The tempos of capitalism [feedly]

....fascinating survey of legacy and modern reading on "the history of capitalism". Dan Little is a wonderful sociologist and philosophy intellectual with nearly encyclopedic interests.

The tempos of capitalism

Dan Little
http://understandingsociety.blogspot.com/2019/10/the-tempos-of-capitalism.html

I've been interested in the economic history of capitalism since the 1970s, and there are a few titles that stand out in my memory. There were the Marxist and neo-Marxist economic historians (Marx's Capital, E.P. Thompson, Eric Hobsbawm, Rodney Hilton, Robert Brenner, Charles Sabel); the debate over the nature of the industrial revolution (Deane and Cole, NFR Crafts, RM Hartwell, EL Jones); and volumes of the Cambridge Economic History of Europe. The history of British capitalism poses important questions for social theory: is there such a thing as "capitalism", or are there many capitalisms? What are the features of the capitalist social order that are most fundamental to its functioning and dynamics of development? Is Marx's intellectual construction of the "capitalist mode of production" a useful one? And does capitalism have a logic or tendency of development, as Marx believed, or is its history fundamentally contingent and path-dependent? Putting the point in concrete terms, was there a probable path of development from the "so-called primitive accumulation" to the establishment of factory production and urbanization to the extension of capitalist property relations throughout much of the world?

Part of the interest of detailed research in economic history in different places -- England, Sweden, Japan, the United States, China -- is the light that economic historians have been able to shed on the particulars of modern economic organization and development, and the range of institutions and "life histories" they have identified for these different historically embodied social-economic systems. For this reason I have found it especially interesting to read and learn about the ways in which the early modern Chinese economy developed, and different theories of why China and Europe diverged in this period. Kenneth Pomeranz, Philip Huang, William Skinner, Mark Elvin, Bozhong Li, James Lee, and Joseph Needham all shed light on different aspects of this set of questions, and once again the Cambridge Economic History of China was a deep and valuable resource.

A  new title that recently caught my eye is Pierre Dockès' Le Capitalisme Et Ses Rythmes, quatre siècles en perspective: Tome I Sous Le Regard Des Géants. Intriguing features of the book include the long sweep of the book (400 years, over 950 pages, with volume II to come), and the question of whether there is something new to say about this topic. After reading large parts of the book, I think the answer to the last question is "yes".

Dockès is interested in both the history of capitalism as an economic system and the history of economic science and political economy during the past four centuries. And he is particularly interested in discovering what we can learn about our current economic challenges from both these stories.

He specifically distances himself from "mainstream" economic theory and couches his own analysis in a less orthodox and more eclectic set of ideas. He defines mainstream economics in terms of five ideas: first, its strong commitment to mathematization and formalization of economic ideas; second, its disciplinary tendency towards hyper-specialization; third, its tendency to take the standpoint of the capitalist and the free market in its analyses; fourth, the propensity to extend these neoliberal biases to the process of selection and hiring of academics; and fifth, its underlying "scientism" and positivism leads its practitioners to devalue the history of the discipline or the historical conditions through which modern institutions came to be (9-12).

 

Dockès holds that the history of the economic facts and the ideas researchers have had about these facts go hand in hand; economic history and the history of economics need to be studied together. Moreover, Dockès believes that mainstream economics has lost sight of insights from the innovators in the history of economics which still have value -- Ricardo, Smith, Keynes, Walras, Sismondi, Hobbes. The solitary focus of the discipline of mainstream economics in the past forty years on formal, mathematical representations of a market economy precludes these economists from "seeing" the economic world through the conceptual lenses of gifted predecessors. They are trapped in a paradigm or an "epistemological framework" from which they cannot escape. (These ideas are explored in the introduction to the volume.)

The substantive foundation of the book is Dockès' idea that capitalism has long-term rhythms punctuated by crises, and that these fluctuations themselves are amenable to historical-causal and institutional analysis.

En un mot, croissance et crise sont inséparables et inhérents au processus de développement capitaliste laissé à lui-même.

