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Forthcoming Events

IoI Forum
IoI Economy Forum
Venue: London
Date: Ongoing

The IoI Economy Forum meets regularly to discuss political economy across both the developed and emerging economies.


If you would like to join the forum, or would like further information, please contact Angus Kennedy at economyforum@instituteofideas.com.

Upcoming forums

The truth about neoliberalism. Thursday 27 June 2013

The next meeting of the Economy Forum will be at 7pm Thursday 27 June 2013. Please email if you would like to attend.

Please note there will be a small charge of £5 to cover the room booking.

Daniel Ben-Ami, author, Ferraris for All, will introduce a discussion on neoliberalism.

Is there a powerful neoliberal current intent on pursuing austerity in western societies? Many self-identified liberals and leftists insist this is the case. The first step in tackling this question is to probe more deeply into the meaning of “neoliberalism”. Too often it is assumed to refer simply to an ideological commitment to the free market. This discussion will probe the topic more deeply.

QUESTIONS TO CONSIDER

  1. What are the main components of the neoliberal worldview?
  2. To what extent is neoliberalism a break from earlier forms of liberalism?
  3. What is the significance of the German /Austrian strand of neoliberalism?
  4. How has the influence of neoliberalism changed since the 1970s?

READINGS


Past forums

A new industrial revolution? Tuesday 7 May 2013

Peter Marsh, economist; former manufacturing editor, Financial Times, author, The New Industrial Revolution: Consumers: Globalization and the End of Mass Production, introduced a discussion on the themes of his book.

READINGS

The limits and dangers of muddling through: Tuesday 5 March 2013

Phil Mullan, economist; author, The Imaginary Time Bomb, introduced the discussion.

In the January 2013 issue of Foreign Affairs Fareed Zakaria wrote in an article titled 'Can America be fixed?': "With only a few exceptions, the advanced industrial democracies have spent the last few decades managing or ignoring their problems rather than tackling them head-on". Nowhere is this more true than in the sphere of economics.

The economic problems that hit the western economies in the 1970s have never been fixed. Instead an extraordinary confluence of circumstances since the late 1980s meant that these problems could be papered over with temporary palliatives at home, and a greater reliance on wealth created elsewhere, especially in emerging Asia. This Long Slump has been disguised for extensive periods by the greater ease these palliatives gave in maintaining the appearance of expanding prosperity. This was a false prosperity built mainly on state-driven policies, not least the unprecedented expansion of debt. Ultimately these state-led methods for coping with the moribund condition have proved unsustainable, evidenced by the post-2008 return to stagnation conditions. Today's 'contained depression', evidenced by the sluggish recoveries everywhere in the west, is a consequence primarily, not of the financial crisis itself, but of those four decades of low investment in production and of lacklustre innovation, and of the political failure to address these deficiencies.

The defining characteristic of this long period of economic crisis is that the western elites have been able to turn muddling along into their modus operandi. The unusual economic and political circumstances since the 1980s – an end to social contestation at home and to Cold War abroad, globalisation, and the emergence of financialisation and other forms of greater state economic intervention - has opened up that 'muddle through' path for western elites of all political complexions. Not only do such measures not fix things properly, but they are at a great cost to our collective future. They get in the way of the long overdue economic renewal, by producing a state of corporate and personal dependency that inculcates against revitalisation. The sustained political evasion of the west’s profound economic challenges has itself become the number one barrier preventing a return to economic growth and genuine prosperity. In this way a political, subjective failure, and the continuation of 'muddle through' ways, prevents the thoroughgoing restructuring and revamp of the objective economic and technological conditions necessary to get us out of this Long Slump.

QUESTIONS TO CONSIDER

  1. Is it fair to say we've had 'productive decay' since the 1970s? Surely people living in the west are much better off than they were 40 years ago.
  2. What's wrong with 'muddling through'? It seems to have sustained rising prosperity for much of the time since the 1980s; today's problems are bound to pass at some point.
  3. How can one expect a state that has made a virtue of 'muddling through' to changes its approach and initiate a renaissance in innovation and production? As the physicist Andre Geim implies, isn't this a somewhat utopian hope ('Be afraid, be very afraid, of the world's tech crisis', Financial Times, 6 February 2013)?

