Next Left Economic Circle

Next Left Economic Circle

The roundtables of the Next Left Economic Circle bring together progressive economists from different European institutions, from civil society organisations and the business sector, who wish to evaluate the economic theoretical corpus behind economic policy proposals.

The roundtables consist of regular public meetings, co-organised by the Foundation for European Progressive Studies (FEPS) and the Global Progressive Forum (GPF)

The Next Left Economic Circle is co-chaired by Liem Hoang-Ngoc (MEP, S&D Group at the European Parliament, Professor of Economics at Paris I University) and Stephany Griffith-Jones (FEPS consultant and Professor of Economics, Columbia University).

They take place in the European Parliament in Brussels (translation in French, English and Spanish) at lunch time.

For each roundtable, a renowned economist is invited as a guest speaker.

6th roundtable


HENRI STERDYNIAK

Henri Sterdyniak

The 6th roundtable took place the 4th December at the European Parliament with the Co-President of the Appalled Economists, the so-called « Economiste atterrés », the French association created in 2011 in order to stimulate collective reflection and public expression of economists who are not resigned to the dominance of neo-liberal orthodoxy.

Topic

Henri Sterdyniak, also Head of the “Economics of Globalisation” department at the OFCE (Observatoire français des conjonctures économiques), presented other perspectives to the current situation:

  • appalled to see that the neoliberal paradigm is still the only one that is acknowledged as legitimate, despite its obvious failures
  • appalled that the same policies are on the agenda, and that their theoretical foundations are not reconsidered
  • appalled that the arguments which have been used during thirty years in order to guide European economic policy choices have been undermined by the facts.

BACKGROUND REFLECTIONS

The Appalled Economists

Gathered researchers, academics and experts in economics, together with other citizens who are not economists, the “Appalled economists” is an association created 22 February 2011 in order to stimulate collective reflection and public expression of economists from who are not resigned to the dominance of neo-liberal orthodoxy.

Manifesto of the Appalled Economists entitled « Crisis and debt in europe: 10 pseudo “obvious facts”, 22 measures to drive the debate out of the dead end »

The world economic recovery, permitted by a massive injection of public spending into the economy (from the United States to China), is fragile but real. One continent lags behind, Europe. Finding again the path of growth is no longer its priority policy. Europe has embarked on another path : the fight against public deficits…. Read more (also available versions of the manifesto in FR, DE, ES, PT)

Background on the Alternative reading of the EC Annual Growth Survey:

Thanks to alternative set of analyses and recommendations to the European Commission’s own Annual Growth Survey ,which now defines the EU’s and the member states’ economic policy agendas, l'Observatoire français des conjonctures économiques (OFCE) in Paris, the Macroeconomic Policy Institute (IMK) in Düsseldorf and the Economic Council of the Labour Movement (ECLM) in Copenhagen, came to the conclusion that the Commission is underestimating the impact of austerity measures across Europe and propose to delay and spread the fiscal consolidation in respect of current EU fiscal rules.

In their report, the experts predict that Europe will face another year of recession next year with a fall of 0.3% in GDP and a new surge in unemployment due to the current austerity measures in most EU countries. "Instead of austerity measures of nearly €130 billion for the whole euro area, a more balanced fiscal consolidation of 0.5 point of GDP, in accordance with treaties and fiscal compact, would give a margin for manoeuvre of more than €85 billion for 2013 alone", they write. "It would also save 1.5 million jobs."


BACKGROUND MATERIALS

Meeting documents:

Refuser l’Europe néo-libérale, ouvrir de nouvelles perspectives (PPT)

Catherine Mathieu et Henri Sterdyniak

5th roundtable

AUSTERITY IN EUROPE: A CRITICAL POST-KEYNESIAN APPROACH AND THE CANADIAN EXAMPLE
Next-Left-economic

MARC LAVOIE

The 5th roundtable will take place the 20th June at the European Parliament Room PHS 1 A 002 from 12.30 to 14.30

Guest speaker: Marc Lavoie is Professor in the Department of Economics at the University of Ottawa, where he started teaching in 1979. Besides having published more than 100 articles in refereed journals and more than 60 chapters in books, he has written a number of books, among which Introduction to Post-Keynesian Economics (2006), translated into four languages, Foundations of Post-Keynesian Economic Analysis (1992), as well as Monetary Economics: An Integrated Approach to Money, Income, Production and Wealth (2007) with Wynne Godley, a book which deals with the stock-flow consistent method.