[In a word, growth and crisis are inseparable and inherent in the process of capitalist development left to itself.] (13)

The fluctuations of capitalism over the longterm are linked in a single system of causation — growth, depression, financial crisis, and growth again are linked. Therefore, Dockès believes, it should be possible to discover the systemic causes of the development of various capitalist economies by uncovering the dynamics of crisis. Further, he underlines the serious social and political consequences that have ensued from economic crises in the past, including the rise of the Nazi regime out of the global economic crisis of the 1930s.

Etudier ces rythmes impose une analyse des logiques de fonctionnement du capitalism.

[Studying these rhythms imposes an analysis of the logic of functioning of capitalism.] (12).

Dockès is explicit in saying that economic history does not "repeat" itself, and the crises of capitalism are not replicas of each other over the decades or centuries. Historicity of the time and place is fundamental, and he underlines the path dependency of economic development in some of its aspects as well. But he argues that there are important similarities across various kinds of economic crises, and it is worthwhile discovering these similarities. He takes debt crises as an example: there are great differences among several centuries of experience of debt crisis. But there is something in common as well:

Permanence aussi dans les relations de pouvoir et dans let intérêts des uns (les créanciers partisans de la déflation, des taux élevés) et des autres (les débiteurs inflationnistes), dan les jeux de l'état entre ces deux groupes de pression. On peut tirer deux conséquences des homologies entre le passé et le présent.

[Permanence also in the relations of power and in the interests of some (creditors who favor deflation, high rates) and others (inflationary debtors), in the games of the state between these two pressure groups. We can draw two resulting homologies between the past and the present.] (20)

And failing to consider carefully and critically the economies and crises of the past is a mistake that may lead contemporary economic experts and advisors into ever-deeper economic crises in the future.

L'oubli est dommageable, celui des catastrophes, celui des enseignements qu'elles ont rendu possible, celui des corpus théoriques du passé. Ouvrir la perspective par l'économie historique peut aider à une meilleure compréhension du présent, voire à préparer l'avenir. (21)

[Forgetting is harmful, especially forgetting past catastrophes, forgetting the lessons they have made possible, forgetting the theoretical corpus of the past. Embracing the perspective of the concrete economic history can help lead to a better understanding of the present, or even prepare for the future.] (21)

The scope and content of the book are evident in the list of the book's chapters:

1. Crises et rythmes économiques
2. Périodisation, mutations et rythmes longs
3. Le capitalism d'Ancien Régime, ses crises
4. Le "Haut Capitalism", ses crises et leur théorisation (1800-1870)
5. Karl Marx et les crises
6. Capitalisme "Monopoliste" et grande industrie (1870-1914)
7. Interlude
8. Á l'âge de l'acier, les rythmes de l'investissement et de l'innovation
9. Impulsion monétaire et effets réels
10. La monnaie hégémonique
11. "Le chien dans la mangeoire"
12. La grande crise des années trente
13. Keynes et la "Théorie Générale"La "Haute Théorie", la dynamique, le cycle (1926-1946)
14. En guise de conclusion d'étape

As the chapter titles make evident, Dockès delivers on his promise of treating both the episodes, trends, and facts of economic history as well as the history of the theories through which economists have sought to understand those facts and their dynamics.

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En Guerre: Populism and a Plant Closing in France [feedly]

I found myself arguing with every other paragraph of this post and cheering at the ones in between! Proving -- its a provocative read on the contradictions of globalization and structural change. It shows how both political and bargaining aspects of labor organization need some serious upgrades and social elevation to cope with these changes.

