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ABSTRACT
The economic policy reaction to the Covid-19 crisis has been considered from different angles. Here I will remind only the positions by Draghi (looking at this historical conjuncture comparing it to ‘war times’), Tooze (seeing in it the definitive closure of the ‘political economy of inflation’ as well as ‘the first crisis of Anthropocene’), Kregel (proposing ‘central controls for social provisioning’ as the pertinent macroeconomic policy). The pandemic could inaugurate a game change in European economic policy; and even unlikely quarters suggested in the last year a retreat from neoliberalism as we knew it. However, the health crisis is not an exogenous shock: it is inherent in the capitalist social form of production and consumption. The pathological state of affairs that takes our breath away reveals the hidden reality of the society where we work and consume. Confronting the current and future virus outbreaks (as well as climate change) obliges us to go back to the founding themes of macroeconomics, which needs to consider not just the level of employment, but also what employment is for. In this logic, we are forced to radicalise the notion of the ‘socialisation of investment’ into that of a ‘social production economy’: the challenge in front of us is indeed about the ‘how’, ‘what’, ‘how much’ and ‘for whom’ to produce.
KEYWORDS:
Acknowledgements
I thank the editors of the Review of Political Economy for inviting me to contribute to this Symposium on ‘What Have We Learned from the Covid-19 Crisis? New Macroeconomic Policy Options for a Post-Coronavirus World’. The final version profited of the referees’ comments.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Notes
1 In this article I very much develop a line of thought which was espoused for the first time in an intervention on the Monthly Review online blog (cf. Bellofiore Citation2020).
2 Draghi (Citation2020).
3 Since this article was submitted and accepted, Draghi became prime minister of Italy. His record has been disappointing. His nomination has been a paradigmatic example of Colin Crouch's post-democracy, to which I refer later in this text. His decisions may well be catastrophic. As if he had forgotten the parallel with a War, he has in fact managed the transition to a much weakened lockdown and an early unsafe re-opening of commercial activities, radicalizing a trend already established by the previous government after May 2020. In the meantime, deaths in Italy are escalating much faster than in other European countries. I think that the wise choice would have been the opposite: a much more rigid shutdown of the economy aiming at zero deaths, and then the tracking of new contagions. I am convinced that the costs, not only for human lives but for the economy itself, would be less.
4 Adam Tooze is a prolific writer, and his (written and online) interventions are too many to be quoted. In this case, the most concise reference is Tooze (Citation2020): an interview nicely summarising a complex understanding detailed in articles on Foreign Policy, The London Review of Books, The Guardian, Social Europe.
5 Cf. Bellofiore and Garibaldo (Citation2020a).
6 A reference to Marx on nature (beginning from the seminal contribution of Alfred Schmidt in the 1960s) as well as to Marxian ‘ecological materialism’ (up to the more recent works of John Bellamy Foster and Kohei Saito) would be quite useful here, but I have to disregard it, even though it is quite basic in my perspective put forward later on. See at least Bellamy Foster (Citation2016).
7 Kregel (Citation2020). The Policy Note for the Jerome Levy Economics Institute is dated October. Its content was anticipated in some videos, especially relevant the IDEAS online streaming in May, ‘Why stimulus cannot solve the Pandemic depression’, which is available on youtube: https://www.youtube.com/watch?v=rneE9ui9F1c&feature=emb_logo.
8 Kregel (Citation2020, p. 3).
9 Kregel (Citation2020, p. 5).
10 I have really to thank one of the referees for insightful remarks about the three positions I am surveying. I think that his observations are not far from my assessment, and they helped me to better focus on similarities and differences among the authors I consider.
11 My reading of the economic consequences of the coronavirus crisis can only follows from les deux ou trois choses que je sais d'elle, the ‘elle’ in question being the global and European crisis of the early 2000s. A summary of my views is in Bellofiore (Citation2013). The title of that article is a wink to Godard.