READINGS

How broken are the western economies?
Quantitative Easing: a current example of muddling through: what are the consequences?

The state of industrial policy: Wednesday 5 December 2012

Rob Lyons, deputy editor, spiked, introduced a discussion on state industrial policy.

A recent government-commissioned report, by former Conservative deputy leader Michael Heseltine, has criticised the coalition for not having a strategy for growth. Heseltine argues for greater government intervention, particularly at local level, to revive ailing parts of both the economy and the country. Last year, the think tank Demos published a report by an Italian-American economist, Mariana Mazzucato, which argued that the 'entrepreneurial state' has always played a part in innovation, research and development and should do so even more.

On the other hand, free-marketeers would argue that a bloated state that draws off a large proportion of society's wealth will inevitably misallocate those resources and be a barrier to innovation and new ideas. Far better to simply let the market get on with it rather than have the state attempt to 'pick winners' based on political interests or current fashions. The high-profile failure of the US solar-power company Solyndra, which had been heavily supported by the federal government, is a case in point. There is also plenty of evidence that privatisation, the private-finance initiative and other state contracts have propped up large areas of economic activity in recent years in the absence of vigorous economic growth.

Some things that are necessary for the smooth operation of capitalism as a whole - like basic research, the provision of infrastructure, the creation of an educated workforce, and so on - may never be profitable for any individual company. Is there a role for the state that supports wealth creation without making the mistakes of state intervention in the past?

Some questions to consider in advance:

READINGS

The Giants of Asia: Tuesday 25 September 2012

Professor James Woudhuysen introduced a discussion on his Battle of Ideas session, the Giants of Asia.

With their huge populations and buoyant growth rates, China and India are two of the economic and technological powerhouses of the 21st century. And though many seem to forget it after the Lost Decade, Japan is the third largest economy in the world, the second largest developed economy and the world’s largest creditor nation. Nevertheless, all three countries have giant problems, too. Will the giants of Asia stumble in the face of the US rebound? And when might Asian production finally and decisively shift to low-cost Indonesia, Bangladesh and Vietnam?

Specifically, in this meeting, we want to look at the following questions about Japan:

BOOKS

ARTICLES

The moral limits of markets: Thursday 30 August 2012

Economics writer Daniel Ben-Ami will introduce a discussion on Michael Sandel’s What Money Can't Buy: the moral limits of markets. Sandel argues there is an urgent need for a public debate about how far market values, rather than just the market economy, should be allowed to go. In his view excessive marketisation leads to social corrosion and extreme inequality.

Questions to consider:

  1. What is the true extent of marketisation in America and Britain? Consider not just the economy but the social impact of market encroachment.
  2. At what point do market values become excessive?
  3. To what extent does marketisation corrode social bonds and a sense of a common identity?
  4. How do market values relate to the inequality debate?

Suggested readings

After reading the book it is particularly worth watching and listening to Sandel’s broadcast performances as these illustrate his broader views and underpin his influence as a celebrity academic.

Short pieces by other authors on this topic include:

The military-industrial complex today: Thursday 14 June 2012

Professor James Woudhuysen will introduce the discussion.

In terms of industrial policy, it can be argued that the UK – and even more, the US – have long had one: it's called the state's procurement of weapons that have a fair amount of R&D put into them. Most recently, Obama's State of the Union address (January 2012) said that the US Department of Defense, the world’s largest consumer of energy, would make one of the largest commitments to clean energy in history – with the US Navy purchasing enough capacity to power 250,000 homes a year.

