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5943 results in Economics: general interest

Page 52 of 298

  • Chapter 4 - Smaller Companies Need a Different Solution

  • from PART ONE - SUSTAINABILITY AND THE EVOLUTION OF BUSINESS
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 62-78

  • Summary

    “Creativity involves breaking out of established patterns in order to look at things in a different way.”

    EDWARD DE BONO

    If you are a leader in a smaller organization, you will have recognized that much of what I have discussed to this point applies to larger companies. The largest firms may employ tens of thousands of people, have multiple locations, and have a substantial impact on waste, water, and energy use. They also have a disproportionate impact on local employment and community development because of larger contributions to the local tax base and more sophisticated infrastructure. In many cases, large global businesses have a dedicated chief sustainability officer (CSO) or a senior executive with a similar mandate. These companies will generally publish an annual report on corporate social responsibility and have a dedicated HR function. Typically, they will also have specialized functions and budgets for recruiting, talent development, and training. The question becomes, Does a sustainability advantage accrue only to the largest of companies, and do smaller businesses just become followers of a larger trend?

    However, the importance of small to medium-size enterprises (SMEs) cannot be overstated. If your organization is in this category, then you should know that according to the Organisation for Economic Co-operation and Development (OECD), SMEs account for 70 percent of employment among the thirty-six OECD countries. They account for 45 percent of employment and one third of GDP in emerging economies. In addition, they are less likely to move than a big firm and a larger percentage of the capital they invest stays in the local community. Small to medium-size businesses are also important in times of post- recessionary recovery. According to Thomas Stewart, executive director for the National Center for the Middle Market at Ohio State University, “SMEs created almost two-thirds of all new jobs in the United States since the end of the great recession in 2007–2008.”

    Small to medium-size enterprises are generally defined in the United States as companies with fewer than five hundred employees, but this is one definition among many. In the European Union (EU), the standard definition is 250 employees with revenue less than 50 million euros.

  • Chapter 1 - A Journey of Self-Discovery

  • from PART ONE - SUSTAINABILITY AND THE EVOLUTION OF BUSINESS
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 11-26

  • Summary

    “There is no discovery without risk and what you risk reveals what you value.”

    JEANETTE WINTERSON

    My first ancestor to arrive in the United States was my great-grandfather, Matthew McAteer. He was born in Northern Ireland in 1856 and arrived in New Jersey through the port of Jersey City in 1882. Other relatives would arrive later though Castle Garden in lower Manhattan, the gateway to America before Ellis Island opened a decade later. Matthew would have sailed in steerage class on a coal-fired steamer for a fare of approximately four British pounds, the equivalent of almost 340 British pounds today. He was among the more than 1 million Irish who had come to the United States in the preceding fifty years to escape the great Irish potato famines. The famines were the direct result of unsustainable agriculture practices and a dangerous dependence on monoculture farming. Matthew settled in the New York City area. At that time, the world's population was approximately 1.2 billion people. New York City had grown to approximately 1.2 million people. What would follow Matthew to New York and to the country generally were a range of unsustainable practices already creating negative social outcomes around the world.

    I doubt that when Matthew arrived in the US he had concerns about his carbon footprint. Although I can count six generations of McAteers since his arrival in the US, I do not recall a family conversation in which we openly discussed being complicit in pollution, inequality, or climate change. I'm sure most families would say the same thing. However, the signs were there if you wanted to look:

  • • major European cities had experienced air and water pollution for hundreds of years;

  • • London experienced deadly fogs in the 1800s, when still air trapped a lethal combination of industrial pollution and gases

  • from wood- and coal-burning stoves;

  • • most of the great European rivers passing through major cities or industrial zones were heavily polluted in the 1800s;

  • • by the late 1800s, the lung disease bronchitis had become the leading cause of death in Great Britain;

  • • the American bison, once numbering in the tens of millions, was almost wiped out by the late 19th century;

  • • the US census of 1870 found that one in eight children aged ten to fifteen was already formally employed.

  • Chapter 11 - Key Areas for Training and Growth

  • from PART THREE - BUILDING TALENT AND OPERATIONAL EXCELLENCE FOR SUSTAINABILITY
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 196-210

  • Summary

    “Education is our passport to the future, for tomorrow belongs to the people who prepare for it today.”

    MALCOLM X

    In our discussion of talent planning and development, growing and retaining talent includes hiring, onboarding, and training, as well as offering an environment that optimizes talent potential. The process covers incentives to culture and key business practices. In relation to sustainability, it also includes new areas of accountability and new performance values. While this process undoubtedly sounds familiar to you, I wish to emphasize that even with the best investments in talent, sustaining a mission-based business over time is hard: the business grows, the sustainability movement evolves, and customer preferences change. In addition, bold changes in business models can often drive a company into uncertain territory, and companies can lose their way. We've seen executives at high-growth companies like Satyam Computer, Tyco, Computer Associates, and Enron convicted of fraud, misuse of company funds, or worse.

