Daniel Daianu, 5 october 2020
Mankind will prevail in the fierce war against the coronavirus, a hidden, treacherous foe that has been attacking randomly and leaving many human deaths behind. The struggle with this pandemic has no soon end in sight because we need effective weapons to combat it, such as safe medication and vaccines which should be used on a grand scale, worldwide.
We will overcome the severe economic downturn as well; but this crisis will leave deep scars, given that economies are witnessing sweeping changes. These changes, adding to tensions and intricate issues and policy dilemmas that date back prior to the Pandemic and the current economic crisis, call for introspection, examination of economies’ functioning anda revisiting of public policies.
The financial crisis that erupted a decade ago prodded social scientists and policy-makers to think about serious problems that afflict modern economies. In the text belowI hook up with ideas that I have expressed in recent years and extrapolate them to the fallout fromthe current crises.
It may be that the current crises (public health and economic) are harbingers of a new turning point in the evolution of capitalism. History has lessons to learn, although interpretations may vary owing to intellectual propensities, or interest-related biases.Thisdoes not invalidate the rationale to revisit critical moments in the evolution of modern capitalism, which can be pretty illuminating as to its technological, economic, and social drivers.
My guiding idea is that, over itshistory, capitalism has “civilized” itself as a social and economic system.This “civilizing” experience is interlocked with cycles of ideas, of public policies, and institutional change. The concept of ‘learning by doing’ can be applied to the motion of capitalism, with its ups and downs, windings, yet following a clear-cut evolution over the past hundreds of years – despite dark periods, which include totalitarian regimes andwars. Not to forget the colonial regimes, with their grey and black areas.
A mixed economy took shape over time, in which a public sector and a private sector cohabit, based on market dynamism, entrepreneurship, with the shares held by the two sectors shifting in accordance with historical circumstances and local conditions. This is how capitalism took shape in advanced economies, around the world in general. Modern capitalism has among its core principles the notion of ‘equal opportunities’. To what extent reality befits this principle is an open question and is part and parcel of the current quest to re-examine the functioning of capitalism.
The debate that started after the outbreak of the financial crisis is not and should not be, chiefly, about capitalism vs socialism (seen as socialisation/nationalisation of property and extinctionof market mechanisms), but about the path of capitalism, of the mixed economy.
There is the experience of communism, a totalitarian regime that should by no means be judged as the distortion of an enlightened project; communism has in its genes an anti-democratic ideology and unsurmountable structural flaws as a command economy. And there is the experience of National Socialism in Hitler’s Germany, of fascism. Totalitarianism crushes and humiliates the human being as a being thathas the innate right to freedom; it does proclaim and imposes the single thinking/ideology and the single party rule, and it creates monstrosities (see also Hannah Arendt, “Origins of Totalitarianism”, 1951). But capitalism embodied, as an ideal type,by unrestrained markets, lack of rules and regulations, by market fundamentalism, is itself inimical to a thefunctioning of a market economy, to democracy. History providesirrefutable responses in both regards.
In my view, the great stake in the current debate, on the future of capitalism, is to safeguard democracy, liberal democracy. This stake in no way diminishes the urgency to deal with climate change as an existential threat.
In what follows I mention characters, ideas and institutions, events, which illustrate key policy and institutional shifts. The choices made provide, I believe, atelling picture.I refer to central banks as a key construct in modern economies, social security as an institution of major economic and social significance, the paradigm shift after Great Depression (The New Deal) and the Bretton Woods arrangements, the paradigm shift of the 1970s and 1980s, China’s economic rise, theGreat Recession (the 2008- crisis) and the “Return of Keynes”, climate change as an existential threat, and the “Return of the State”. Final remarks conclude this essay.
1. Central banks, the lender-of-last-resort (LoLR), moral hazard
Central banks are a fundamental construct of modern banking and capitalism.“And I would highlight in this regard the lender of last resort (LoLR) function in particular. Walter Bagehot and Henry Thornton are credited (at mid-19th century) with explaining the need for money market intervention in order to preserve liquidity in circulation and prevent panics (although Bagehot was rather an advocate of free banking).
In the USA, things were more complicated, even though Alexander Hamilton, the first United States Secretary of the Treasury, realised that a central bank had been needed ever since the American republic was established. There was no true central bank in the US until 1913, which may be viewed as odd. It took an ‘apostle’ of financial capitalism, J.P. Morgan, who used his bank,to stem the Financial Panic of 1907.Thisprobably made influential political milieus understand the function of LoLR, which called for an institution as the central bank. The Fed was set up in 1913 as the US central bank.
In Europe,central banks have a much longer history – the Riksbank was founded in Sweden in 1668, the Bank of England in 1694, the Bank of France in 1800, the Bank of Japan in 1882, the Bank of Italy in 1893, the Reichsbank in Germany in 1876 (a descendant of the Bank of Prussia), etc. Central banks were originally tasked with financing royal families, their wars and other needs, being subservient to the interests of royal absolutism. Over time, central banks took on complex functions.
That the Great Depression (1929-33) could not be avoided is also the result of policy errors, inter alia the underestimation of the LoLR function. As Milton Friedman and Anne Schwartz (1960) pointed out, during the critical phase of the crisis too little liquidity was injected into the system. Yet, the establishment of the Fed, given the US’s ever-increasing role in the global economy – overcoming the UK’s share of world GDP in the first half of the last century – was a critical moment in many ways.
Clearly, the LoLR function was seen as no less important that the moral hazard concerns of not a few economists and policy-makers. In current times’terminology, the LoLR is to be seen in conjunction with the market-maker/repair function, as evidenced by Fed and ECB interventions during the Great Recession and the current economic crisis.
Moral hazard can obfuscate a deeper problem than making finance feel that, in the end, whatever it does, someone stands behind it; it is the increasing disconnect between finance and the real economy, its increasing share in corporate profits and in GDP, that can easily be seen as embodying the extraction of undue rents and a very powerful lobbying power. The reform of finance has to be judged from this perspective too.
2. Social and business insurance
Another landmark in the institutional build up of capitalismis the introduction of social security elements by Chancellor Otto von Bismarck (in Germany) in 1899. Bismarck was no socialist, as some might think. Yet, he was a rational and lucid statesman, with an innovative thinking, who realised that a risk-mitigating mechanism to protect people is badly needed.
Economic and social insurance, with public and private forms, has played a major role in civilising capitalism and mitigating individual, community, and business risks.
Social security could also be seen as having marked the exit from 19th-century capitalism (so well portrayed in Charles Dickens’ novels), with the social emancipation of those living in appalling, often subhuman conditions, Die Untertanen, and the development of industry and international trade.
