Re: International Keynesian Possibilities

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

michael,
     Not quite sure what you are asking for, evidence
of their "success" or more discussion of their policies.
     Regarding success, I will note that they all rate very
highly on the UN measures of human quality, even
troubled Sweden.  The cliches that many read about
are largely true, despite some problems, noted at length
regarding Sweden by Sven Larsen.
       In terms of policy, the main extra tool that has been
used, in Sweden at least quite successfully for a long time,
has been the use of the Active Labor Management Policies.
These have involved considerable expenditures to assist
laid off workers in both retraining, job search, and relocation.
These were consciously put in place to assist the sectoral
restructuring of the Swedish economy that was implied
by the largely free trade policy (except for agriculture).  Until
1990 these programs appeared to be quite successful,
especially given that Sweden was successful in maintaining
very low unemployment rates.
      Things have not looked so good in Sweden since 1990
when there was a major macro collapse with a huge jump
in unemployment.  That has put a big strain on the the ALMP
policies, and those numbers of people effectively unemployed
that Sven referred to are people who are on those programs,
although as I have noted in another post, the unemployment
rate has been declining again in Sweden.
      Another policy that was peculiar to Sweden, but which
is no longer in place, and was carried out in synch with the
economy-wide bargaining system that dated from the
Saltsjobaden Agreement between the SAF (management)
and the LO (labor) in 1938, was an effort to achieve "wage
solidarism," that became very strong starting after the late
1950s.  The effort was to compress wage differences across
industries, and in general to have a high degree of wage
equality.  This culminated in the early 1980s when Sweden
had its highest degree of income equality.  But, the economy-
wide bargaining broke down effectively in 1986, partly
because of unhappiness by white collar workers with this
policy.
      The link with trade policy was precisely that it was seen
that this would actually speed sectoral restructuring.  The
rising level of the lowest wages would put pressure on the
least productive and competitive firms while favoring those
that were more competitive and productive (and which
were generally in the export sector).  The combination of
wage solidarism and the active labor management policies
was precisely what was known as the "Rehn-Meidner Plan,"
named for two economists associated with the LO.  Meidner
gave an interview to Challenge magazine in 1999 or 1998
about the whole history of the plan in Sweden, a good source
to see on all this.
      Again, the bottom line is that the largely free trade policy
of Sweden was integrally connected with the corporatist
economy-wide wage bargaining system, the wage solidarism
policy that increased wage and income equality, and the
active labor management policies that supported retraining
and relocating labor.
     I would note as an aside that the US
labor movement has tended not to support such things very
much because they have viewed them as an "admission of
defeat" that would distract from their protectionist stance.
Barkley Rosser
----- Original Message -----
From: "Michael Perelman" <michael@xxxxxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Thursday, April 26, 2001 6:09 PM
Subject: Re: International Keynesian Possibilities


