Credit, Money and Crises in Post-Keynesian Economics
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Credit, Money and Crises in Post-Keynesian Economics

Edited by Louis-Philippe Rochon and Hassan Bougrine

In this volume, Louis-Philippe Rochon and Hassan Bougrine bring together key post-Keynesian voices in an effort to push the boundaries of our understanding of banks, central banking, monetary policy and endogenous money. Issues such as interest rates, income distribution, stagnation and crises – both theoretical and empirical – are woven together and analysed by the many contributors to shed new light on them. The result is an alternative analysis of contemporary monetary economies, and the policies that are so needed to address the problems of today.
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Chapter 7: The theory of money, interest and unemployment

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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