En Guerre: Populism and a Plant Closing in France
https://workingclassstudies.wordpress.com/2019/10/28/en-guerre-populism-and-a-plant-closing-in-france/

Stéphane Brizé's En Guerre (At War), released in France in 2018 and in the United States this July, tells the story a car factory closing in Agen, a small company town in the southwest of France.  In this grim and painfully realistic dramatization, viewers witness many of the predictable and formulaic features of corporate industrial relocation, combined with the impending specter of joblessness that looms over the community in question. North American audiences will see many parallels between this film and accounts like Julia Reichert's documentaries The Last Truck: Closing of a GM Plant (2009) and American Factory (2019), Amy Goldstein's award-winning non-fiction book Janesville (2017), and the voluminous recent coverage of GM closures in Detroit-Hamtramck and Lordstown.  The uncertain future of the Nissan Sunderland plant in the Northeast of England provides a similar reminder of the present and ongoing turbulence created by transitions in the auto industry.  In this context, En Guerre represents a useful instructional tool, yet from a cinematic standpoint it leaves little room for novelty or surprise.

In the tale in question, German-owned Perrin Industries calls on workers to accept a scheme that would reduce their incomes by paying them for thirty-five hours but requiring them to work forty hours and forego bonuses for the next five years. Despite state subsidies to remain in Agen, Perrin decides two years later that the facility is no longer competitive. While local management offers platitudes like "we're all in this together," the company initiates plans to close the plant, displacing its 1,100 workers.  Union leader Laurent Amédéo, a robust and salty family-man played by Vincent Lindon, leads workers in a lock-out, demanding a meeting with the Perrin CEO.  Lindon, like many of the characters, bristles with intensity, conveying the gravity of what is at stake.

The film focuses on the ensuing escalation of this conflict and the thwarted efforts of Amédéo and his comrades.  When Amédéo visits company headquarters in Paris, young company officers tell him that the chairman will not see him and that he should return to Agen, but to "have a great day."  Government officials are sympathetic but assert that they cannot tell a company not to close with any legal authority.  "We support you and your movement," the workers, now obtaining a growing measure of media coverage, are told.  At a meeting between the German CEO and the union, the executive exclaims that he loves France – "I own a house here!" ­– before coldly asserting that the workforce is not performing and that if there are no other jobs in Agen then perhaps they should consider moving elsewhere.  When he is assaulted and bloodied by protesting workers, who flip his car as he leaves the premises, the movement to rescue the plant begins to unravel.

En Guerre explores the tough choices union officials and workers must make in the face of impending closures and the fractures in solidarity that threaten to emerge. Brizé probes these questions with vim and sympathy.  But the film too often relies on familiar tropes of neo-liberal capitalism – like executives who explain that "refusing to see market realities is like demanding a whole new world" – that have been parodied in popular media since at least the collapse of Enron and even more since the 2008 financial crisis.  No politician anywhere on the spectrum professes to be a fan of plant closures, even if some actively support the economic model that encourages them.  Merely to critique the callousness of shareholder-driven corporate manufacturers that shift around production is, in 2019, somewhat shallow and banal.  Most of the audience knows this already.

Had Brizé's fictional car factory not merely been closing but rather relocating to Morocco, then the virtues of the dogged French proletariat might have really been put to the test.  Had workers received the outspoken support of Marine Le Pen's Front National, again not an unrealistic scenario, then the director would have been forced to confront the political challenges that working-class communities face across Europe in the wake of industrial decline and right-wing insurgency, from Campania in Southern Italy, to Saxony and Brandenburg in Eastern Germany, to the protestant sections of Belfast.  But Brizé does not grasp that nettle, living instead in the moment and process of plant closure, rather than navigating the broader and more complex ways that working-class communities are actors in the political fallout once the initial anti-closure consensus has disintegrated. Some blame corporate executives or national politicians when communities decline, but others point the finger at Central European migrants or Syrian refugees.

Released in France in July 2018, En Guerre debuted just over a year after the election of Emmanuel Macron as the president of the republic, and just months before the commencement of the grassroots gilets jaunes ­– yellow vest –  protests in November.  Initially a revolt against rising fuel prices, the ongoing gilets jaunes movement, which has been fading in recent months, attracted supporters of both left-wing and right-wing parties around a loosely defined collection of mutual grievances: against the wealthy, punitive tax policies, austerity measures, and, yes, so-called "political elites," including some or all elected officials depending upon whom you ask.  But the totemic subject of their ire was the president himself. Brizé's sentiments overlap with those of the gilets jaunes.  "The idea of the world that Macron defends is a brutality without name," he observed in May 2018.