>
> Barkley, I would like to see some more information regarding the success
> of the open northern European economies.  One thing they seem to have in
> common is a relatively egalitarian system by U.S. standards, together with
> a good educational system.  These conditions can make it possible to
> compete without a race to the bottom -- what I have called elsewhere, the
> Haitian Road to Development.
>
> On Thu, Apr 26, 2001 at 01:15:03PM -0400, J. Barkley Rosser, Jr. wrote:
> >      This depends on what one is talking about.  Is
> > one referring to more generalized "Keynesian"
> > fiscal or monetary policies, or is one talking
> > about the more direct kinds of intervention
> > such as incomes policies that have been more
> > specifically associated with Post Keynesian thought?
> >      I would submit that we are more likely to see
> > the latter in highly globally exposed economies.
> > The Scandinavian countries and Austria and the
> > Netherlands are those that come to mind.  All of
> > these are very open, with almost zero protectionism
> > and high percentages of their GDP exported.  They
> > are also at the high end on measures of "corporatism"
> > economy-wide wage bargaining, one form of
> > incomes policy.
> >       Of course there is another variable entering in
> > here.  It is easier to carry out such policies in somewhat
> > smaller and more homogeneous countries, which these
> > all are.  That correlates with being highly open.  Thus,
> > although it may be harder to carry out Keynesian
> > fiscal or monetary policies in a highly open context
> > (especially when your trading partners are not doing so),
> > it is not at all the case that other PK policies are unlikely.
> > Indeed, in the case of Sweden the motivation for such
> > bargaining was very much driven by the perceived need
> > to keep inflation under control and to not have wage
> > increases exceed labor productivity increases in the
> > all important export sector.  So, openness may actually
> > stimulate incomes policies.
> > Barkley Rosser
> > ----- Original Message -----
> > From: "John Gelles" <johng@xxxxxxxxxx>
> > To: "Post Keynesian Thought" <pkt@xxxxxxxxxxxxxxxx>
> > Cc: "Gernot Kohler" <gkohler@xxxxxxxxxxxxx>; "1944" <1944@xxxxxxxx>
> > Sent: Wednesday, April 25, 2001 5:09 AM
> > Subject: International Keynesian Possibilities
> >
> >
> > > "Keynesian ideas should be injected into international
> > > economic policies, international financial architecture,
> > > etc.  ..."
> > >     -- Gernot Kohler, reflecting on the difficulty of
> > >          popularizing PKT in nations with substantial
> > >          exposure to globalization
> > >
> > >
> > >         Keynesian-Lerner money, which many of us hope can
> > >         be used to stimulate full employment and production to
> > >         raise minimum living standards (via a living wage that gets
> > >         better every year), is a national legal thing -- related to
> > >         national laws of contract and debt enforcement.
> > >
> > >         Gernot shows that hard money has power across
> > >         borders. He wonders if Keynesian money can be
> > >         effective in meeting some of the challenges of today's
> > >         hard-money based global trade. The challenges are:
> > >         exploitation of labor and ruin of the environment.
> > >
> > >         Gernot wonders how treaties might take advantage
> > >         of Keynesian principles. It seems to me IF we had
> > >         a national Keynesian program that worked -- in any
> > >         prosperous place -- ANY treaty that place made
> > >         would disclose the techniques Gernot seeks.
> > >
> > >         Without any nation committed to a Keynesian program,
> > >         it is hard for me to see how several nations could find
> > >         a regional or global approach to our, so called, "non-
> > >         neutral" money.
> > >
> > >         What we call Keynesian or Keynesian-Lerner money
> > >         is also called "non-neutral" money.  By non-neutral,
> > >         we mean that money is not just a means of exchange
> > >         for goods and services. It is also a catalytic agent that
> > >         can facilitate production which will later justify the use
> > >         of money that starts as a promise to be "good as gold"
> > >         -- when it is really only paper or an account with no
> > >         commodity or collateral value at all.
> > >
> > >         In all events, I believe Gernot is right to observe how
> > >         hard it is to use K. money ideas in nations tied to global
> > >         trade.
> > >
> > >         Especially hard it is BECAUSE no one is really using
> > >         K. money for full employment -- anywhere.
> > >
> > >         Nations like the US use fiscal and monetary policy in
> > >         ways that resemble Keynesian principles. But they also
> > >         use mostly hard money backed by existing collateral.
> > >
> > >         And in actual banking and trading practice the details
> > >         of the law are so formidable there may be nobody able
> > >         to explain to academics, politicians or the voters, of any
> > >         nation, just what we need to do to return to the way we
> > >         financed wartime needs without losing our freedom
> > >         from 1939 to 1945.
> > >
> > >             John G.
> > >
> > > ====== Gernor's comment above prompted by: =====
> > >
> > >         Message  To: PKT 23 April:
> > >             From:   John Gelles
> > >         Subject:    Keynesian thought -- what is it for?
> > >
> > >         Why Keynesian thought?  Why not "admit" the
> > >         American economy works just fine as it is?  We
> > >         Keynesians wanted less than five percent
> > >         unemployment. We have it. We wanted less
> > >         disparity. Now that dot.com guys are poor, we
> > >         have it. What is it that Keynesian thought offers
> > >         that other economic thought does not?
> > >
> > >         ... <snip> ... [original message in PKT
> > >         proceedings for April 2001
> > >
> > >
> >
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx
>