In the 20th century, particularly in Europe, social security moved ahead, favouring economic and social progress. In the United States, President Franklin Delano Roosevelt’s administration was concerned with developing social security mechanisms based on what the Great Depression had revealed; but the American social security system is considerably less developed than in Europe.
Social security is a mechanism for diminishing adjustment costs and alleviating the after-effects of a deep recession.
The great challenge to social security, or social assistance, is not to lead to excessive, addictive, aid dependence – which is often reflected by wide and growing public debts and, eventually, in the crisis of the “welfare state”. Moreover, we must distinguish between high social expenditure, yet which honours a social contract that is not conducive to budget crises (as is the case in European Nordic states), and budgets with large deficits and public debts that illustratea welfare state in deep trouble (the case of southern euro area member states). This is an issue facing not a few advanced economies, which will be accentuated as a public policy dilemma by the pandemic effects and the ongoing severe economic crisis, as well as challenges posed by climate change.
Insurance is present in markets plays a well-defined role. Yet, if it turns into purely speculative instruments, such as credit default swaps that are not backed by an underlying asset (naked CDS), it can fuel uncertainty and inflict great damage. The financial crisis, that was unleashed by the bankruptcy of Lehman Brothers, brought the large-scale speculative use of CDS to the fore, a de factodegradation of their economic function.
3. The New Deal and Keynesian policies: a paradigm shift!
Another policy and institutional milestonewasThe New Deal, which was introduced in the wake of the Great Depression (1929-33) by President Franklin Delano Roosevelt. His administration grasped the importance of reforming public policies and mechanisms (including the above-mentioned budding social insurance system) in order to tackle social and economic big problems.
Regulations were introduced in finance with a major legislative novelty, The Glass Steagall Act that was enacted in 1933. Investment banks were separated from retail banks, most banks turned regional –an architecture that resonates with what Andrew Haldane and May proposed in 2011to shape inter-connectedness as a means to contain contagion, a novel approach to Fed’s activity, new institutions to prop up economic development (Tennessee Valley Authority, as a financial development institution, including its planning function). State interventionwas required and strengthened by the preparations for entering World War Two (WW2).
The Great Depression and National Socialism in Germany, his mefiance vis-à-vis corporatist structures, and thinking in line with the Austrian School, made Joseph Schumpeter be sceptic about the future of capitalism (“Capitalism, Socialism and Democracy”); he saw whatever was remote from completely free markets as leading to socialism . At Cambridge (UK), a powerful Marxian current became vocal in the likes of Maurice Dobb, Joan Robinson, Piero Sraffa a. o. Oskar Lange and MichałKalecki advocated socialism, yet they did not think in terms of a command economy, but rather of a “market socialism” (as attempted in former Yugoslavia) and this led to a fascinating public debate, together with Dobb, versus Friedrich von Hayek and Ludwig von Mises on the Economic Calculation. It can be presumed that Schumpeter was not acquainted with all the horrors of Stalinism, since he passed on in 1950 – long before the collapse of communism in 1989. He did not even get the chance to witness the rebuilt Europe in the aftermath of WW2.
The big overhaul of capitalism that started with the New Deal in the United States and what further evolved institutionally and policy-wise in post-war Europe was a major turning point for capitalism. Economic development in the West after WW2 fostered market reforms in the East later on (prior to 1989,in Hungary and Poland), and prompted the fall of communism, eventually.
In Europe, Keynesianism, as a school of thought andas the basis for policies to combat deep recessions, was preceded by Keynesian practices. Public works were undertaken in Sweden and in the United Kingdom before Keynes’ Magnum Opus (1936) went to print.And, in the aftermath of WW2, economic reconstruction policies marked a so-called “Golden Age”, either in France, home to economic dirigisme (the Plan Commission created by General Charles de Gaulle in 1946 and led initially by Jean Monnet, one of the founding fathers of the EU), or in Italy via IRI (Istituto per la RicostruzioneIndustriale, a remnant of the fascist regime, but that lasted half a century after the war was over), in Federal Germany with its Ordnungspolitik, a policy based on rules and neo-corporatism that brought together the social partners’ positions (Mitbestimmung /co-determination). Ludwig Erhard, one of the intellectual fathers of Ordungspolitik, is a revered name in Germany, along with that of Chancellor Konrad Adenauer.
In the United States, in Europe, intellectual elites graduated from a number of universities promoting professional excellency, meritocracy (the Ivy League in the US on the East coast, UCLA, Stanford, Berkeley, etc. on the West coast, Chicago University close to the Great Lakes, in the North). Although these days no few voices criticise elitistuniversities (such as ENA in France), which are seen as representative for an ‘Establishment’, and which would reproduce political and social strata “cut-off” from the rest of society, one can easily overshoot in making judgements. A society needs elites, competent people. The fact that, not unfrequently, networks operate and reproduce themselves, appear to have become impervious to outsiders,should not lead to throwing the baby out with the bathwater. This does not mean that the elites cannot make monumental mistakes, as was the case with the financial system deregulation, with promoting boundless globalisation — which both fuelled scepticism towards experts, a “crisis of expertise”.
It is worth mentioning here the confusion, the commotion created by slipping into an area of debate and confrontation for power at any cost, in which moral yardsticks are lost; truth is perverted, fake news are deliberately spread out (much facilitated by the Internet). In a paper with a powerful message Michiko Kakutani cites Hannah Arendt (1951): “The ideal subject of totalitarian rule is not the convinced Nazi or the convinced communist, but people for whom the distinction between fact and fiction (i.e. the reality of experience) and the distinction between true and false (i.e. the standards of thought) no longer exist” (2018, p.11). Since truth is fundamental to democracy, this trend should worry us to the highest degree.
4. Bretton Woods and the multilateral system
During WW2 a system for regulating international economic relations based on multilateralism was designed and subsequently put in place – in time, the world witnessed the founding of the United Nations (that succeeded the League of Nations, the IMF, the World Bank, regional development banks (for Latin America, Asia, Africa), GATT (replaced subsequently by the WTO).
John Maynard Keynes was the prominent brain in the talks at the US town that lent its name to the Bretton Woods Arrangements.These arrangements pursued a system of multilateral ordering international of economic and financial relations, with relative stability of exchange rates,management of capital movements to support the efficacy of monetary policies (a combination of goals that is defined conceptually by the so called ‘impossible trinity’ in macroeconomic policy: impossibility to achieve simultaneously free movement of capital, exchange rate stability and autonomy of monetary policy).
