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Macroeconomic Policy and the Future of Capitalism

The Revenge of the Rentiers and the Threat to Prosperity John Smithin, Professor of Economics, Department of Economics and the Schulich School of Business, York University, Toronto, Canada
Macroeconomic Policy and the Future of Capitalism addresses the revolution in macroeconomic policy of the last quarter of the twentieth century and the movement away from concerns with employment and growth in favour of financial variables such as inflation and exchange rates.
Extent: 160 pp
Hardback Price: $134.00 Web: $120.60
Publication Date: 1996
ISBN: 978 1 85278 731 8
Availability: In Stock
Paperback Price: $46.00 Web: $36.80
Publication Date: 1997
ISBN: 978 1 85278 745 5
Availability: In Stock
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  • Economics and Finance
  • Post-Keynesian Economics
Macroeconomic Policy and the Future of Capitalism addresses the revolution in macroeconomic policy of the last quarter of the twentieth century and the movement away from concerns with employment and growth in favour of financial variables such as inflation and exchange rates.

John Smithin argues that this ‘financial reaction’ in macroeconomic policy is the result of a distinct shift in political power in favour of financial or ‘rentier’ interests, and away from both labour and manufacturing business. The outcome is a regime in which the real rate of return to financial capital is persistently higher than it was in the relatively prosperous years between the end of World War II and the mid-1970s, but economic performance is persistently worse. Professor Smithin recommends drastic changes in attitude, in particular in the conduct of monetary policy, if a more secure prosperity is to be restored in the 21st century.

Macroeconomic Policy and the Future of Capitalism is an accessible, highly readable account of macroeconomic policy in the industrial nations which cuts through the complex mathematics and obscure jargon of most books on economics to deal with real issues.
‘This book is stimulating and written in language easily accessible to a wide audience. It presents a useful survey of macroeconomic policies and ideas up to the present day. Smithin provides a welcome appraisal of modern macroeconomic theory and raises valid questions about the wisdom of contemporary policy makers. This is definitely a book worth reading and adding to your library.’
– Donald Lee, Business and the Contemporary World

‘E.M. Forster once gave “two cheers for democracy”. I wish to give three cheers for John Smithin and his wonderfully courageous and timely new book. Stripping away all the clever technical scaffolding which characterises so much modern economic theory (which Smithin himself understands well) he reveals the underlying political economy of the major developments in capitalist economies since the great depression. Basically, he makes a fundamental Marxist point: capitalism works tolerably well if finance and industrial capital advance in tandem not only because then the two great capitalist classes are content but also because the resulting prosperity may also be shared in by the wage-earners. But if they get out of tandem, as happened in the 1970s, for example, tacit harmonies turn to conflict so that, in the case of the last 20 years we have been witnessing the rentiers’ revenge. As both Marx and Kalecki told us and now John Smithin does too, hired prizefighters may be found to say that the situation has become “basically unsound”. But political economy was started by true scientists and scholars; and it is to that honourable tradition that John Smithin so naturally belongs.’
– G.C. Harcourt, University of New South Wales, Australia

‘. . . a solid and well reasoned book. Smithin mixes incitefulness, an excellent command of the literature, together with common sense to come up with a superb discussion of macro policy.’
– David C. Colander, Middlebury College, Vermont, US

‘John Smithin examines critically the new orthodoxy in macroeconomic policy and reveals it as little more than a return to pre-war values and concepts with policy once again dominated almost entirely by financial interests.’
– John Grieve Smith, Robinson College, Cambridge, UK
Contents: Preface Part I: Prosperity and Austerity Part II: The Main Macroeconomic Trends of the Twentieth Century Part III: Politics and Economics Part IV: The Power of Ideas Part V: Inflation and the Economy Part VI: Cause and Effect in the Relationship between Budget Deficits and the Rate of Interest Part VII: What Should be Done about the Balance of Payments and the Exchange Rate? Part VIII: Macroeconomics and the Stock Market Part IX: Concluding Remarks Bibliography Index