12 Cf. Toporowski (Citation2010).
13 Two excellent interpretations of the past and present contradictions of the European political economy are given by the book by Celi, Ginzburg, Guarascio, Simonazzi (Celi et al. Citation2018) and by three Halevi working papers for INET (Halevi Citation2019a, Citation2019b, Citation2019c). The reader may also consult Bellofiore, Garibaldo, and Mortágua (Citation2019), which is a much enlarged and updated version, in book-length form, of an article published in The Review of Keynesian Economics in 2015. A referee suggested supporting the argument with a reference to Augusto Graziani about core and periphery, as well as to the notion of mezzogiornificazione (which does not come from Graziani but from Krugman Citation1991: a new economic geography concept partially going back to the debate in the 1930s from authors like Ohlin, Christaller and others). In fact, what I consider a more sophisticate inquiry about the structural divarication of ‘core' and ‘peripheries' (in the plural: Southern Europe; Eastern Europe) is found in the book by Celi et al., as well as in Halevi's working papers: cf. Bellofiore and Garibaldo Citation2021. The referee is however right that Graziani is a key author in my overall reconstruction. For Graziani, what mattered was not so much the exchange rate system (fixed or variable), or even the single currency (with all its deficiencies), but the structural ‘quality' of the real conditions of production built over time. Graziani is clearly one of the main inspirations behind my perspective on macroeconomics as a ‘monetary theory of production', in general, and the notions of ‘socialisation of investment' and ‘social production economy’, in particular: cf. Bellofiore Citation2019.
14 See Section V, Current account imbalances within the European Monetary Union, in De Cecco Citation2012. For example:
In the Euro financial space, whose integration has substantially increased since 1998, not much attention was paid by national authorities and by the ECB to the accumulation of current account imbalances in member countries. After all, it was one of the reasons why the EMU was pursued for many years, that economic agents belonging to the various national jurisdictions did not have to worry any more about intra-European trade balances and to find financial resources exclusively within their countries. (p. 42).
15 Bellofiore and Garibaldo (Citation2020b). The first part of the title is, of course, a wink to Truffault.
17 My emphasis is on the qualitative ‘inversion’ in European economic policy. Given the focus of this article (the Covid-19 crisis as an occasion for rethinking economic policy and economic theory), I am not updating the information, draft after draft, running after a still unsettled situation. As I shall argue at the end, I am quite pessimistic about a full valorisation of the new openings.
18 Pasinetti (Citation1998) clarified beyond any doubt the folly of the 3 Percent Deficit/GDP ‘Parameter'. This does not mean, however, that the anti-austerian polemic about the sustainability of the public debt very often mounted by Post-keynesian economists is always well grounded. As I observed with Halevi in an Italian conference in 2005, what was needed was not so much insisting on some alternative criterion of sustainability or the stabilisation of the public debt. The point was rather to understand that the true rules of good management of public finance requires to engage in higher ‘good' deficits, even risking a huge (but in fact also temporary) rise in the deficit/GDP ratio. I borrow the expression good deficit from Parguez (Citation2014). In my view, what matters most is the targeted content of public expenditure. Keynes’ distinction between current and capital items in government budget may be useful here (Kregel Citation1985). The 2005 intervention in Italian is also available in English: cf. Bellofiore and Halevi (Citation2012). That argument is more and more relevant nowadays, so much so that after the 2007-2008 crisis is even recognised by some mainstream economists, in their own way.
19 On this line, the best remarks are those by Francesco Saraceno in his recent Italian book, The reconquest. Why we lost Europe and how to get it back (Saraceno Citation2020).
20 In the July/August 2005 a lead article was title ‘The next pandemic’.
21 In their original Italian version the ‘12 Theses’ are included in Nobile’s excellent book on the Covid crisis (Nobile Citation2020a), whose title in English is translated as One world one health. The relationship among capitalism, pandemics, and ecosystems. The 12 Theses are available online in English translation: http://utopiarossa.blogspot.com/2020/04/12-theses-against-political-and-social.html.
22 See Mirowski (Citation2013) and Bonefeld (Citation2019).
23 According to Schumpeter, even the market economy is a planned economy: the plan is coordinated by that central accounting department of the society which is the banking system.
24 For this and the following, a more detailed account and the necessary references can be found in Bellofiore (Citation1992).