The cornerstone of the Bretton Arrangements was the US dollar as the world’s major reserve currency and which was tied to gold. What mattered also enormouslyeasthe US economic and military supremacy in the world, in whichPax Americana had superseded Pax Britannica – despite a communist subsystem which was dominated, until China’s “emancipation,” by the USSR.
When the US became over-stretched (to use Paul Kennedy’s concept) globally, owing to multiple wars and the erosion of economic supremacy, the US dollar was cut off from gold (in 1971) and the switch to flexible exchange rates was made, thus boosting financial transactions and fostering the development of financial arbitraging instruments. Seeds were planted that germinated in the over-financialization of economies and the burgeoning of financial crises.
There is a debate on whether to revert to a more stable system, similar to the Bretton Woods arrangements. Yet the crisis of globalisation and the resurgence of nationalism, a spreading “inward looking” syndrome, inter alia, do not favour a new Bretton Woods regime. It is difficult to return to a system resembling that created after WW2. The rise of China as a great geopolitical and economic rival, the nature of its public governance model,big challenges to national security in the West, have changed radically the geopolitical equation in the world.
Yet, there are global commons to be provided — like dealing with climate change and pandemics Therefore, it is essential to consider areas of cooperation among geopolitical rivals.
5. The Paradigm shift of the 70s-80s: liberalisation/globalisation and “efficient markets”
The 70s and 80s were marked by discontent vis-à-vis the excesses of Keynesian practices, there were also episodes of very high inflation, although major economies witnessed deep recessions – remember stagflation, as a combination of high inflation and recession Monetarism came to the fore in central bank practices at that time. Paul Volcker at the helm of the Fed curbed double-digit inflation in the US, be it at the cost of very high unemployment – which, in a way, was at odds with the Fed Employment Act of 1946 (reformed in 1977), which mandated the central bank to pursue high employment as well.
The monetarist school of Milton Friedman, Karl Brunner, Allan Meltzer, etc. set the stage for the rise of theRatex(rational expectations) school of thought, the latter having Robert Lucas and Thomas Sargent as leading figures and based on the fundamental assumption of quasi-perfect markets and the uselessness of stabilisation interventions on the part of the government. The Great Moderation years (two decades of subdued inflation and steady growth, ahead of the Great Recession) seemed to score decisively in favour of this approach. But Ratex proved its limits, for markets are not perfect, just like the optimisation algorithms on the basis of which individuals and firms operate.
Behavioural economics (Herbert Simon as a forerunner with his “bounded rationality”, Daniel Kahneman, Robert Shiller, Richard Thaler, Amos Tversky, etc.) came with major nuances regarding how people make decisions, with ingredientssuch as affection, simple rules, emotions, empathy, loyalty, individual and group identities being pretty important in the decision making process.
But man’s acquisitive nature (defining the Homo Oeconomicus, which is not at odds with the Homo Faber) is arguablynot dented, in understanding its habits and propensities, by behaviouraleconomics. Under the same conditions, most people choose to have more rather than less. That is why it is difficult to alter the logic of economic activity (net revenue/profit maximisation), to make markets internalise externalities that they do not readily perceive, or are forced one way or another to take into account (like imposing a Pigou tax). It is not simple either to redefine welfare as a statistical and accounting methodology; markets are used to aggregates of economic activity that increaseceaselessly, as much as possible, even if macroeconomic corrections are often asked for by widening deficits and large debt stocks. All this makes us think that markets do not accept (yet?) that some people might be more satisfied with less, even though such a stance might be tantamount to rescuing the human species and a proper surrounding habitat.There is a market myopiajudged in a broad sense, which weakenseven highly sophisticated models, that can be invalidated by non-liniarities
Inflation targeting (the monetary policy regime implemented in advanced economies in the past two decades) replaced the control over monetary aggregates, while the focus on price stability appears to have put central banks on autopilot. Inflation targetinguses models that work with output gap (potential GDP) as a keyconcept (that implies a trade-off between inflation and unemployment),it resorts to neo-Keynesian type models (Jordi Galli, Richard Clarida).
The fall of the Berlin Wall, of communism, system augmented a general frame of mind, stimulated globalisation, the belief that the world has come to “the end of history”, as Francis Fukuyama put it(1990).
Nevertheless, the less benign side of globalisation and financialisation of systems were blatantly overlooked. The deregulation of finance, the light touch regulation regime (that started with the Big Bang in the City in 1986 and continued with the rescinding of Glass Steagall Act in the US in 1999) could be branded as one of the most harmful policy capture in advanced economies, with global repercussions, and which enhanced the Great Recession.
6. China’s awakening: Deng Xiao Ping, economic reforms, state capitalism and a monolithic political structure
From 1978 onwards, underDeng Xiao Ping’s leadership, China embarked on a path of market reforms, which ensured swift and steady economic progress and made the country a global power in a few decades time. Its inhabitants and enormous natural resources, the past decades’ industrial development and remarkable technological advance have made China a geopolitical rival of the US, of the Western world. Yet, China has stuck to a monolithic political structure and projects an illiberal political model, a form of a broadly based state capitalism, despite the domestic entrepreneurial effervescence and the development of remarkable private companies.
There is an intense ideological competition, pending responses from the US and Europe (the EU). However much some claim that China does not seek to provide an alternative, that its model fits its own development needs and not much else (Kishore Mahbubani), a competition is underway as the Asian giant is expanding its interests worldwide, in Europe included. China also seeks to set up a network of international institutions, presumably as an alternative to the Bretton Woods arrangements, that are seen to be too much under western influence.
Competition with China is ever broader, be it geopolitical and military (security-related: on the ground, in space, in the oceans), technological, and economic.
In this context, it is easy to see why the EU aims at achieving an economic and technological “sovereignty”, as a response to the new global geopolitical game – not least also because of the erosion of multilateralism in international economic relations, the apparent demise of globalisation as it has been practiced over the past decades, as well as the strains in transatlantic relations.
7. The Great Recession: giving up “light touch regulation, “Keynes’ return”, central banks’ useof unconventional operations (QE)
The Great Recession, which broke out in 2008, marked a wake-up call and an attempt to return to a regulated financial industry (giving up light touch regulation). This was encouraged by insights from the analytical work of Alexandre Lamfalussy, AnatAdmati and Martin Hellwig,and other kindred spirits, from rediscovering Hyman Minsky and Charles Kindleberger’s analyses, accepting that what Robert Shiller, Joseph Stiglitz, etc. have claimed for years is closer to reality than the views of Eugene Fama, Robert Black, Myron Scholes, etc.
