ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Arjun JayadevSubscribe to Arjun Jayadev

A Better Economics for the Indian Context

Reflecting on their experience of using The Economy to teach undergraduate students in India, two teachers of economics discuss the need for a version of the alternative textbook that addresses the needs of students who seek to understand the Indian economy. The possibilities of such a version of the textbook are discussed.

Debt Targets Built on Quicksand

Despite being an improvement on the ad hoc and restrictive Fiscal Responsibility and Budget Management framework, the N K Singh Committee report suffers from some shortcomings. A short critique of the report’s framing is presented, suggesting that the report is insufficiently attentive to the considerations of macroeconomic coordination. There is a case for increased fiscal spending that runs counterto the recommendations of the committee.

Mapping India’s Finances

As a useful adjunct to other macroeconomic accounts, this paper describes financial flows between different sectors of the Indian economy from 1955 to 2015. It finds that the consolidated government sector has the largest net deficit, while the households sector has the largest net surplus. The private corporate sector is running larger deficits than at any other time in the past, implying more reliance on external credits. With liberalisation and globalisation, the rest of the world sector is now the second-largest net surplus sector in the economy.

A Response to Waknis

We thank Parag Waknis for his comment. If nothing else, it succeeds – albeit unintentionally – in providing a fine illustration of the problems with contemporary economics that our article described. In our article, we suggested that the methodology that has dominated economics for the last...

Strange Defeat

Macroeconomics in the United States today appears to be a site of intense controversy between supporters of more aggressive stimulus measures and supporters of austerity. These policy debates, while important, tend to obscure the strong methodological and theoretical consensus in the economics profession today. All major schools of mainstream macroeconomics are committed to a vision of the economy in which rational agents choose the optimal path over time, and in which any sources of instability are fully offset by a benevolent central bank, at least in normal times. These core intellectual commitments of modern economics have contributed to the weakness of efforts to reduce unemployment in the US and Europe. This paper first describes the intellectual failure of the most prominent arguments for austerity, and then argues that the deeper consensus in macroeconomics has nonetheless made it difficult to make consistent arguments for sustained deficit spending or for making lower unemployment a high priority relative to other macroeconomic goals.

Healthcare Law in the US and the RTE in India

Earlier this year, the Supreme Court of India upheld the constitutional validity of the Right of Children to Free and Compulsory Education Act 2009 and the Supreme Court of the United States likewise upheld the Patient Protection and Affordable Care Act, 2010. The two pieces of legislation attempt to expand, to a greater or lesser degree, the provision of education and health services, respectively. This article attempts to understand and evaluate the policy debates and legal decisions around the two Acts as attempts by two constitutional liberal democracies to clarify the relationship between the state and private sector, and their respective roles and responsibilities to secure social welfare.

Reading the Signs at the Occupy Movement

The Occupy movement with its myriad signs and slogans still appears to be an inchoate protest movement railing against economic inequality, free market capitalism and its most visible institution - Wall Street in the United States. But its unmistakable insistence on taking on the established political parties - including the Democrats - and its radical democratic form of organisation suggest a new ambitious grass-roots politics with the potential to mature further.

Financial Reform in the US: A Brief Overview

The final contours of the legislation on financial reform that is being enacted in the US are now clear. If the objective was to tackle the most egregious excesses of a wildly out-of-control sector, the bill that will eventually emerge is a reasonable effort. If the goal, however, is to conceive of and develop a 21st century financial sector that is an aid to the real economy and that assists in creating widespread prosperity, then this effort should be seen as a cynical attempt that will fail to do the needful. Proponents of this view suggest that the approach adopted has been regulatory as opposed to structural. The reform process has progressed as if the fundamental problem was a lack of prudential regulations as opposed to the actual social functioning of the financial system in the US.

A Blueprint for a Fairer and More Stable Global Economy

The report of the United Nations Commission on reforms of the international monetary and financial system goes beyond making a critique of the paradigm that has held hegemonic sway over economic thinking and policy. It focuses on the enormous challenges that the world faces beyond the immediate crisis. This article provides an overview that illustrates the potential of the report to be a blueprint for creating a new global order.

When the Facts Change: How Can the Financial Crisis Change Minds?

This essay argues that pragmatism as a temporary prop to stabilise the crumbling financial system is distinct from pragmatism as a governing ethic. The emerging common sense worldwide and in India aims to be the latter. Yet, in the absence of sufficient grounding in a broad theoretical doctrine, this incipient pragmatism may be insufficient to dislodge the prevailing doctrine of neoliberalism and thus may, in fact, end up being a temporary reaction.

The Credit Crisis: Where It Came From, What Happened, and How It Might End

Massive deregulation in the United States allowed non-banks to function like banks, exposing the institutional fragility particular to banking. This unprecedented scale of deregulation and the concomitant absence of systemic risk controls were facilitated by a radically lopsided political economy in the North. This was, in turn, held up by an extremely lopsided global division of labour. Export-surplus-fuelled liquidity and excessive deregulation combined to exacerbate the cyclical nature of banking systems that follow from the credit nature of money, leading to massive booms and searing busts. Layer upon unstable layer, these interacting dynamics have imperilled our world system and brought us to the brink. Each dynamic will now have to be rebalanced, a difficult political task.

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