But the vain young president and his bracingly masculine handshakesare quite easy to dislike, and he is widely disapproved of in France, even by many who voted for him in the final round to avert a Le Pen presidency.  Such a diversity of the French population may hold mutual antagonisms, but reach widely different conclusions in identifying the most cogent remedies.  En Guerre provides a fast-paced and energetic depiction of the implications of the free movement of capital within the European Union without engaging with the destructive nationalism that has been unleashed by the numerous demagogues intent on benefitting from such circumstances.

Brizé's critique of twenty-first century corporate mobility may have been fresh in 2005, but it fails to break new ground in explaining how working-class communities process industrial decline in 2019.  It is wishful thinking to contend that a conversation on job loss can be narrowly defined as a debate on the movement of capital without touching on immigration, too. The internal contests between ideas of nationalism, multiculturalism, xenophobia, and identity, conversations buoyed by a surfeit of false information on social media and the fusion of physical and virtual discourse are as real as and as bound to define the future landscape of a community as those between a German executive and a French union.  The logic of neoliberal capitalism might close down a factory, but a series of angry rallies against fictitious Asian rapists and pedophiles or a brutal attack on a pride parade will ensure that it never re-opens. The European working classes face a multitude of painful political and cultural challenges, and as admirable as Brizé's solidarity and commitment to the blue-collar worker may be, this is not a time for the romanticism that En Guerre ultimately delivers.

Patrick Dixon, Georgetown University

Patrick Dixon is a research analyst at the Kalmanovitz Initiative for Labor and the Working Poor and the managing editor of Labor: Studies in Working-Class History.

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Equitable Growth: Getting Recession Ready.

The difference between recession and depression is in the planning.....

Recession Ready

Equitable Growth

https://equitablegrowth.org/recession-ready-2/ 

 

Economic recessions are inevitable and they are painful, with harsh short-term effects on families and businesses and potentially deep long-term impacts on the economy and society. But we can ameliorate some of the next recession's worst effects and minimize its long-term costs if we adopt smart policies now that will be triggered when its first warning signs appear.

Equitable Growth has joined forces with The Hamilton Project to advance a set of specific, evidence-based policy ideas for shortening and easing the impacts of the next recession. In a new book, Recession Ready: Fiscal Policies to Stabilize the American Economy, experts from academia and the policy community propose six big ideas, including two entirely new initiatives and four significant improvements to existing programs, all to be triggered when the economy shows clear, proven signs of heading into a recession. These proposals (see more on each below) aim to strengthen and add to our automatic stabilizers: policies that inject money into the economy in a downturn and withdraw stimulus when the economy is strong. Congress should consider these policy proposals now because when the next recession appears on the horizon, it may be too late.

In addition to the book, Equitable Growth has prepared a summary of the report, and Equitable Growth's Executive Director Heather Boushey spoke about the proposals with co-editor Jay Shambaugh on The Brookings Cafeteria podcast. For more on each proposal, please see links to the individual chapters and two-page summaries below:

• A proposal by Claudia Sahm of the Federal Reserve would boost consumer spending during recessions by creating a system of direct stimulus payments to individuals that would be automatically distributed when the unemployment rate increases rapidly. Full chapter and two-page summary.
• A proposal by Matthew Fiedler (Brookings Institution), Jason Furman (Harvard University), and Wilson Powell III (Harvard University) aims to avoid state budget cuts during recessions by increasing the federal matching rate for Medicaid and the Children's Health Insurance Program during economic downturns. Full chapter and two-page summary.
• A proposal by Andrew Haughwout of the Federal Reserve Bank of New York aims to set up an automatic infrastructure investment program that would fund transportation projects at the state and local level during economic downturns. Full chapter and two-page summary.
• A proposal by Gabriel Chodorow-Reich of Harvard University and John Coglianese of the Federal Reserve Board aims to strengthen the automatic stabilization functions of the Unemployment Insurance system by increasing UI participation and payments during downturns, as well as strengthening Extended Benefits. Full chapter and two-page summary.
• A proposal by Indivar Dutta-Gupta of the Georgetown Center on Poverty and Inequality aims to set up a countercyclical stabilization program that would fund both job subsidies and basic assistance through the Temporary Assistance for Needy Families program. Full chapter and two-page summary.
• A proposal by Hilary Hoynes of the University of California, Berkeley and Diane Whitmore Schanzenbach of Northwestern University aims to strengthen the Supplemental Nutrition Assistance Program as an automatic stabilizer by limiting or eliminating SNAP work requirements and automatically increasing SNAP benefits during economic downturns. Full chapter and two-page summary.