The recourse to quantitative easing (QE) unfroze financial markets and, in the euro area, rescued (through the ECB) the single currency. But I share the opinion that QE is a sort of “kicking the can down the road”, although the arguments noticing a dramatic decrease in “the natural rate of interest” (Knut Wicksell’s concept) are to be taken into account: demography, falling productivity gains (Robert Gordon), secular stagnation (Larry Summers, who revived the concept used by Alvin Hansen back in 1937), a shortage of safe assets (Robert Caballero and Emmanuel Farhi), etc. Olivier Blanchard speaks about a new normal in monetary policy, which would allow the financing of larger public debts (as compared to Kenneth Rogoff and Carmen Reinhart’ 90%-of-GDP ceiling). Rogoff even advocates negative nominal interest rates.
This is a time when both theory and practice are in full display of creativity, but also a time of confusion and puzzles mingled with great conundrums and uncertainties; as some say, policies are moving in uncharted territories. Disconcerting for many is the flattening of the Phillips curve, the persistence of very low inflation although, in the US, joblessness was at a historical low until the Covid-19 hit.
The Fed has announced a new monetary policy framework, which targets average inflation over time allowing inflation to overshoot the target without a response from the central bank. At the same time, the unemployment rate would nottrigger a policy reaction as long as inflationary pressures are not manifest;monetary policy would focus on stability, with income distribution as one of the benchmarks. In a way, it is a return to the 1946 mandate. The ECB is also re-examining its monetary policy framework.
A critical policy issue is whether central banks can target several objectives – as there is also the desire to take climate change into account as well. By the way, taking into account climate change is a stated objective of the ECB. As Isabel Schnabel put it “when markets fail, there is need for collective action” (2020)).
Central banks cannot be a factotum, and this is not only because they lack sufficient independent instruments (the Tinbergen rule) in pursuing several objectives. But central banks need to be responsive to huge challenges and, in addition, they have to adapt their models and practices in view of flaws that these very models have glaringly revealed. Central banks cannot escape the spectre of commercial banks being increasingly exposed to industries that would fail the acid test of greening themselves. This is why green bonds as collateral are gradually finding their way into central banks’ mandates. Even the conduct of monetary policy may have to consider climate change –in the sense of an ‘’optimal policy rate”.
Some voices raise the issue of central bank independence, not only in virtue of a “fiscal dominance” that might lead to the monetisation of deficits (the new Monetary Theory is looming highly in this respect), a path riddled with significantrisks. For,thinking that high inflation solves the issue of over-indebtedness opens the door to all sorts of economic and social troubles.
Climate change as an existential threat
The threat of climate change is not new. Nevertheless, a technology-driven optimism prevailed, with the Club of Rome’s messages, decades ago, being light-heartedly put aside and (MIT-based) Jay Forrester’s global dynamics models likewise. Public policies remained unmoved even when Nicholas Stern, a British high-ranking official who served as Chief Economist of the EBRD, then of the World Bank, released a report that stirred rumours (2007), as did the statement that environmental issues and risks are the most blatant “market failure”. The past years’ sequence of events, wildfires, the melting of the ice cap, floods, the dramatically widespread and fast changes in temperature, etc., pinpoint a dangerous future for mankind, with a possible extinction of humans if nothing is done to rescue ourselves.
This something means to change public policies, bolster public budgets that would allow timely interventions in case of emergency as well as systematic actions that would help face major adverse shocks in decent conditions and increaseeconomic and social systems’ resilience. People’s behaviour needs to change (thoughman’s acquisitive nature is amajor hurdle), industries need to cut back on their carbon emissions and our relationship with Nature must change.
It is refreshing to see the policy stance of the new Europe Commission, of EU institutions in general. The New Generation Plan is a step in the right direction and President Ursula von der Leyen speech in the EU Parliament showed that, in Europe, politicians and people at large take climate change very seriously, as do most Americans. 
IFIs too are gearing to the forefront of action to deal with climate change. Like her counterparts in Europe, Kristalina Georgieva is crystal clear about the need to combat carbon emission and revisit public policies to this end; a carbon tax implemented globally would be a step forward.
Furthermore, a global accord on climate change should be reached, underpinned by both the US and China, while fossil fuel dependence must be reduced.
Covid-19, the economic crisis, artificial intelligence and labour market redundancies
The healthcare crisis, the partial lockdowns revealed the possibility for many companies, public institutions to continue functioning with a considerable reduction in the number of employees. Homeworking, digitalisation, new technologies in general, entail sweeping changes to the activity of many firms, leaving their hallmark on the future structure of labour market. This impact is to be seen in the context of an increasing number of losers due to unrestrained globalization.
The economic and healthcare crises are forcing companies to streamline their operations, cut workforce, not only temporarily. If we add the impact of automation, of artificial intelligence, we come to understand their severe impact on the labour market. Mass redundancies in the labour market will heighten social issues and structural unemployment. This a reason why the introduction of minimum guaranteed wages is experimented as a means to prevent social tensions going to the extreme.
The financing of a minimum guaranteed income could be done through a “taxation of robots” (as some, including Bill Gates, have advocated) which would lead to an income redistribution from those using robotics (and displacing human labour) to those losing their jobs; the more automated a lucrative business, the more taxed will this be in absolute terms. Such ideas are meaningful as long as we strive to avoid facing scores of jobless, desperate people on the rise, serious social anomies.
8. “The Return of the State” – a one-off or lasting trend?
The Covid-19 public health crisis, the severe economic crisis and a potentially broad-based social crisis in the years to come, all of them seen as major national security concerns, have triggered a tendency for a stronger presence (intervention) of the State in the economy, in a bid to provide safeguards and provide public goods:to make healthcare systems (which become national security concerns) more robust/resilient, to promote inclusion, to face geopolitical challenges, to promote or support economic “champions”’, etc.
In Europe, more resources in the EU budget are envisaged to be collected via own resources (new taxes – carbon tax, digital tax, possibly a tax on financial transactions, etc.) by fighting tax evasion and avoidance. EU Commissioner Paolo Gentiloni is adamant in this respect not only vis-à-vis the abusive, incorrect practices of telecom giants; he claims (and this is presumably the EU view as well) that those who are the big winners of the health crisis and of implementing new technologies should participate more in the joint fight against the coronavirus and mitigate the pains of the economic crisis, have an adequate contribution to Member States’ budgets.