    In the case of sustainability, there is a temptation to engage in “greenwashing,” which is the practice of painting a company's actions as much greener or sustainable than they really are. Checks and balances are a necessary part of good governance, and good governance is a product of shared accountability, business controls, and strong ethics. In this chapter, I will discuss values in relation to the new sustainability curriculum.

    Changing the Way You Do Product Design

    Product design is one of the most important considerations for sustainability. A complex product with unusual materials may make it hard to service, repair, or recycle. Certain choices may increase the use of limited resources, extend a supply chain, or challenge end-of-life disposal. As noted earlier, Patagonia founder Yvon Chouinard created a series of design standards that have been codified into the Patagonia YC Scorecard. The scorecard is used to review and score new product options on issues such as simplicity of design, functional use, and ease of repair. This is a test for success. The scorecard is based on a ten-point scale and scored by several design team members. The average scores from the team serve as a way to examine how the products measure up in their “functional, social, and environmental performance.

  • Foreword

    • By William B. Eimicke, Professor of Practice, Columbia University's Graduate School of International and Public Affairs
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp xiii-xvi

  • Summary

    When I was asked to write the foreword to this book, I took a moment to ponder the fundamental question that underlies its purpose: Is sustainability good for business? Although many in academia or professional practice might answer yes, one look at the percentage of products sold that fully comply with sustainability principles suggests that the answer is hardly certain or universal. As with many difficult tasks, faster progress often requires a good storyteller to make a compelling case and offer a path forward. I am happy to say that Peter has achieved that goal with this book.

    For the better part of four decades, I've worked with local, national, and international public-sector organizations to improve the quality of government services and the health of our communities. A hallmark of this effort is supporting urban parks around the United States and throughout the world to improve their quality, accessibility, and financial stability, often through cross-sector partnerships. To me, this is the goal of sustainability—financially stable, vibrant communities that support innovative industries and schools that are a joy to live in. Although many people share this aspiration, the journey has been a challenging one.

    Through my work with Columbia University's School of International and Public Affairs, I have engaged with public servants from Brazil to Hong Kong and developed customized programs for public and private organizations on every continent. Although the sustainability challenges and degree of difficulty may vary among countries and organizations, two things are clear. The desire to support the United Nations Sustainable Development Goals is very strong, and so is the need for a blueprint that allows more organizations to participate and generate results.

    I have known Peter McAteer since his days at the United Nations Development Program as a dedicated teacher, problem solver, and innovator. Today, in addition to being a successful entrepreneur, he is one of the thought leaders in the business world who recognize that sustainable business practices are not only essential to preserving our planet, but also good for business.

    In this important new book, Peter builds a very effective logic model, beginning with a detailed examination of what sustainability is, how the field is evolving, and why all of us should embrace a personal commitment to the success of this methodology.

  • Introduction

  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 1-8

  • Summary

    “The greatest threat to our planet is the belief that someone else will save it.”

    ROBERT SWAN

    I wrote this book to bring attention to the damage we are doing to our planet and to present a plan for change agents to create sustainable business outcomes. Sustainability is the issue of our times and reflects collective, long-term, damaging behavior that needs our immediate attention. Mass immigration challenges speak to inequality, oceans filled with plastics to unsustainable consumption, and unusually strong weather events to climate change. Poverty remains endemic even in the wealthiest of nations, and the lack of clean water and sanitation is a growing challenge for millions. Yet these issues are not new. They have been with us for generations, and the warning signs were visible if you chose to look. So, why has progress been so slow? Why have we chosen to continue behaving in ways that are clearly harmful? In some instances, despite overwhelming information, we continue to make matters worse.

    In order to accelerate change, our effort must be a united one. We need to help everyone in our organizations develop a heightened degree of awareness about both the problems and the opportunities. How can we generate positive economic results while solving the problems of polluted oceans, unpotable water, and unsafe working conditions? We need to come up with new ideas, scale solutions, and develop the talent to operate sustainable businesses. I generally have faith that people have good intentions, which is why I believe these challenges are solvable. I do not believe most business leaders or government officials deliberately seek to destroy the environment, operate sweatshops, or ruin the communities in which they live. The problem lies in the way we have been trained to behave, the incentives that encourage similar behavior, and the business practices that keep us going down the same path.

    I have been an advocate for “conscious capitalism,” or responsible growth, for a long time. However, even making that statement is something of an excuse. While I may profess advocacy, I have also happily driven gas and diesel cars for forty years and racked up several million frequent flyer miles in aircraft.