With Mario Seccareccia, he has been the co-editor of three books, including one on the works of Milton Friedman, in addition to writing the first Canadian edition of the Baumol and Blinder first-year textbook (2009). Lavoie has also been the associate editor of the Encyclopedia of Political Economy (1999), and he has been a visiting professor at the universities of Bordeaux, Nice, Rennes, Dijon, Grenoble, Limoges, Lille, Paris-Nord and Paris-1, as well as Curtin University in Perth (Australia).

He has lectured at the post-Keynesian summer schools in Kansas City, the Levy Institute and Berlin.


AUSTERITY IN EUROPE: A CRITICAL POST-KEYNESIAN APPROACH AND THE CANADIAN EXAMPLE

Marc Lavoie argumented the Critical reflections on fiscal consolidation as part of stock-flow consistent models, with a retrospective of Canadian cases. He explained the finance function in a closed economy, the imbalances in the euro area and the Canadian case of budgetary consolidation from 1995.

The imbalances in the Eurozone

Lavoie argued that it would be possible to obtain the same convergence of fiscal balances and current account if the northern countries of the euro area which are in good shape (Germany, Netherlands) adopted stimulus policies by government spending like stimulus wage policies to increase domestic demand. This will help to reduce trade imbalances, and increase the GDP of the South.
An alternative is to have a single government in Europe. The present structure of the European Union would need to be modified, said Marc, giving far more spending and taxing power to the European Union Parliament, transforming it into a bona fide federal government that would be able to engage into substantial equalisation payments which would automatically transfer fiscal resources from the more successful to the less successful members of the euro zone.
All countries of the euro area cannot benefit from current account surplus. Government deficits in the euro area are not necessarily due to an irresponsible fiscal behavior. These public accounts deficits can also occur due to poor sales performance; or because other countries in the euro area (Germany) have improved their market position on the European and world markets (eg., the competitive disinflation), causing budget deficits and current account deficits of other countries, which transforms the euro overvalued currency for the other euro countries.
The current structure of the euro area is at fault, the assumption that governments will never have to meet a financial crisis caused by the private sector.

The Canadian case of budgetary consolidation from 1995

Lavoie showed that during the campaign for the leadership of the Progressive Conservative party in 1993, the deficit and debt were becoming major issues, although the issue of unemployment remained the nº1 concern of citizens. The Liberal Party won the elections (1993-2006).
Canadian bankers were asking international rating agencies that the AAA rating of the federal debt is lowered. But Moody's Sees No Significantly negative trends in the Federal or public-sector outlook which would justify Changing the AAA rating. In October 1994, Finance Minister Paul Martin made the deficit a priority.
There were deleterious effects on the Canadian health system with a very high reduction number of nurses and doctors.
Harper, Prime Minister of Canada, June 11, 2012 in Montreal said: "Economic growth and sound public financial management are inseparable. The world needs an approach that combines budgetary discipline and other measures of growth. To sum up, an approach that works: the Canadian approach. "


BACKGROUND MATERIALS

Meeting documents:

Slides of Marc Lavoie’s presentation

A simple model of three economies with two currencies: the eurozone and the USA - Wynne Godley and Marc Lavoie


4th roundtable

THE FISCAL COMPACT: AN HETERODOX ANALYSIS

Malcolm Sawyer

Malcolm Sawyer

The fourth roundtable of the Next Left Economic Circle was organized on April 11st 2011. Guest speaker: Malcolm Sawyer, Professor of Economics at Leeds University Business School.