Covid-19 and the severe economic crisis have called for massive interventions on the part of both governments and central banks. The instruments/components of this intervention feature a temporary componentwhich shows up in in larger budget deficits and central banks’ special operations, but some of the new measures are quite likely to stay on geopolitical and security grounds, or motivated by the need to address economic and social issues, to pursue industrial policies and to counteract climate change effects.
Strategic foresight at the macro level will probably acquire higher significance and, quite likely, appropriate institutional settings. The EU Commissioner MarosSefcovicseems to have taken on a greater role as regards the strategic foresight given the huge challenges facing the EU; he announced that he would recommend Member States to develop strategic foresight capacity –which should not be mistaken for either forecast analyses or policy planning conducted by public institutionsin traditional terms. A very intricate analytical effort is to be taken to a new,strategic level.
France has announced a resuscitation of the “Plan Commission (Commissariat du Plan)”, as part of a strategic foresight and guidance of its investment policy. Other countries will probably follow suit, and even the EU will develop such a capacity. This, it makes sense to assume, would collide with the current stance on state aid, if the goals of fostering European champions is decided upon as a meansto underpin sectors that promote innovation and technological excellence. It is to be noted here the unhappy experience with Lisbon Agenda and 2020 Agenda. The United Kingdom keeps to a similar path, i.e. the latest conservative governments announced industrial policy programmes.
New Deal-type measures will likely emerge in the United States too against the backdrop of the geopolitical/technological/economic competition with China, the economic competition with the EU. Trade barriers may also have to be judged in the same framework.
The “return of the State” comes, nevertheless, with a risk that ought to be considered: as markets alone can neither solve social issues, nor surmount economic crises, aconsiderable higher public support will not automatically ensure lasting solutions (large public debts are telling evidence of this fact).We need smart states, that should address market failures and create public goods on a necessary scale. But, for this to happen, states need robust budgets, higher public revenues. This implies combating tax evasion and avoidance resolutely, punishing unethical corporate conduct firmly. It also demands diminishing undue rents that some industries (including finance) extract from the economy. How to achievethis is a big question as vested interest hold immense political clout and swaying power.
We need an agile and smart state that, with no countless resources, should do more by putting in place policies to get more people out of servitude to (public) social security, to restore dignity for each person and the feeling that she is an active player of society, not forsaken by it.
There is a need for a pragmatic approach to public policies, for accountability, for rediscovering the middle ground represented by “community” and “reciprocity” (mutual rights and obligations), for belonging to more than oneself, loyalty, dignity, respect, moral values in general. It is not simple, yet we need to find the right path and avoid further setbacks.
The world is changing, capitalism is in the throes of major changes by the force of events, and public policies are being adjusted along the road, frequently chaotically and diffidently. We will likely go through a transition period, an inter-regnum with a lot of mayhem and mushrooming conflicts – with global governance rules eroding markedly, with survival of the fittest -type reactions.But capitalism will quite likely change.
Academic textbooks will in time capture these developments. Agustín Carstennotedthat textbooks had become obsolete when examining the macroeconomic policy in emerging economies (2019). The same may hold true, on a much larger scale, for the interpretation of the path of capitalism in the years to come. It is difficult to make predictions in light of extraordinary uncertainties. But avenues of change are looming at the horizon.
9. Which way goes capitalism?
Challenges for capitalism originate not only in idiosyncratic inclinations of some leaders and in vested interests, in sheer struggles for power; they have much deeper roots such as: unrestrained globalisation and market fundamentalism, neglect of social aspects (exclusion and lack of fairness), market abuse perpetrated by large players (firms) including massive tax dodging, the lack of proper regulations (especially in finance, which continues to extract undue rents), disregard of the impact of climate change, inability to reform the EU, etc.
There are stark facts and dynamics underway that will quite likely define capitalism in the years to come, such as:
– governments will be more present in economic life for the sake of providing more public goods; state presence is to be seen in conjunction with the need to deal with climate change and pandemics (public health becomes a national security concern).
– industrial policies will be on the rise. Industrial policies may be facilitated by equity/shares that governments may acquire in firms that are rescued; EU industrial policies are implied by conditional disbursement of funds from The Plan for recovery and resilience, in order to foster “greening” and digitalization of economies
– tax regimes will be revisited to make them more fair
– inclusion and fairness will acquire more prominence in public policies.
As to concrete features and dynamics it pays to pose and answer some relevant questions.
Is there an ideal model?
The Nordic model is eye catching. Thismodel relies on a very high level of economic and social development, with massive redistribution of resources through the public budget, amid strong and innovative economies. The Nordics also went through episodes of national crises: Sweden a few decades ago, Finland after the collapse of the Soviet system owing to its high reliance on Eastern markets, then on Nokia. But there were timely responses and reform measures, a high degree of adaptability. The Nordics (including the Baltic States) are models of excellence in educational systems. Nordic societies reveal a lot of decency, modesty in politicians’ conduct. This model is not immune to social tensions, to difficulties in integrating immigrants.
Germany has, besides the features of the Nordic model, an impressive industrial power. But there is also fallibility, as is only natural, and there are deplorable cases of corporate misconduct (Wirecard, the Volkswagen emissions scandal, etc.).
The South of the EU is different in many ways, sometimes it seems entrenched in inertial structures – though economic progress has been made.
An EU model?
There is an all-encompassing model epitomized by EU’s principles and values,and which is embraced bythe political families that are imbuedwith the liberal spirit in its deepest meaning. From this perspective, Christian Democrats/People’s Parties, Social Democrats, the parties grouped in the New Europe family in the European Parliament, conservatives who accept the checks and balances mechanism and fundamental freedoms, belong to an extended political family that supports liberal democracy. But this all-encompassing model has flaws that derive from the incompleteness of the EU, of the euro area, and the neo-liberalism that underpins the Single Market.
The European (EU) model faces big challenges that are reflected by illiberal propensities, by the rise of extremist groups and the assault of demagogues and populists, the crisis of “social paternalism” and spreading cynicism. How to reformits functioning, how to deal with economic divergence in the euro area, are formidable challenges for European leaders.
Issuing collective bonds in order to fund the Plan of recovery and resilience of 750 Billion euros is a major step forward (some call it a Hamiltonian moment), and the ECB proposal to make it permanent has a deep meaning – as the euro area badly needs a safe asset (it needs risk sharing mechanisms, which involve fiscal arrangements).