Clearly the role of military procurement has changed over the years; right now, for instance, the new US cybersecurity agency cannot find all the computer specialists it wants. Since Eisenhower's influential and liberal 1961 farewell address, which coined the phrase 'military-industrial complex', US defence spending totals and percentages, as well as US forces/weapons postures, have likewise been through their ups and downs, declining as a percentage of GDP during the Cold War and reviving even before 9-11, and certainly since. Over the years, too, nuclear weapons, always a relatively cheap option, have become a smaller and smaller element in US defence spending.

Economic and political attitudes to the MIC have also changed. Historically the left always attacked the MIC for its pork-barrel subversion of democracy, its expense, its waste, its baroque product innovations, its arms exports, its debatable 'spin-off', and its direct interest in starting wars. On the other hand, from Baran and Sweezy in the 1950s through to the British SWP, military budgets have long been seen as an essential Keynesian support for capitalism, mopping up the capitalist 'surplus' generated elsewhere. More recently, however, the US has seen (and again the UK is not far behind) a convergence between militarists worried about energy security, and Greens keen on military innovations spinning off into renewable energy.

Cuts in UK defence are sharp. At the same time UK defence secretary Philip Hammond has just added his voice to traditional US demands that Germany do more in defence. Meanwhile cuts in US defence are a mirage, and there is a very rapid increase in defence spending in China and India.

What role would we assign to expenditure on armed services and weapons today? Are arms really so different from other kinds of products? Why have attempts to restructure the MIC, and reap a peace dividend, proved so difficult? What do we make of the growing US deployment of private armed services in places like Iraq? What can we foresee about the future course of defence spending, in the UK, the US and Asia?

Suggested readings

For MIC buffs:

For MIC super buffs:

When all the fruit is gone: Tuesday 17 April 2012

Phil Mullan introduced a discussion on the recent book The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better

Cowen attributes America's economic troubles to a combination of technological exhaustion by around the 1960s, and of Americans' failure to see that this technological plateau had been reached and to adjust accordingly since.

Questions to consider:

Suggested readings

Not essential for the discussion but if you are interested in the technology-productivity theme historically:

Equality and Efficiency: the big trade-off, Tuesday 28 February 2012

Angus Kennedyintroduced a discussion on the classic text Equality and Efficiency: the big tradeoff by Arthur M. Okun. As many call today for increased taxes to pay for social entitlements and to restrain the alleged greedy excesses of bankers and the City, for the state to deliver social justice and fairness, it is worth considering the arguments that attempts to increase equality in society can not only be economically wasteful and inefficient but also even that they come at the expense of freedom and at the risk of creating a culture of dependency and passivity.

“High tax rates,” wrote Okun, “are followed by attempts of ingenious men to beat them as surely as snow is followed by little boys on sleds.” Is it true that there is a necessary tradeoff between equality and efficiency? That attempts to regulate the economy such as Basel III are doomed to failure? Would lower tax rates benefit us all or just the well-off? In what sense can we be considered to be equal, if any, so long as inequalities in wealth distribution remain?

Suggested readings

Less cash? More inequality? The reality of changes in UK living standards, Wednesday 21 September 2011

Daniel Ben-Ami introduced a discussion on trends in living standards in Britain. There is much talk about growing poverty, rising inequality and the impact of public spending cuts on the British population. This discussion will seek to identify real material changes in living standards. It will attempt to work out developments in relation to poverty, inequality and austerity in recent years. It will also consider the pitfalls of different approaches to measuring such shifts. In the aftermath of the English riots and against a background of ongoing austerity, it is important to establish to what degree Britons are really feeling the pinch.

Questions to consider

Suggested readings

Is the dollar dead?, Wednesday 3 August 2011

Phil Mullan introduced a discussion on the fate of the dollar. During most of the twentieth century the US and the dollar have reigned supreme in the world. The dominance of the dollar as the leading international currency has both expressed US hegemony and also more recently helped to sustain it. As each year passes economic power is shifting more and more away from the US, and from the west in general, to China and the rest of the emerging economies. How much longer can the US expect to maintain its own currency as world money?

Questions to consider

Suggested readings

Inflation: is the problem getting bigger?, Wednesday 1 June 2011

Professor James Woudhuysen introduced a discussion on inflation, commodity price ups and downs, and what may lie ahead.

