On cost disease and “neoliberal” demagoguery


In the 1960s, William Baumol (in his book, co-written with William Bowen, Performing Arts: the Economic Dilemma, as well as in subsequent works) noticed that, almost by definition, the productivity in the “services” that required direct human interaction (e.g. schooling, certain medical procedures, performing arts, etc.) would necessarily lag behind the productivity in other branches.

He then warned that this phenomenon could be exploited by political demagogues bent in de-funding public good provision, since the cost of schooling, medical care, etc. would appear to skyrocket compared to other costs, even if there’s nothing strange or wasteful (“inefficient”) about that.

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HYMAN KAPLAN AND THE POVERTY LINE by S. Subramanian (following Leo Rosten)

[The author is an Indian Council of Social Science Research National Fellow affiliated with the Madras Institute of Development Studies, Chennai, India. Email: ssubramanianecon@gmail.com ]

Explanatory Note: This essay is aimed at presenting an expository account of the World Bank’s methodology of assessing country-specific and global income-poverty. The methodology, in the author’s view, is logically flawed, apart from being politically conservative. It is also the author’s belief that a more direct measure of income-poverty is yielded by what is known as the ‘quintile income statistic’, or average income of the poorest 20 per cent of a population. This statistic (a version of which is beginning to be gradually and cautiously accepted by the World Bank), it can be argued, should provide a better idea of income-poverty (as such), than the misleading and questionable estimates, presently put out by the Bank, of the so-called ‘dollar-a-day headcount ratio’. The article is premised on the notion that policy-makers and involved lay readers are entitled to have an insight into how global money-metric poverty statistics are presently (unreasonably) conceptualized – and how they might be (more reasonably) formulated. A less unorthodox version of the contents of this piece are available in a recent UNU-WIDER (Helsinki) publication by the present author (bibliographic details are furnished in the recommended reading list at the end of the piece). The present essay has been written, with a view to stimulating the widest possible popular interest, in the style of one of Leo Rosten’s well-known Hyman Kaplan  stories, and is addressed to readers who do not feel called upon to systematically diagnose seriousness only in the presence of solemnity.

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ISLM: a further explanation and a defense* by Matías Vernengo

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I noted before  the traditional representation of the ISLM is problematic. Yet as I also noted the ISLM model can accommodate changes that incorporate the criticisms of classical-Keynesian, post-Keynesian and other heterodox groups. There is no need for an investment function based on the marginal productivity of capital and the principle of substitution. The accelerator can be incorporated, and the inverse relation with the rate of interest would result from the effects of interest rates on other components of demand. Also, endogenous money can be incorporated easily, and for the most part this has been done in New Keynesian models (the ISMP).

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Quick Response II by Richard McIntyre and Michael Hillard

We wanted to establish one point in our June 2013 URPE article, “Capitalist Class Agency and the New Deal Order”: radical economists have been mistaken in believing that a “limited capital-labor accord” existed in the post World War II era and this mistake has had negative political consequences lasting to the present. We understand that class relations are affected (differently) by racial and gender relations.  We do not think the latter are “unimportant” and have written extensively on gender and labor elsewhere (Hillard and McIntyre, 2009a, 2009b, 1992). Continue reading

Continuing the discussion on Race and Class by Paddy Quick

I appreciate the response by Richard McIntyre and Michel Hillard (MH) to my critique of their article.  They are quite right in stating that I do not address the main argument of their paper – I began my response by saying exactly that. However I would argue that it is impossible to understand the relations between capital and labor in the United States without recognizing the significance of race, and integrating it into an understanding of US history.  This history consists of an account of social relations which consist not only of class relations (between labor and capital,) but also race relations and gender relations, none of which can be understood in isolation from the others. MH disagree. Thus they argue that “both racial and gender discrimination are historically and socially constituted in different ways, but this did not seem relevant to our critique of an accord between capital and labor.”  I argue that they are indeed relevant. (As before, I set aside my concerns about gender relations. They seem unimportant to MH, whose discussion of  “individual rights” is carried out entirely in terms of race and its significance for the “white working class” rather than the male workers, or white male workers.)

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Time for a Discussion on Race and Class by Paddy Quick

The most recent issue of the Review of Radical Political Economics (RRPE Vol. 45, No. 2.  Spring 2013) included an article by Richard McIntyre and Michael Hillard (hereafter RH) entitled “Capitalist Class Agency and the New Deal Order:  Against the Notion of a Limited Capital-Labor Accord.”  While the article’s focus is on the existence or nonexistence of a “capital-labor accord” in the post-World War II United States, my criticisms relate to the authors’ treatment of race. Both authors have well-deserved reputations as radical political economists, but on this topic, I find myself in serious disagreement.

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