Markets, States, Community
The debate should be about the nature of capitalism, whether markets can be reined in so that inclusion and fairness, income distribution be met as policy objectives. BrankoMilanovici, Paul Mason, Mariana Mazzucato, Fareed Zakaria, and others are pointing the finger at the need to revamp capitalism, as do RaghuramRajan, Paul Collier and Martin Sandbu do when they emphsizethe need to rediscover the middle ground, the community. Samuel Bowles touches a relevant chord when he says that not only incentives are needed to shape individuals’conduct, thatsociety needs“good citizens”. This brings us to the issue of ethical conduct, be it in the corporate world or among people at large. This is an issue that Adam Smith pointed outin “The Theory of Moral Sentiments” and closer to our days, the Nobel laureates Kenneth Arrow and Amartya Senstrongly highlight.
Dealing with companies that abuse both markets and society
Industries have to be properly regulated and undue rents need to be downsized, if not eliminated.
Massive tax evasion and avoidance is a shame, scourge, of our times, especially since public budgets are under so much strain and income distribution has gotten so skewed. Taxes may have to rise, tax regimes have to be fair.
Carbon tax is a must both internationally and nationally, as are digital taxes on giant companies that pay nothing in numerous countries where they operate.
Conditioning bail-outs on higher future taxes does make sense as the obnoxious cycle of privatizing social benefits and socializing privatelosses has to be stopped; equity may be taken in companies that are rescued during the current crisis.
What happens with Finance?
Finance needs to continue to reform itself. Banks are larger now and their revenues (that includes the pay of management and staff) continue to be disproportionately large. That their net profits are diminished by ECB’s QE is a different matter for discussion.
Finance will have to change not least because of new technologies, if digitalization. Banks feel the punch of shadow banking, while capital markets, too, are under the impact of new technologies.
The regulation and supervision of finance will have to consider new systemic risks, those that come from capital markets and the advent of digital currencies.
One way or another, financial services will have to cater more to the needs of the real economy.
Central banks consider climate change as an increasing systemic risk and income distribution is also on their radars. To what extent that fits into the traditional mandate of central banks will be heavily debated. But there are strong arguments that push central banks to change their policy frameworks.
The social responsibility of the corporate world
When it comes to the corporate world, ithas long way to go to ditch its seeminglystill prevailing philosophy: a conduct that fits the perception that economic logic is amoral.
The shareholder vs. stakeholder distinction should not be a formal one, and what is called corporate social responsibility should not be empty rhetoric, a mere object of study in business schools.
The American Business Roundtable, that groups some of the largestUS firms, has spoken about the need to consider all stakeholders in their operations (a statement of August 2019). How much is this a candid acknowledgement of the distance between what Big Business claims and what it practices is still to be seen.
Big Pharma, that is involved in the frantic search to discover effective treatment and vaccines to combat Covid-19 need to be restrained with the prices they charge, not only on moral grounds, but also in view of the funding they get from governments –a point strongly made by Mariana Mazucato (2020).
The threat of climate change may speed up a transformational attitude, as people would be more picky in their preferences. As central banks become so serious about climate change, companies need to heed to it too; if they do not, not a few of them will perish.
Income distribution and fairness
Brexit and the Trump phenomenon in the United States stemmed also from a “reality denial” of many political leaders. The Third Way promoted by Bill Clinton, Tony Blair and Gerhard Schröder, etc, with Anthony Giddens (1998) as the academic guru, was not the way out of the woods. You do not have to share Thomas Piketty, Emmanuel Saez, Gabriel Zucman and others’ outlook to see that there is something valid in what they sayconcerning income distribution. The increasing attention central banks and IFIs give to income distribution is more than relevant in this regard.
An increasing social problematique; the role of education
The social issue will grow more difficult to deal with and this is why, as mentioned above, in the EU there is talk about guaranteed minimum wages. But, in this respect, there is a risk of increasing difficulties of the welfare state.
A big question is how to stop the jobless from growing in number. Even if, supposedly, guaranteed income would eliminate the spectre of social riots. Not incidentally, inclusion is a key concept, also underscored by international financial institutions. Education systems are key in this regard. And better public education is a must; for only good private education and healthcare arrangements would deepen social and political fractures.
Social and economic dynamics will be more tense if the middle class is increasingly eroded, if new technologies displace large groups of people from the labour market.
An entire society cannot turn into a Silicon Valley. A “start up nation” is an exciting catchword and one might say that Israel, for instance, would come close to something like this in an inspirational manner (because this country has a density of mathematicians, physicists, engineers rarely seen in the world…). However, it is difficult for economies, societies, to turn into “scientific-technological complexes” (to paraphrase Dwight Eisenhower and his “military-industrial complex”) within a relevant timeframe; I do not even think this is possible. But it takes a “revolution”, sweeping changes in educational systems to provide equal opportunities to most youth, to all people.
Public debts and fiscal sustainability
There is also the issue of mounting public debt (massively fuelled by the pandemic-induced economic crisis), of burdening the future generations, which can turn into a clash between generations, with political implications and an impact on public policies.
Taxation of property and wealth, as advocated by some economists, may be seen from this perspective, of dwindling chances for many youngsters to have the well-being their parents enjoyed. Climate change adds further anxiety and potential burdens to national budgets.
Public health and education as national security concerns
Public health and education become national security concerns, calling for higher budgetary resources. Governments all over the world are concerned about finding budgetary resources to deal with present and future challenges. Strategic thinking will be subject to reassessment from this perspective.
Global commons are needed
Global issues cannot be underplayed. Not only because there is a geopolitical competition for resources and supremacy, but also because we all face the same global challenges, among which climate change is paramount; other challenges include the fate of very poor countries (that are not few), large disparities in economic and social development around the world, fighting pandemics, etc.
Rediscovering Truth is a must
We need to rediscover Truth in our lives, to fight fake news, mass manipulation. Sliding towards an area of debate and battle for power where moral milestones are lost, where truth is perverted by replacing facts with fiction, undermines the democracy in the end. Truth is indispensable to democracy, and this tendency to distort, to pervert, should make us worry to the highest degree. This is the only way to combat boundless populism and demagoguery, congenital lies in some politicians’ conduct.
Strategic alliances are needed between those who believe in moral values and what a society can offer, combining economic freedom with the need for public goods, with empathy, compassion, solidarity. Just as markets alone cannot solve the problems of society, an omnipotent state, with an overwhelming public sector, is not the solution for the ills of society.
The in-depth discussion is not andshould not be capitalism vs. socialism. This counter-position is more than a hyper-simplification, it is a distortion of the substance of the big debate. The discussion is about the future of capitalism, of the mixed economy and how we can tackle better climate change as an existential threat, as well as other big challenges –like pandemics.