Questions to consider

Suggested readings

Behavioural Economics, Thursday 5 May 2011

Timandra Harkness introducd a discussion on behavioural economics.

Questions to consider

Suggested readings

Articles

Global Imbalances, Thursday 24 March 2011

Ben Hunt, author of The Timid Corporation: Why Business is Terrified of Taking Risk, introduced a discussion on global imbalances.

Questions to consider

Suggested readings

For reference

The New Economics, Thursday 10 February 2011

Daniel Ben-Ami introduced the discussion.

Background

The 2008-9 economic and financial crisis was a tremendous shock to the discipline of economics. Economists were mortified by their failure to predict events. Within a short time it became widely accepted that many core elements of the discipline were sadly lacking.

Common themes in the discussion of economics included the need to make it more moral, historical and understanding of human psychology. This meant it should be correspondingly less focused on profits, mathematical models and the idea of rationality.

Typically the case for the new economics, also sometimes referred to as the “Keynesian resurgence”, was put in counter-position to a supposed free market orthodoxy. Supporters of new economics saw themselves as pragmatic proponents of state intervention rather than doctrinaire advocates of the free market.

Perhaps the best known institution promoting new economics was the Institute for New Economic Thinking. Since its foundation in October 2009 the organisation has gained the support of many of the world’s top economists and economic policymakers.

Existing think tanks which took up the theme included Demos and the IPPR. This was in addition to organisations that pre-existed the crisis such as the New Economics Foundation and the New Economics Institute - although the latter changed its name from the EF Schumacher Society in 2009.

Questions to consider

Suggested readings:

Where in the world is the economy going? Wednesday 15 December 2010

The discussion – an end of the year review – was on the state of the world economy post G20, with introductions by Rob Killick and Mina Blauel on the situation in the developing and in the developed world: global imbalances between slow growth and rapid development; currency wars; trade deals; protectionism; etc.

Read Rob Killick's edited introduction.

Suggested readings:

Sunday 10 October 2010

Alex Hochuli will introduce a discussion on Anatole Kaletsky’s latest book Capitalism 4.0

Suggested readings:

Sunday 5 September 2010

Professor James Woudhuysen introduced a discussion on 'Does Britain need an industrial policy?'

Some questions to consider:

And some suggested readings:

Sunday 25 July 2010

Daniel Ben-Ami introduced a discussion on his new book Ferraris for All: In Defence of Economic Progress

Some questions to consider:

Sunday 20 June 2010

Yimeng Liu introduced a discussion on the realities of income distribution in China in the context of its rapid economic growth.

Yimeng kindly submitted this paper, Income Disparity in China, as a briefing document.

Further suggested readings:

Sunday 30 May 2010

Patrick Hayes introduced a discussion around the ongoing economic crisis in Greece and what it means for Greece, Europe and the world economy.

Greece owes about €300bn (115% of GDP). Public spending currently stands at 51.3% of GDP and only last October the government had committed to increasing already generous welfare benefits, including raising unemployment benefits from 63% to 70% of the minimum wage. Greece now faces the imposition of severe austerity measures, causing considerable domestic unrest by its heavily unionised workforce, making markets nervous that it’s only a matter of time before Greece fails to meet its debt repayments.

Would Greece emerge faster from the crisis by defaulting on its loans and leaving the Eurozone? Given the current state of Greek industry, is there a realistic alternative to stringent austerity measures? What are the main obstacles in the way of avoiding a new financial crisis and a return to productive economic growth in Greece and across Europe more broadly?

Selected suggested readings:

Sunday 25 April 2010

Angus Kennedy introduced a discussion on America the rich?: looking at the the material realities of poverty in America today, the immiseration of the masses and asking whatever happened to trickle-down theory.