--

John Case
Harpers Ferry, WV

Enlighten Radio

Socialist Economics

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Announcing the US-China Trade Policy Working Group [feedly]

I see Dani Rodrik is using his recently elevated reputation to try and move mountains. I will Post more material docs on this effort. Look forward to commentary.

Announcing the US-China Trade Policy Working Group
https://rodrik.typepad.com/dani_rodriks_weblog/2019/10/announcing-the-us-china-trade-policy-working-group.html

Concerned about where the US-China trade relationship is going, we recently formed a "US-China Trade Policy Working Group." Yang Yao, Jeff Lehman and I are co-conveners. Other members are Meredith Crowley, Robert Howse, Jiandong Ju, Feng Lu, Justin Yifu Lin, Eric Maskin, and Rob Staiger. We released our statement today.

The statement is signed by 27 additional economists and legal scholars, including Philippe Aghion, Kaushik Basu, Robert Engle, Gang Fan, Robert Frank, Gene Grossman, Gordon Hanson, Ann Harrison, Kala Krishna, Ned Phelps, Alvaro Santos, Greg Shaffer, Anne-Marie Slaughter, Mike Spence, Joe Stiglitz, Michael Trebilcock, David Trubek. That is 5 Nobelists in all, in case you are counting!

The basic idea is that we need a different narrative about how the two nations can resolve their differences. Neither convergence nor decoupling will work. We propose a middle path between these extremes that prohibits explicitly beggar-thy-neighbor policies but is otherwise permissive of policies that may create cross-border spillovers.

Under our guidelines, engaging in monopoly conduct, predatory pricing, or rent-shifting on world markets would be expressly prohibited while policies that protect domestic economic arrangements (e.g., industrial policies or social safeguards) would be allowed (unless they fall in the previous category).

We argue that nations are entitled to engage in trade policies that protect their economic models. But they are not allowed engage in policies designed to make other countries change their systems (trade wars) or that benefit them only through the adverse effects they have on others (BTNs).  

While we provide a new conceptual vocabulary for the two countries to address their differences, we do not prejudge the outcomes on any specific dispute. That is for the countries to figure out, using the approach we propose. See full statement here. A Bloomberg news piece about our effort is here.

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Matthew Yglesias : Impeachment Protests and Mass Resistance Are Needed to Beat Trump https://www.vox.com/policy-and-pol... [feedly]

Matthew Yglesias : Impeachment Protests and Mass Resistance Are Needed to Beat Trump https://www.vox.com/policy-and-pol...
https://www.bradford-delong.com/2019/10/matthew-yglesias-_impeachment-protests-and-mass-resistance-are-needed-to-beat-trump_-watergate-is-the-ur-text-for-how.html

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Interview with Emmanuel Farhi: Global Safe Assets and Macro as Aggregated Micro [feedly]

I view this as an important piece. Imperialism led to a shortage, not a surplus, of safety, which weakens hegemony. There are some important implications to that argument.