25 This was the position I advanced in Bellofiore (Citation2014).
26 The interest reader may find more details in Bellofiore (Citation2011), where I present a histoire raisonnée of the great structural crises punctuating the stages history of capitalism. It goes without saying that a proposition like this should be qualified, as it is judiciously urged by a referee. A first problem is to distinguish ‘Keynes’ from ‘Keynesian’. Everybody knows the story told by Joan Robinson according to which, after Keynes in 1946 dined in Washington with some of his admirers, he told Austin Robinson that ‘I was the only non-Keynesian there’. A second, even more serious, problem is that Keynes’ thinking was quite sensitive to the context (‘when facts change, I change my mind’), and cannot be fixed in a single standpoint. A third problem is to demarcate Keynes’ theory from any specific economic policy. The argument that, in a great crisis, like the one we are living in, there remains a very strong demand-side problem proves too much. Like the ‘restricted consumption of the masses’ in Marx, that contention is always true, and then it cannot explain any historical conjuncture. I am however quite convinced that this crisis, as the great recession preceding it, can be accommodated by a ‘structural Keynesian’ interpretation, for the simple reason that I myself have provided elements of it. In fact, when the referee argues that ‘a key element to solving the longer-term crisis is a Keynesian policy of socializing investment, and that such a policy would entail both dealing with the deficiency of aggregate demand and the composition of this demand, as well as favouring the supply of public capital in its resolution. This would be a clear case of how the level and composition of both demand and supply would be connected with Keynes’ (my italics), I couldn’t agree more, except for the fact that in this phrase the name ‘Keynes’ is a theoretical construct condensing many influences. I prefer to distance this Keynes from a too generic ‘Keynesianism’, and connect him to the other authors that the same referee, rightly, defines my ‘fathers and mothers’: Marx, Kalecki, Minsky, [Joan] Robinson; to whom I would add Graziani, Napoleoni, and de Brunhoff.
27 I cannot but agree with one of the referees, who underlines that ‘social economy’ is a very loaded expression. The term has a long history with terribly nebulous meaning: from Léon Walras, who wrote about the économie sociale, to the modern literature referring to a ‘third sector’ beyond the private/public sector dichotomy. ‘Social production economy’, in my version, is a sort of ‘limit concept’: the production of immediate social use values by immediately socialised workers. It can only be approached tentatively and at the societal level. Most of what I attribute to the ‘social production economy’ corresponds to what Michele Nobile, in his most recent online contribution on the health crisis, calls ‘economy of pandemic’ (cf. Nobile Citation2020b). I avoid that label because of the risk that it could be restricted as pertaining only to the acute phase of the health crisis: which is not, if I understand him well, in the intention of the author. What has to be constructed is an ‘economy against and beyond pandemic’. ‘Socialisation’ is not a state but a process, and refers to the entire historical phase we are entering. The concrete ways in which the social provisioning is delivered and the health emergency is dealt with are, here and now, the fundamental first steps. A not exhaustive list would include: a large-scale propulsion of public ‘investment’ in social items, like health and education; the conversion to a sustainable ecological production; the end of casualisation; the blocking of layoffs; establishing ‘decent’ higher wages and ‘good’ full employment driven by government expenditure; a more ‘caring economy’; a strict and uncompromising health protection within the labour process itself; the reduction of working hours and the lowering of the retirement age. In the European area this necessitates a macroeconomic integration and coordination. Although only temporarily compatible with capitalism (like Kalecki’s full employment), interventions like these would generate a field of tensions to be sorted out, and would ultimately compel to go beyond the logic of capital. Bellamy Foster, Jamil Jonna, and Clark (Citation2021) has recently evoked Sweezy’s plea for an alliance pressing toward increasing standards of living and improvements in collective consumption as well as the quality of living. More than four decades later, Bellamy Foster comments, that alliance should turn into a ‘new socialist movement from below aimed at ensuring a world of sustainable human development’. And concludes: ‘Predictions as to the future are meaningless in this context. The point is to struggle’.
28 Nevertheless, I agree with Tooze (Citation2021) (quoting studies of the OECD, IMF, and EIB) that Next Generation EU, though politically it is a big advance, economically it is ‘simply not big enough’.
29 Just an example. To my knowledge, in no recovery plan presently discussed the centrality of capitalist and market logic is really questioned. That logic is rather embedded in the criteria asked for the ‘public’ intervention to be ‘rational’ and ‘efficient’.
30 The Lecture was given in December 1971, and it is published in Robinson Citation1972.