  • Chapter 12 - Can You Deliver Passion, Purpose, and High Performance?

  • from PART THREE - BUILDING TALENT AND OPERATIONAL EXCELLENCE FOR SUSTAINABILITY
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 211-224

  • Summary

    “A year from now, you will wish you had started today.”

    KAREN LAMB

    If you think of yourself as a sustainability champion, it suggests you have passion for creating a better world or that you see sustainability as an opportunity for innovation. Perhaps you see value in both perspectives.

    Consider the sustainability champions we have read about in this book. Ramesh Ramanathan of Jana Small Finance Bank shows the importance of the investor-promoter as the “lighthouse” of sustainable values. Bernard Arnault, CEO of LVMH, has driven the sustainability agenda for over twenty-five years. Vice President and Chief Sustainability Officer Rebecca Hamilton of W.S. Badger Company demonstrates how the second generation of a founding family can continue the tradition. Nick Pennell has started the process as Essentra's group operating director; Greg Lavery of Rype Office has driven change as an entrepreneur; and Trevor Martin of Galaxy Entertainment supports the sustainability agenda as head of human resources. Change leaders can emerge from many different places in an organization.

    To help you convert your passion into transformation at any level or degree in your organization, I have divided this chapter into five sections based on questions that are important for any sustainability champion to consider. My suggestions are relevant whether you are a lone sustainability champion or a talent development professional charged with developing a community of such champions. For each question, I offer resource ideas or a set of suggested steps to get you started.

    The five questions you need to ask yourself are:

  • 1. Am I personally prepared to act as a sustainability champion?

  • 2. To what degree is my organization committed to change, and what capabilities do we have to carry out change?

  • 3. How fast can we scale a business transformation?

  • 4. How can I and my organization connect to a vibrant sustainability community for support and ideas?

  • 5. Where can I find additional resources on sustainability?

    • Am I Personally Prepared to Act as a Sustainability Champion?

    The first task is to continue your sustainability education. You may have some or a lot of knowledge about sustainability, but the importance of continuing education cannot be understated.

Sustainability Is the New Advantage
  • Leadership, Change, and the Future of Business
  • Peter McAteer
  • Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019
  • During the last 150 years, we have stressed the oceans, warmed the planet and overextended almost every natural resource. To create real change will require a generation of leaders and businesses that think and act differently. 'Sustainability Is the New Advantage' identifies the skill sets, best practices, and new ideas needed to teach a new generation to start, grow, and manage sustainable organizations.

  • Chapter 13 - Resources for Sustainability Champions

  • from PART THREE - BUILDING TALENT AND OPERATIONAL EXCELLENCE FOR SUSTAINABILITY
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 225-236

  • Summary

    “How wonderful it is that nobody needs to wait a single moment before starting to improve the world.”

    ANNE FRANK

    There are many ways that you and your organization can connect to a vibrant sustainability community for support and ideas. One of the best resources for any sustainability champion is a vibrant community of like-minded individuals. Fortunately, there are growing communities of interest around the world. A certified B Corporation typically has a community page that highlights local B Lab organizations and offers helpful links for educators. There are also wonderful industry groups like the Brussels-based Academy of Business in Society (ABIS), the Geneva-based World Business Council for Sustainable Development, and the US-based GreenBiz. It is generally fairly easy to find a sustainability institute linked to a major university like the Cambridge Institute for Sustainability Leadership or the ESADE Institute for Social Innovation in Spain. With a little bit of effort, you can generally find conferences, peer-to-peer networking, and education resources in almost every country or region of the world.

    In the appendix, you will find over 150 resources to get you started on issues from carbon credits to zero waste. I have tried to reference many of the organizations cited in this book as well as a variety of other helpful sites, although my list barely scratches the surface. The deeper you look into any industry, regional area, or goal category, you will find hundreds more. The resources are generally organized according to the Sustainable Development Goals (SDGs), although many relate to several categories. For example, if you are interested in Peace, Justice and Strong Institutions (Goal 16), you will find overlap with Goal 10: Reduced Inequalities as well as Goal 8: Decent Work and Economic Growth.

    In the same way, I have categorized the Ecosystem Services Identification & Inventory (ESII) Tool for calculating physical and biological process under Goal 12: Responsible Production and Consumption, and it clearly has application for Goal 15: Life on Land; Goal 14: Life below Water; and Goal 6: Clean Water and Sanitation. The remainder of this chapter restates the SDGs and provides some examples of resources as an illustration.

  • Chapter 6 - Day-to-Day Problem-Solving Accelerates Change

  • from PART TWO - LEADING THE SUSTAINABILITY AGENDA
  • Peter McAteer
  • Book:
    Sustainability Is the New Advantage
    Published by:
    Anthem Press
    Published online:
    29 May 2019
    Print publication:
    30 March 2019, pp 100-111

  • Summary

    “We do not inherit the earth from our ancestors—we borrow it from our children.”