Some questions to think about with the readings:

  1. Is America really becoming two nations? One poor, one rich? Are the rich stealing from the poor to finance their lifestyles?
  2. If productivity has been growing in America in the last decade, are the benefits trickling down across society as a whole? If not, why not?
  3. If they are, what explains supposed rises in poverty and long-term unemployment?
  4. Are demographic shifts a key factor to consider in explaining changes in income distribution?
  5. What about gender? Have women benefited at the expense of men?
  6. If economic growth is to the benefit of all, how come many are working longer hours, taking two jobs and so much in debt?

Selected suggested readings:

Further background material:

Sunday 21 February 2010

Daniel Ben-Ami introduced a discussion on The Redefinition of Poverty: looking at the shift away from quantitative to qualitative measures such as wellbeing and happiness.

Suggested readings:

Questions to consider:

  1. How does Sen understand poverty?
  2. How does he use the concepts freedom and equality? How does his usage differ from that of others?
  3. What is meant by a capability approach?
  4. What is the significance of the quote from Aristotle on p253?
  5. How does Sen's approach to happiness differ from Layard's?
  6. What are the practical consequences of Sen's overall approach?
  7. Is it fair to call him a growth sceptic?
  8. Is this discussion appropriate for an economics workgroup?

Sunday 6 December 2009

Angus Kennedy chaired a discussion reflecting on differing perspectives on the future of capitalism as revealed by a recent debate between Martin Wolf and Alex Callinicos.


Sunday 27 September 2009

Rob Lyons, deputy-editor of spiked, introduced a discussion on the state and the recession.


Sunday 23 August 2009

Michael Savage introduced on the New Philanthropy: Philanthropy has become a talking point. Vast fortunes have been made recently, and philanthropists like Bill Gates are giving on a huge scale. What is the new philanthropy and what could we say about it? The new philanthropy is amorphous. Debates about it are often vague and there is no agreed definition. But we can make sense of some overlapping ideas. Celebrity philanthropists are raising awareness, billionaires are demanding more bang for their philanthropic buck and social entrepreneurs like George Soros are engaged in political interventions.

There are several distinct features of the new philanthropy. Old-fashioned philanthropists often left fortunes in their wills, and gave money for others to spend. Today many philanthropists are giving earlier and maintaining involvement in how their money is spent. There was some discussion of the extent to which philanthropists are uncomfortable with being capitalists. Whilst there is celebration of capitalist giving, it was noted that entrepreneurship rather than capitalism is being celebrated.

We discussed political points to draw from the philanthropy discussion. Whilst it intersects with many issues, it is difficult to discuss directly because it is so amorphous. However, the undemocratic character of rejecting popular/political action in favour of rich people doing the right thing was noted.

Meanwhile, Stuart Simpson introduced on Financial Engineering, focusing on three key areas.

Risk: The trading of risk in financial markets must first be understood as a method of allocating capital. The term ‘risk’ has a specific meaning in the context of financial markets that is not directly transferable a wider social discussion of risk. Many functions performed by trading risk through the use of derivative products free up capital for other uses. The purchase of a commodity futures contract may reduce the requirement for a firm to hold large stocks of a commodity to protect against the volatility of commodities markets. Many of the largest derivative markets exist due to the withdrawal by the state from managing these risks directly, such as the ForEx markets. However, many states still significantly control the value of the domestic currency. The Chinese state, through controlling the value of RMB, removes the requirement for individual firms to manage their own foreign exchange risk through the financial markets or otherwise.

Financialisation: The use of financial products by non-financial firms is not sufficient evidence of a move towards increased financialisation. The purchase of financial products on the part of non-financial firms is often evidence of hedging activity, whereby non-financial firms limit their exposure to volatile financial markets in order to focus on the core business of the firm. Legal precedent makes it extremely unlikely that treasury departments of non-financial companies or public bodies such as councils are able to engage in speculative activity. Contracts that do not conform to strict definitions of a hedge – involving an underlying position that results in the net position that cancels out speculation – may be declared ultra vires, resulting in a lose-lose situation for any counterparty to the transaction. A specific point was raised regarding the profits made by car firms through financing the p