The avenue that deserves to be explored in rethinking capitalism would have to combine the virtues of economic freedom, of entrepreneurship with the need to nurture social cohesion, man’s longing as a social being, as a member of a community (to distinguish it from collectivism). An increasing number of social scientists rightly emphasize  the need to partake in the community, the social sphere, the civic values, that we need open mindedness, pragmatism in public policies, arejection ofpolicy fundamentalism.
The stakes are much higher than a battle of approaches between political families, academic schools of thought; it is about the fate of democracy, because if the number of losers in the economic competition is ever higher, extremist groups will gain the upper hand in politics. Rearing its ugly head is the spectre of authoritarianism, of illiberal capitalism, which is already a force in action, with an impact at the polls, which should not be underplayed.
If we are not lucid, mindful of menacing in-depth trends, if we do not change public policies, times and skies will fall down upon us, overwhelm us. Xenophobia, chauvinism, growing racism will open the door to more authoritarian, illiberal tendencies, fuelled by social and political anger, as well as by violence. The impact of climate change and the threat of other pandemics may, ironically, reinforce temptations to use authoritarian means in public governance.
The great, historical stake is, therefore, to save liberalism in its deepest sense (which defines democratic parties alike, left and right of the political scene), liberal democracy, checks and balances, human dignity, the rule of law, the belief that good ultimately prevails, that human ingenuity can be guided towards noble ends and save us all, both individuals and the society as a whole.
It goes without saying that by making the assertion that the debate on the future of capitalism is how to save liberal democracy in no way diminishes the overriding challenge of dealing with climate change as an existential threat, as well as preparing us all better to tackle future pandemics and other big challenges.
Arendt, Hannah (1951), “The Origins of Totalitarianism”, New York, Houghfton Mifflin Harcourt
Autor, David (2019) “Work of the past, work of the future”, VoxEu
Admati, Anat and Martin Hellwig (2013), “The Bankers’’ New Clothes. What is Wrong with Banking and What to Do about It”, Princeton, Princeton University Press
Blanchard, Olivier, (2019), “Public Debt and Low Interest rates”, Presidebntial Lecture, AEA, January 2019, published in Vol109, No.4, pp.1197-1229
Bowles, Samuel (2016), “The Moral Economy. Why Good Incentives are No Substitute for Good Citizes”, New Haven, Yale University Press
Baldwin, Richard and Coen Teulings (ed.),(2014), “Secular Stagnation: facts, causes, and cures”, a VoxBook
Bussolo, M., Davalos, M., Peregine, V. and Sundaram, R. (2018) “Toward A New Social Contract”, Washington DC, The World Bank Group
Case Anne and Angus Deaton (2020), “Deaths of Despair and the Future of Capitalism”, Princeton, Princeton University Press
Caballero, Ricardo and Emmanuel Farhi, (2014), “On the role of safe assets shortage in secular stagnation”, VoeEu, 11 August
Clarida, Richard, Jordi Gali and Mark Getler (1999), “The Science of Monetary Polocy: a New Keynesian Perspective”, The Journal of Economic Perspectives, Vol.XXXVII (December), pp.1661-1707
Carstens, Agustin (2019) “Exchange rates and monetary policy frameworks in emerging market economies”, Speech at LSE, May
Collier, Paul (2018) “The Future of Capitalism. Facing the New Anxieties”, Allen Lane
Daianu, Daniel (2009), “Which Way Goes Capitalism?”, New York/Budapest, CEU Press
Daianu, Daniel (2017) ‘The New Protectionism’, World Commerce Review
Daianu, Daniel (2011) ‘Markets and society: When high finance corrodes economy and undermines democracy’, Eurozine,
Daianu, Daniel, (2020), The Coronavirus crisis has laid bare the need to revamp the EU, Friends of Europe, 18 May, https://www.friendsofeurope.org/insights/the-coronavirus-has-laid-bare-the-need-to-revamp-the-eu/
Dornbusch, Rudiger, WilhelmNoelling and Richard Layard ed. (1993), “Postwar Economic Reconstruction and Lessons for the East Today”, Cambridge (Mass), MIT Press
European Central Bank, Financial Stability Review, May 2020
European Commission (2020), The EU budget powering the recovery plan for Europe, Communication From The Commission To The European Parliament, The European Council, The Council, The European Economic And Social Committee And The Committee Of The Regions, 27 May
European Commission (2020), Recovery plan for Europe
Ferguson, Niall (2009), “The Ascent of Money”, London, Penguin Books
Fukuyama, Francis (1990), “The End of History”, The National Interest, 16, 3-18
Friedman, Milton and Anna Schwartz (1963), “A Monetary History of the US”, Princeton, Princeton University Press.
Galli, Jordi (2015), “Monetary Policy, Inflation and the Buesiness Cycle”, Princeton, Prinecton University Press,
Giddens, Anthony (1998), “The Third Way”, Oxford, Polity Press
Gentiloni, P. (2020), Remarks by Commissioner Gentiloni at the Eurogroup press conference, 11 September 2020, https://ec.europa.eu/commission/presscorner/detail/en/speech_20_1630; see also Kinder, A., Agyenmang, E. (2020), It’s a matter of fairness: squeezing more tax from multinationals, articol Financial Times,
Goodhart, Charles, (1988), The Evolution of Central Banks”, Cambridge (Mass), MIT Press,
Gordon, Robert (2014), “The demise of US economic growth: restatement, rebuttal, and reflections”, NBER Working Paper, No. 19895
Hansen Niels Jakob, Alessandro Lin and Rui Mano (2020), Should Inequality Factor into Central Banks’Decisions?”, IMF Working Paper, No.196, September
Hirschman, Alfred (1972) “Exit, Voice and Loyalty”, Cambridge (Mass), Harvard University Press
Haldane, Andrew and Robert May (2011), “Systemic risks in banking ecosystems”, 469, Nature, pp-351-355
Kakutani, Michiko, (2018), “The Death of Truth”’, London, William Collins
Keynes, John Maynard (1936), “The General Theory of Employment, Interest and Money”’, New York, Harcourt Brace
Kindleberger, Charles (1993, second edition), “’A Financial History of Western Europe”, Oxford, Oxford University Press
Kindleberger, Charles and Robert Aliber (1978), “Manias, Panics, and Crasehes. A History of Financial Crises”,
Kennedy Paul, (1987), “The Rise and Fall of Great Powers”, New York, Random House
King, Mevyn, (2016), “The End of Alchemy. Money, Banking and The Future of the Global Economy”, London, Little Brown
Lagarde, Christine (2019) “The Financial Sector: Redefining a Broader Sense of Purpose”, 32d World Traders Tacitus Lecture, London
Lagarde, Christine, (2020), “The Monetary Policy Strategu review: some preliminary considerations”, Speech, Frankfurt am Main, ECB, 30 September
Lamfalussy, Alexander (2000), ”Financial Crises in Emerging Markets”, New Haven, Yale University Press
Mahbubani, Kishore (2020), Has China Won?”