Interview with Emmanuel Farhi: Global Safe Assets and Macro as Aggregated Micro
http://conversableeconomist.blogspot.com/2019/10/interview-with-emmanuel-farhi-global.html

Add note

David A. Price interviews Emmanuel Farhi in Econ Focus (Regional Federal Reserve Bank of Richmond, Second/Third Quarter 2019, pp. 18-23). Here are some tidbits:

On global safe assets

If you look at the world today, it's very much still dollar-centric ... The U.S. is really sort of the world banker. As such, it enjoys an exorbitant privilege and it also bears exorbitant duties. Directly or indirectly, it's the pre-eminent supplier of safe and liquid assets to the rest of the world. It's the issuer of the dominant currency of trade invoicing. And it's also the strongest force in global monetary policy as well as the main lender of last resort.

If you think about it, these attributes reinforce each other. The dollar's dominance in trade invoicing makes it more attractive to borrow in dollars, which in turn makes it more desirable to price in dollars. And the U.S. role as a lender of last resort makes it safer to borrow in dollars. That, in turn, increases the responsibility of the U.S. in times of crisis. All these factors consolidate the special position of the U.S.

But I don't think that it's a very sustainable situation. More and more, this hegemonic or central position is becoming too much for the U.S. to bear.

The global safe asset shortage is a manifestation of this limitation. In my view, there's a growing and seemingly insatiable global demand for safe assets. And there is a limited ability to supply them. In fact, the U.S. is the main supplier of safe assets to the rest of the world. As the size of the U.S. economy keeps shrinking as a share of the world economy, so does its ability to keep up with the growing global demand for safe assets. The result is a growing global safe asset shortage. It is responsible for the very low levels of interest rates that we see throughout the globe. And it is a structural destabilizing force for the world economy. ... 

In my view, the global safe asset shortage echoes the dollar shortage of the late 1960s and early 1970s. At that time, the U.S. was the pre-eminent supplier of reserve assets. The global demand for reserve assets was growing because the rest of the world was growing. And that created a tension, which was diagnosed by Robert Triffin in the early '60s: Either the U.S. would not satisfy this growing global demand for reserve assets, and this lack of liquidity would create global recessionary forces, or the U.S. would accommodate this growing global demand for reserve assets, but then it would have to stretch its capacity and expose itself to the possibility of a confidence crisis and of a run on the dollar. In fact, that is precisely what happened. Eventually, exactly like Triffin had predicted, there was a run on the dollar. It brought down the Bretton Woods system: The dollar was floated and that was the end of the dollar exchange standard.

Today, there is a new Triffin dilemma: Either the U.S. does not accommodate the growing global demand for safe assets, and this worsens the global safe asset shortage and its destabilizing consequences, or the U.S. accommodates the growing global demand for safe assets, but then it has to stretch itself fiscally and financially and thereby expose itself to the possibility of a confidence crisis. ...
Basically, I think that the role of the hegemon is becoming too heavy for the U.S. to bear. And it's only a matter of time before powers like China and the eurozone start challenging the global status of the dollar as the world's pre-eminent reserve and invoicing currency. It hasn't happened yet. But you have to take the long view here and think about the next decades, not the next five years. I think that it will happen. 

For a readable overview of Farhi's views on global safe assets, a useful start is "The Safe Assets Shortage Conundrum," which he wrote with Ricardo J. Caballero and Pierre-Olivier Gourinchas, in the Summer 2017 issue of the Journal of Economic Perspectives (31:3, pp. 29-46. )

On some implications for public finance if many economic agents aren't fully rational and don't pay full attention to taxes 

There is a basic tenet of public taxation called the dollar-for-dollar principle of Pigouvian taxation. It says that if the consumption of a particular good generates a dollar of negative externality, you should impose a dollar of tax to correct for this exter­nality. For example, if consuming one ton of carbon generates a certain number of dollars of externalities, you should tax it by that many dollars.

But that relies on the assumption that firms and households correctly perceive this tax. If they don't — maybe they aren't paying attention — then you have to relax this principle. For example, if I pay 50 percent attention to the tax, the tax needs to be twice as big. That's a basic tenet of public finance that is modified when you take into account that agents are not rational.

