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The latest news, debates, proposals and developments on new economic thinking at a glance.
Large profit margins of oil companies and continuing high fuel prices despite fuel discounts have put an excess profits tax (it has already been introduced in Italy) at the centre of economic policy debates – even if there is also some evidence against this narrative.
In a blog post, Stefan Bach, despite sympathising with the taxation of “war profits”, emphasises the institutional hurdles that make this project difficult to implement. Since German corporate tax law is based on principles of generality and uniformity laid down in the Basic Law, an amendment to the Basic Law would be necessary to create legal certainty. However, this would be unrealistic in the short term and perhaps somewhat disproportionate, as no huge gains could be expected. According to Bach, the Cartel Office is better suited to counter the problem of too much market power.
The whole article is available here.
What influence did monetarist ideas have from the mid-1970s on the monetary policy strategies of the Bundesbank and later on the construction of the ECB? Even today, arguments that see money supply control as the central bank’s main task still play a major role in the public debate on monetary policy.
A new report by the Dezernat Zukunft therefore calls for an evaluation of the monetary policy strategy and its changes since 1973 with the aim of identifying and rectifying corresponding institutional weaknesses. The evaluation should also clarify whether the ECB’s money supply management has led to institutional decisions that still prevent monetary policy from achieving the stated goals of the European Union in the best possible way.
The full report is available here.
A new blog post by Chris Saltmarsh, who is the Co-founder of Labour for a Green New Deal, draws on Xhulia Likaj, Michael Jacobs & Thomas Fricke’s recent paper ‘Growth, Degrowth or Post-growth? Towards a synthetic understanding of the growth debate’. The study, which was commissioned by the Forum, provides a conceptualisation of the contemporary growth debate as one between competing political strategies with the role of capitalism at its centre.
Chris Saltmarsh proposes the Green New Deal as a source of strategic unity for those engaged in practical action for political-economic transformation, analogous to the notion of post-growth offering conceptual unity in the capitalism-growth debate, as proposed by Likaj et al. (2022).
Read the whole blog entry here.
Analogous to the debt brake, European fiscal rules were also suspended during the corona pandemic. As things stand, the intention is to return to the existing system next year. According to Mühlbach, this would result in high consolidation pressure and cuts in essential investments. Instead of repeating the mistakes of the past decade, fiscal rules should be adapted to the current macroeconomic environment of low interest rates. Mühlbach suggests creating exceptions for investment in the existing set of rules and changing the Maastricht criteria in the long term. The medium-term budget target based on the structural deficit should be abolished and replaced by an expenditure rule, he said.
The full analysis is available here.
World-renowned economist and inequality researcher Thomas Piketty in conversation with Rob Johnson, President of the Institute for New Economic Thinking about Piketty’s just-released book, A Brief History of Equality.
When? June 13, 6 pm (CET)
Where? Online
OUR MAIN TOPICS
New Paradigm
NEW PARADIGM
After decades of overly naive market belief, we urgently need new answers to the great challenges of our time. More so, we need a whole new paradigm to guide us. We collect everything about the people and the community who are dealing with the question of a new paradigm and who analyze the historical and present impact of paradigms and narratives – whether in new contributions, performances, books and events.
Redefining
the role of
the state
REDEFINING
THE ROLE OF
THE STATE
For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.
Remaking
finance
REMAKING
FINANCE
More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.
Greening
prosperity
GREENING
PROSPERITY
During the high point of market orthodoxy, economists argued that the most 'efficient' way to combat climate change was to simply let markets determine the price of carbon emissions. Today, there is a growing consensus that prices need to be regulated and that a carbon price on its own might not be enough.
Reducing
inequality
REDUCING
INEQUALITY
The rising gap between rich and poor has become a threat to social cohesion in most rich countries. To reverse this trend it will be crucial to better understand the importance of different drivers of income and wealth inequality.
Innovation Lab
INNOVATION LAB
Do we need a whole new understanding of economic growth? What would be a real alternative? How viable are alternatives to GDP when it comes to measuring prosperity? These and other more fundamental challenges are what this section is about.
Globalization
for all
GLOBALIZATION
FOR ALL
After three decades of poorly managed integration, globalization is threatened by social discontent and the rise of populist forces. A new paradigm will need better ways not only to compensate the groups that have lost, but to distribute the gains more broadly from the start.
Europe
beyond markets
EUROPE
BEYOND MARKETS
The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.
Corona Crisis
CORONA CRISIS
The current Corona crisis is probably the worst economic crisis of the post-World War 2 era. Economists are working hard on mitigating the economic effects caused by COVID-19 to prevent a second Great Depression, the break-up of the Eurozone and the end of globalisation. We collect the most important contributions.