After studying Mathematics at the Oxford University, Malcolm C Sawyer studied economics in London. He tought economics in London, York and Leeds, and became head of Economics Division, at the University of Leeds in 1998. Since 2003, he has been Member of Steering Committee, Conference of Heads of University Departments of Economics. He was also Guest Research Fellow, International Institute of Management, Berlin (1985), and visiting scholar, at the New School (1997), at La Trobe University (Melbourne, Australia, March/April 2002), at Korea University, (Seoul, Korea, May/June 2002), and at the University of Missouri Kansas City, USA, (September/November 2002).

Malcolm Sawyer published many books, mainly with P. Arestis including, among others: Re-examining Monetary and Fiscal Policies in the Twenty First Century (2004), The Euro: Evolution and Prospects (2001), A Handbook Of Alternative Monetary Economics, Financial Liberalization : Beyond Orthodox Concerns (2006), The Rise of the Market : Critical Essays on the Political Economy of Neo Liberalism (2004), ‘Inflation targeting and central bank independence: we are all Keynesians now! or are we?’ (Journal of Post Keynesian Economics / Summer 2006), ‘The nature and role of monetary policy when money is endogenous’, and ‘Can monetary policy affect the real economy?’(European Review of Economics and Finance).


The fiscal compact: an heterodox analysis

One of the cornerstones of the new fiscal compact put forward by European leaders is the concept of “structural deficit” which should not exceed 0.5% of member states’ nominal GDP and is to be passed into law at constitutional level or an equivalent. The failure to respect such a limit would be automatically sanctioned, reinforcing the pro-cyclical character of European economic policy.

These views seem to us very grounded in orthodox theory and may result in negative outcomes, reinforcing the current macroeconomic, financial and sovereign crisis. However, some views and policies, based on alternative heterodox economic thinking, allowing to expect a higher and more balanced and sustainable economic growth, can be envisaged. These are the points developed during this roundtable


Background materials

Meeting documents:

Slides of the Malcolm Sawyer’s presentation

The contradictions of balanced structural government budgets – University of Lead – Malcolm Sawyer

3th roundtable

THE EURO CRISIS AND THE NEED FOR AN ALTERNATIVE ECONOMIC POLICY PACKAGE
FOR THE EURO AREA

Engelbert Stockhammer

Engelbert Stockhammer

The third roundtable of the Next Left Economic Circle was organized on February 9th 2012. Guest speaker: Engelbert Stockhammer Economics at Kingston University, London.

Engelbert Stockhammer obtained his PhD at the University of Massachusetts at Amherst in 2000. He joined Kingston in 2010. He is presently research associate at the Political Economy Research Institute at the University of Massachusetts at Amherst and member of the coordination committee of the Research Network Macroeconomics and Macroeconomic Policy. His research areas include macroeconomics, applied econometrics, financial systems and heterodox economics. He has worked extensively on the determinants of European unemployment, the demand effects of changes in income distribution and the macroeconomics effects of financialisation.

He has published numerous articles in international peer-refereed journals including the Cambridge Journal of Economics, Structural Change and Economic Dynamics, the Journal of Post Keynesian Economics, the International Review of Applied Economics and the European Journal of Industrial Relations. In 2004 he published the book The rise of unemployment in Europe (Edward Elgar); in 2009 he edited two books, one together with E. Hein and T. Niechoj on Macroeconomic policy on shaky foundations. Whither mainstream economics? (Metropolis), and the other Heterodoxe Ökonomie (Metropolis) together with J.Becker, A. Grisold, G. Mikl-Horke, R. Pirker, H. Rauchenschwandtner, O. Schwank and E. Springler.


The Euro crisis and the need for an alternative economic policy package for the Euro area

Indeed, while unemployment is rising and several European states are on the verge of bankruptcy as financial markets refuse to roll over their outstanding debt, the policy response to the crisis has been an orthodox package of austerity and downward pressure on wages. This presentation will establish the origins of the crisis to the neoliberal economic policy regime in the EU. Neoliberalism has given rise to two different, complementary growth models: one of debt-led growth and one of export-led growth. Both are built on wage suppression, and are ultimately unsustainable. European integration has been dominated by Neoliberalism, but a European welfare state based on coordinated collective bargaining that aims at higher wage growth in trade surplus countries, speed bumps for financial flows and a European social security system would be economically viable and prevent many of the imbalances that have led to the present crisis.


