployment have evolved and recently have come to form a unified policy package: how to solve the unemployment problem using money and interest as policy tools. Full employment has, therefore, become a major preoccupation in their scholarly activity. Recently, Seccareccia and Lavoie et al. (2018) have even engaged in some sort of political lobbying in an attempt to influence policymakers to adopt full employment as a clearly stated policy objective. In this chapter, I want to argue that despite their obvious commitment to full employment, and despite being fully aware of the ‘political obstacles’ to full employment, Lavoie and Seccareccia continue to rely on the use of fiscal and monetary policies and remain somewhat vague about the necessity of implementing some other important changes, namely institutional, that could hasten the transformation of the system and bring about the much-desired objective. For instance, in their study of income distribution between rentiers and non-rentiers, Seccareccia and Lavoie (2016) acknowledge that rentier capitalism ‘has brought some of the [advanced industrial] economies, especially in the Eurozone, to the verge of social collapse’ and agree that there is need for some ‘significant institutional transformation’, but full employment is not discussed in the context of a change in the institutional setting of property rights to productive resources under capitalism. Similarly, even though Seccareccia (2017, 2019a) clearly shows that key institutions under capitalism such as Central Banks are captured by the vested interests of the rentier class, he does not call for any radical change in institutions. Changes to the distribution of wealth and private property of resources are not envisaged as possible means to building the egalitarian society, which would guarantee full employment. This is somewhat surprising given that both authors would consider themselves as close followers of Michal Kalecki (1943) who had called for the scrapping of capitalism for being ‘an outmoded system’ that could not deliver full employment.

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Hassan Bougrine

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Hassan Bougrine

Ever since its emergence, the State has always had an economic function in society. Under capitalism, the ideology of laissez-faire or neoliberalism makes full use of all the powers of the modern State to deregulate markets, privatize public corporations and assert hegemony of the individual/corporate property rights with the aim of expanding wealth for the dominant class. This chapter proposes alternative ways for the State to manage the economic affairs in society for the benefit of all social classes.

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Hassan Bougrine

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Hassan Bougrine

Austerity measures have been tested in developing countries for several decades under the pseudo name of ‘structural adjustment programmes’ following the recommendations and under the supervision of the World Bank (WB) and the International Monetary Fund (IMF). Evidence indicates that the economic and social consequences of these policies have been so disastrous that there is now more poverty and more inequality than a generation ago. The same scenario is being proposed as the alternative to what has hitherto been labeled a social-democratic economic system in industrialized nations. The economically dominant minority has largely succeeded in imposing its neoliberal agenda by convincing the general public, through various means, of the need for austerity. The paper challenges the erroneous theories on which austerity is based and proposes an alternative explanation to what is the ‘best practice’ in public finance. It argues that deficit spending by the government is an important policy tool that can be successfully used to guarantee full employment and create wealth and prosperity for the whole society.

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Hassan Bougrine and Louis-Philippe Rochon

The 2007 economic and financial crisis is by many measures the most serious since the 1930s. It cannot, however, be analysed as an isolated event separate from the series of crises that has characterized the capitalist system. Indeed, even though the current crisis shows some specific characteristics, its main causes are similar to those that triggered previous crises. In this study, we argue that we are experiencing a generalized economic crisis, as opposed to a financial crisis whose impact is felt on the real side via the traditional Keynesian transmission mechanism. As such, we identify the development of a number of both real and financial factors, whose combination should be recognized by any astute observer as a recipe for financial turmoil and recessions. In particular, we consider two parallel and ongoing practices that have transformed the entrepreneurial capitalist system and rendered it much more fragile and prone to crisis: (i) the financial deregulations-cum-innovations since the late 1970s have fundamentally changed the basic role of banks and financial institutions and created the possibility for financiers to (artificially) increase their wealth independently of the real production sector – thus resulting in financial bubbles; and (ii) at the same time, prolonged austerity measures in most advanced capitalist economies have kept the productive capacity of these economies below full employment and therefore directly contributed to engineering recessions. We conclude that there is a need to rethink not only the type of economic policies in place but also the economic model.

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Hassan Bougrine and Louis-Philippe Rochon

While the notion of austerity has recently become the subject of intense debate among academics and in policy circles in the industrialized countries, it is rarely if ever discussed in the so-called developing countries where policymakers faithfully implement its dogmatic principles; often with the tacit support of the intelligentsia and under the overt pressure of international financial institutions which make their lending explicitly conditional on the implementation of strict austerity measures; as exemplified in the 1990s by the Washington Consensus. In this chapter, we argue that austerity policies are inspired by the colonial rule and, therefore, have a long history in the developing world. By focusing on the post-independence era, particularly since the 1970s, the study shows that austerity measures have been designed and implemented with the clear aim of aborting any developmental strategy, and that the results have been as expected in most countries – economic stagnation, precarious employment, and a rise in poverty. Interestingly, the notable few exceptions happened in countries where official policymaking relied on the government as a major player stimulating growth and generating prosperity through massive public spending in a clear breakaway from the free-market ideology.

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Louis-Philippe Rochon and Hassan Bougrine

Over a century ago, in an aptly-titled article, Innes (1913) asked what we believe is one of the most important questions in monetary theory: ‘What is money?’ – a question Smithin (1999) would later revisit. While on the surface this question may appear to be simple enough, the answer, however, is far from simple. Indeed, many answers have been provided, from a number of perspectives and disciplines. Money can mean something very different to different scholars, and the answers provided often reflect the focus of one’s research, thereby leading to different aspects of the same issue or question being explored in various degrees of detailed analysis. Indeed, money has many dimensions. The study of money has certainly perplexed economists for decades, if not centuries, with no consensus in sight. However, two general approaches can be identified, which, following Schumpeter (1954/1994, p. 277), can be labelled real and monetary analyses respectively (see also Rogers, 1989, Ch. 1) – although other labels can also be used: orthodox versus heterodox, exogenous versus endogenous. Rochon and Rossi (2013) have further identified two distinct approaches to endogenous money within post- Keynesian theory, referring to what they call the ‘evolutionary’ (Chick, 1986) and ‘revolutionary’ (Lavoie, 1992, 2014; Rochon, 1999) approaches to endogenous money.

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Louis-Philippe Rochon and Hassan Bougrine

The names of Marc Lavoie and Mario Seccareccia have been associated with one another for well over four decades, during which time they made important contributions to post-Keynesian economics in general, but have also been associated with an array of more specific topics, including the theory of the monetary circuit, economic growth, fiscal policy, monetary policy/theory and endogenous money, growth theory, and microeconomics, among others. Individually or together, they contributed a vast arsenal of both critical and constructive papers and books: close to 300 journal and book articles, as well as a number of books, authored and edited, including the Canadian version of the American micro–macro textbook by Baumol and Blinder (see Baumol et al., 2009a; 2009b). Throughout their long and distinguished careers, their contributions have pushed post-Keynesian and heterodox economics in many interesting and fruitful directions, and they have influenced a number of scholars as well as students around the world. Steadfast in their criticism of neoclassical – or orthodox or mainstream – economic theory, as well as their rejection of mainstream policies, in particular fiscal austerity and fine-tuning monetary policy, Lavoie and Seccareccia have shared a vision of a more real-world view of economics, where institutions mattered.

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Edited by Louis-Philippe Rochon and Hassan Bougrine