In public finance, there is also a traditional presumption that well-calibrated Pigouvian taxes are better than direct quantity restriction or regulations because they allow people to express the intensity of their preferences. Recognizing that agents are behavioral can lead you to overturn this prescription. It makes it hard to calibrate Pigouvian taxes, and it also makes them less efficient. Cruder and simpler remedies, such as regulations on gas mileage, are more robust and become more attractive.

Aggregate production functions, the disaggregation problem, and the Cambridge-Cambridge controversy

There's an interesting episode in the history of economic thought. It's called the Cambridge-Cambridge controversy. It pitted Cambridge, Massachusetts — Solow, Samuelson, people like that — against Cambridge, U.K. — Robinson, Sraffa, Pasinetti. The big debate was the use of an aggregate production function.

Bob Solow had just written his important article on the Solow growth model. That's the basic paradigm in economic growth. To represent the possibility frontiers of an economy, he used an aggregate production function. What the Cambridge, U.K., side attacked about this was the idea of one capital stock, one number. They argued that capital was very heterogeneous. You have buildings, you have machines. You're aggregating them up with prices into one capital stock. That's dodgy.

It degenerated into a highly theoretical debate about whether or not it's legitimate to use an aggregate production function and to use the notion of an aggregate capital stock. And the Cambridge, U.K., side won. They showed that it was very problematic to use aggregate production functions. Samuelson conceded that in a beautiful paper constructing a disaggregated model that you could not represent with an aggregate production function and one capital stock.

But it was too exotic and too complicated. It went nowhere. The profession moved on. Today, aggregate production functions are pervasive. They are used everywhere and without much questioning. One of the things David [Baqaee] and I are trying to do is to pick up where the Cambridge-Cambridge controversy left. You really need to start with a completely disaggregated economy and aggregate it up. ... 

We have a name for our vision. We call it "macro as explicitly aggregated micro." The idea is you need to start from the very heterogeneous microeconomic environment to do justice to the heterogeneity that you see in the world and aggregate it up to understand macroeconomic phenomena. You can't start from macroeconomic aggregates. You really want to understand the behavior of economic aggregates from the ground up.
For example, you can't just come up with your measure of aggregate TFP [total factor productivity] and study that. You need to derive it from first principles. You need to understand exactly what aggregate TFP is. I talked about aggregate TFP and markups, but the agenda is much broader than that. It bears on the elasticity of substitution between factors: between capital and labor, or between skilled labor, unskilled labor, and capital. It bears on the macroeconomic bias of increasing automation. It bears on the degree of macroeconomic returns to scale underlying endogenous growth. It bears on the gains from trade and the impact of tariffs. In short, it is relevant to the most fundamental concepts in macroeconomics.

For a retrospective recounting of what happened in the Cambridge-Cambridge controversies, a useful starting point is Avi J. Cohen and G. C. Harcourt. 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?" Journal of Economic Perspectives, 17 (1): 199-214.

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Brad DeLong: The best thing I have yet seen on how industrial organization, concentration, and monopsony drive the conclusion that i... [feedly]

Very interesting new research on minimum wage changes and their impact on employment. That impact varies in effect in different labor markets, with the most positive overall effects in very dense markets. The study helps explain why previous studies keep coming up with noisy results. 

Helpful definition: MONOPSONY: a market situation in which there is only one buyer. Most examples of monopsony have to do with the purchase of workers' time in the labor market, where a firm is the sole purchaser of a certain kind of labor. ... The classic example of a monopsony is a company coal town, where the coal company acts the sole employer and therefore the sole purchaser of labor in the town.

___________________________

Brad DeLong: The best thing I have yet seen on how industrial organization, concentration, and monopsony drive the conclusion that i... [feedly]

The best thing I have yet seen on how industrial organization, concentration, and monopsony drive the conclusion that i...
https://www.bradford-delong.com/2019/10/jos%C3%A9-azar-emiliano-huet-vaughn-ioana-marinescu-bledi-taska-and-till-von-wachter-_minimum-wage-employment-effects-a.html

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