Background materials

Meeting document:

Slides of Engelbert Stockhammer’s presentation

Peripheral Europe’s debt and German wages: the role of wage policy in the Euro area – University of Kingston, London – Author: Engelbert Stockhammer

Press coverage:

Euractiv - Renegotiate the Treaty to include solidarity and investment-led growth- Itw in French with Liêm Hoang Ngoc

2th roundtable

PUBLIC DEBT CRISIS IN EUROPE: URGENT SOLUTIONS & LONG-TERM REMEDIES

Laurent Cordonnier

Laurent Cordonnier

The second roundtable of the Next Left Economic Circle was organized on December 8th 2011. Guest speaker: Laurent Cordonnier, Associate Professor Lille 1 University “Centre lillois d’études et de recherches sociologiques et économiques”

Laurent Cordonnier teaches at the Social and Economic Sciences department of Lille 1 University and at the Institut d’Etudes Politiques of Lille. His research are mainly focused on growth, income distribution and employment within financialised capitalism. He published several books : “Coopération et réciprocité” in 1997 (P.U.F) ; “Pas de pitié pour les gueux”, in 2000 (Raison d’agir) and “L’économie des Toambapiks, une fable qui n’a rien d’une fiction” in 2010 (Raison d’agir). In addition he is a regular contributor to Le Monde Diplomatique.


Background materials

Meeting document:

Comment sauver la Grèce… et la zone euro ? - Le Monde Diplomatique, 10/2011 - Laurent Cordonnier

Video:

You tube - Financial crisis : Euro progressists call for the creation of a European Central Bank – Itw Liêm Hoang Ngoc and Laurent Cordonnier

1th roundtable

FROM COORDINATED TO DIFFERENTIATED ECONOMIC POLICIES: FOR A STRONGER EUROPE

Eckhard Hein

Eckhard Hein

The first roundtable of the Next Left Economic Circle was organized on September 21st 2011. Guest speaker: Professor Eckhard Hein, one of the leaders of the Post-Keynesian school of thought in Europe.

Eckhard Hein has been Professor of Economics, in particular European Economic Policies, at the Berlin School of Economics and Law since 2009. Previously, he was a Senior Researcher at the Macroeconomic Policy Institute (IMK), Hans Böckler Foundation, Düsseldorf, and visiting Professor at the University of Hamburg and Vienna University of Economics and Business Administration.

He is a member of the coordinating committee of the Research Network Macroeconomics and Macroeconomic Policies, a co-editor of the “Series of the Research Network Macroeconomics and Macroeconomic Policies” (Metropolis Publisher), and “Intervention. European Journal of Economics and Economic Policies”.


From coordinated to differentiated economic policies : for a stronger Europe

Mr Hein presented the theoretical corpus on which the current economic policies are grounded, and their expected limits to initiate a recovery and reduce economic imbalances in Europe. He then focused on alternative proposals based on the need for differentiated wage and fiscal policies and proper financial regulation.

We consider this view as particularly relevant, treating European imbalances as a regional issue, and contesting the “all austerity” message in the European Union. So, thanks to Eckhard Hein, we had the opportunity to have a better understanding of alternative proposals based on the Keynesian and Post-Keynesian principles, and see to why and to what extent the current proposals do not answer to major economic troubles in the European Union.


Background materials

Meeting documents:

Slides of the Eckhard Hein’s presentation

The European Financial and Economic Crisis: Alternative Solutions from a (Post-) Keynesian Perspective – Working paper from the IMK - authors: Eckhard Hein, Achim Truger, Till van Treeck

Video:

You Tube - Itw with Professor Hein

Press coverage:

Euronews – Progressive MEPs question Greece’s on-going austerity plan (available in 12 languages)