New School Economic Review

The Jobless Recovery

Since the middle 1970s — that is for more than a full generation now — the U.S. economy has been on a downward trajectory with respect to the things that matter for most people: decent jobs, access to high quality and affordable education and health care, and some reasonable level of security in terms of employment, income, and retirement. This downward trajectory became emphatically clear during the Presidency of Ronald Reagan from 1981-88, and continued through the Republican administration of George Bush -1 and the Democratic administration of Bill Clinton. Conditions have only worsened from 2001-04, with George Bush 2 as President and the Republican Party controlling both houses of Congress.

Historical forces beyond the control of any given politician or political party have certainly been important in contributing to this trend. The primary one has been the rapid pace of global economic integration. This has increasingly placed U.S. working people in competition for jobs with workers in other countries. To invoke Karl Marx’s famous term, globalization has meant a vast expansion in the so-called “reserve army of labor.” U.S. workers now compete increasingly in this global job pool with people in poor countries, who are willing to work at pay scales far below what constitutes anything close to a minimally decent “living wage” within the U.S. Of course, from the narrow standpoint of business, this pressure on U.S. workers to lower their wage demands is most frequently construed as a positive development.

But even given the contemporary realities of globalization, there is still nothing inevitable about the U.S. economy’s negative trajectory.

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Pollin, Robert. 2004.  “Deepening Divides in the U.S. Economy, 2004: Jobless Recovery and the Return of Fiscal Deficits.” New School Economic Review 1(1): 22-30

The Steady State Growth Rate in the Neoclassical Theory: A Brief Survey

The so-called ‘marginalist revolution’ took place around the decade of the 70s of the 19th century. It produced a theory of the level and distribution of output based on the endowments of production factors, technology and consumer preferences. In such a theory, economic growth had to be conceived as the result of the increase in the endowments of factors. Early marginalist analyses of economic growth were developed by Alfred Marshall, Gustav Cassel and Knut Wicksell. We, however, start our survey from Robert Solow’s (1956, 1957) formulation of the neoclassical growth model because it later became the basic point of reference for any discussion on neoclassical exogenous and endogenous growth.

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Zamparelli, Luca. 2004. “The Steady State Growth Rate in the Neoclassical Theory: A Brief Survey.” New School Economic Review 1(1): 42-53

Financial Integration, Growth and Macroeconomic Volatility: Evidence and Interpretations

Has the increased access to capital increased investment? Is increased financial globalization associated with economic growth and macroeconomic stability? This paper reviews the theoretical benefits of financial integration, the “consensus” evidence of its failure to deliver the expected growth and stability, and some alternative interpretations on what is missing to obtain the benefits and avoid the risks.

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Marca, Massimiliano La. 2004.  “Financial Integration, Growth and Macroeconomic Volatility: Evidence and Interpretations” New School Economic Review 1(1): 31-41

Fiscal Policy: A Potent Instrument

There has undoubtedly been a major shift within macroeconomic policy over the past two decades, from the pre-eminence of fiscal policy to that of monetary policy. The latter has gained considerably in importance as an instrument of macroeconomic policy, whereas the former is rarely mentioned in policy discussions anymore, except in the context of limiting its use. We argue in this short paper that fiscal policy remains a powerful instrument for regulating the level of aggregate demand. We discuss two broad aspects of fiscal policy: its status in the eyes of the ‘new consensus’ in macroeconomics, and its institutional aspects.

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Arestis, Philip and Malcolm Sawyer. 2004. “Fiscal Policy: A Potent Instrument.” New School Economic Review 1(1): 15-21