Mason, Paul (2015) “Post-Capitalism. A Guide to Our Future”, London, Penguin Books
Mazzucato, Mariana (2013), “The Entrepreneurial State. Debunking Public vs. Private Sectors Myths”’, New York, Anthem Press
Mazucatto, Mariana (2020), “Capitalism after The Pandemic. Getting the Recovery Right”’ Foreign Affairs, 2 October
Milanovic, Branko (2020), “Capitalism, Alone”, New York
Minsky, Hyman (1988), “Stabilizing an Unstable Economy”, New York, Mc Graw-Hill
Nichols, Tom (2017), “The Death of Expertise. The Campaign Against Established Knowledge and Why it Matters”, Oxford, Oxford University Press
Pisani-Ferry., J. (2020), La postérité du plan de relanceeuropéen sera une affaire d’exécution‚ articol Le Monde, 20 iunie,
Polanyi, Karl (1944) “The Great Transformation”, New York, Farrar and Reinhart
Rajan, Raghuram (2019) “The Third Pillar: How Markets and the State Leave Community Behind”, London, Penguin Press
Rey, Helene, (2013), “Dilemma not Trilemma: The global financial cycle and monetary policy independence”, Federal Reserve of Kansas City Symposium, Jackson Hole, 22-24 August
Reinhart C., (2020), Global economic recovery may take five years, Reuters, 17 September,
Reinhart, Carmen and Kenneth Rogoff (2009), “’This Time is Different. Eight Centuries of Financial Follies”, Princeton, Princeton University Press
Rodrik, Dani (2018) ‘The Double Threat to Liberal Democracy’, Project Syndicate, 18 February
Rachel, Lukasz and Smith, Thomas (2015), “Secular drivers of the global interest rate”, Bank of England, Staff Working Papers, No.571
Schnabel, Isabel (2020), “When markets fail – the need for collective action in tackling climate change”, Speech, ECB, 28 September
Schumpeter, Joseph (1942), ‘Capitalism, Socialism and Democracy’, New York, Harper and Brothers, p. 54
Stern Nicholas, (2006), „”The Stern Review: The Economics of Climate Change”
Stiglitz, Joseph, (2010), “Contagion, liberalization, and the optimal structure of globalization”, The Journal of Globalization and Development, Volume 1, Issue 2
Summers, Larry, (2014), “Reflections on the new secular stagnation hypothesis”, in Baldwin and Teulings (ed.)
Tirole, Jean (2017, “Economics for the Common Good”, Princeton, Princeton university Press
Timmermans F. (2020), Now’s the Time for Jumbo Green Bond Sale, interviuacordat Bloomberg, 17 september,https://www.bloomberg.com/news/articles/2020-09-17/eu-climate-chief-says-now-s-the-time-for-jumbo-green-bond-sale
Von der Leyen Ursula, (2020), State of the Union, 17 September,
Yifu Lin, Justin “The Quest for Prosperity. How Developing Economies Can Take Off”, Princeton, Princeton University Press, 2012
Zucman, G (2015), The Hidden Wealth of Nations: The Scourge of Tax Havens. Chicago: Chicago
Zakaria, Fareed, (2020), Ten Lessons for a Post-pandemic World, New York, Norton
 This a revised version of the essay that was published in Romanian by Contributors.ro and Hotnews , 14 September 2020
“Which way goes capitalism”(2009), “When finance undermines economy and corrodes democracy”( 2011); “Liberal vs. Illiberal Democracy”( 2018); “The New Protectionism”(2017); “The Coronavirus has laid bare the need to revamp the EU”( 2020)
 Charles Goodhart provides an excellent presentation of the evolution of central banks (1988). See also Charles Kindleberger (1994), and Nial Ferguson (2009)
His presentation at the American Economic Association in 1949
 A volume that brings together the main protagonists of this lively debate, with some of their key contributions, is Alec Nove and Mario Nuti(1972)
 For an analysis of postwar economic reconstruction in western economies see also RudigerDornbusch, Wilhelm Noelling and Richard Layard (ed.)(1993)
 “The Death of Expertise”’ in the overdramatized words of Tom Nichols (2017)
For the enormous growth of the financial sector in recent decadessee Robin Greenwood and David Scharfstein (2015), Thomas Philippon and AriellResef (2015). Geenwood and Scharfstein show that while finance made 2.8% of US GDP in 1950, it contributed to 8.3% in 2006. The share of finance in corporate profits rose much more over the same period of time.
As was the case with models used by the Long Term Capital Management/LTCM hedge fund; fearing a financial market meltdown, the Fed “coordinated” the bail-out of LTCM in 1998.
10 A major flaw that these models have revealed is that they focused almost exclusively on price stability; and price stability does not entail financial stability automatically.
Frans Timmermans’s words that he may not be able to look into his children’s eyed in the not too distant future unless bold action is taken in order to deal with climate change is pretty telling (Bloomberg interview).
 Numerous famous economists signed an open letter in favor of a Pigou tax implemented globally in order to combat carbon emission, Wall Street Journal, 19 January, 2019
 David Autor has revealing studies on globalization and the rising number of losers in advanced economies, the decay of industrial cities and why this matters for local and national politics.
 See also Anna Case and Angus Deaton: “’Deaths of despair and the Future of Capitalism” (2020)
See also Jean Pisani Ferry, 2020
Mariana Mazucatto argues that we need “entrepreneurial states” (2013),
 See also Paul Collier (“The Future of Capitalism, 2018), RaghuramRajan (2020), Jean Tirole (Economics for the Common Good), Samuel Bowles (The Moral Economy), Paul Mason (2015), Martin Sandbu (2020)
What Mervyn King calls “radical uncertainty” (2018)
 In spite of recommendations made by various reports over the years (see The Sapir and the Monti reports, which were preceded by the MacDougall Report)
See also Mariana Mazzucato, (2020)
Interestingly, a recent IMF working paper submits a changed Taylor rule that would include the level of wages among its parameters (Niels Jakob Hansen and Rui Mano, 2020)
RaghuramRajansays that “if we want to save the state and markets we need to rediscover communities”(2020)