    NATIVE AMERICAN PROVERB

    I began this book with a look back to the midpoint of the 1800s. Despite my focus on a century and a half of modern industrial life, it is but a small slice of the global human experience. All long-lived civilizations, from the Native American tribes to the continuously occupied cities of Beirut, Damascus, and Beijing, have one thing in common: they managed to maintain some semblance of balance with the environment and society for an extended period of time. Some communities, such as the Aksumite Empire of Ethiopia, lasted for more than one thousand years. The Carthaginian Empire lasted for more than four hundred years, and the kingdoms of ancient Egypt lasted for over five hundred years. What can these civilizations teach us in our search for a more sustainable world?

    I recently returned from a trip to Vietnam, which has several excellent examples of long-lived communities. The Tan Le Commune in Thai Binh Province has been making straw mats for five hundred years, and more than 80 percent of the households are still involved in the straw mat trade today. Similarly, near present-day Hanoi is the village of Cu Da, a time capsule of preserved architecture that is also the center of traditional glass noodle manufacturing and has been for over seventy years. Today, the villagers typically sell fifteen to eighteen tons of noodles per day. In both cases, the businesses of straw mats and glass noodles cannot be separated from the communities where they are produced. The education process of teaching future generations, the social and economic value that accrues to the communities, and the community commitment to sustain the traditions offer us an example of how daily business challenges are handled in support of larger community interests.

    Ancient Practices

    Let's step back and consider what it would be like to live in such a community. Imagine you are a member of a Native American tribe called the Ho-Chunk in what is now Green Bay, Wisconsin, in the United States. It is a warm evening in the summer of 1450 and you are meeting with a tribal elder to resolve a problem.

Public Debt as a Form of Public Finance

Public Debt as a Form of Public Finance
  • Overcoming a Category Mistake and its Vices
  • Richard E. Wagner
  • Published online:
    26 March 2019
    Print publication:
    30 May 2019
  • Economists commit a category mistake when they treat democratic governments as indebted. Monarchs can be indebted, as can individuals. In contrast, democracies can't truly be indebted. They are financial intermediaries that form a bridge between what are often willing borrowers and forced lenders. The language of public debt is an ideological language that promotes politically expressed desires and is not a scientific language that clarifies the practice of public finance. Economists have gone astray by assuming that a government is just another person whose impulses toward prudent action will restrict recourse to public debt and induce rational political action.

Military Capitalism in Myanmar
  • Examining the Origins, Continuities and Evolution of "Khaki Capital"
  • Gerard McCarthy
  • Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    24 January 2020
    Print publication:
    06 March 2019
  • Military enterprises, ostensibly set up to feed and supply soldiers, were some of the earliest and largest Burmese commercial conglomerates, established in the 1950s. Union Myanmar Economic Holdings Limited (UMEHL) and Myanmar Economic Corporation (MEC) are two profit-seeking military enterprises established by the military after the dissolution of the Burma Socialist Programme Party in 1988, which remain central players in Myanmar's post-2011 economy. Military conglomerates are a major source of off-budget revenue for the military and a main employer of retired soldiers. Yet few veterans receive more than a small piece of the profits from UMEHL. The vast bulk of formal dividends instead disproportionately benefit higher ranking officers and institutions within the Tatmadaw. Military capitalism entrenches the autonomy of the Tatmadaw from civilian oversight. Despite this, obligatory or semi-coerced contributions from active-duty soldiers are a source of cash flow for UMEHL, effectively constituting a transfer from the government budget to the military's off-budget entities. The most significant source of livelihoods support for most veterans is the service pension dispersed by the Ministry of Finance and Planning (MoPF). Despite delivering suboptimal welfare outcomes for most soldiers and veterans while eroding the legitimacy of ceasefires, successive governments since 1988, including Aung San Suu Kyi's National League for Democracy (NLD) administration, have entrenched military capitalism by encouraging commercial activities of armed groups that enter into ceasefire agreements. Extending military pensions already paid by the Ministry of Planning and Finance to retired members of armed groups could deliver a far more consistent and tangible "peace dividend" than the commercial extraction of resources from ceasefire areas. More balanced civil-military relations, and fairer social outcomes for military personnel, will rely on civilian-led state institutions delivering effective and substantive welfare support beyond the commercially oriented welfare arrangements of military conglomerates.

  • Military Capitalism in Myanmar: Examining the Origins, Continuities and Evolution of “Khaki Capital”

  • Gerard McCarthy
  • Book:
    Military Capitalism in Myanmar
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    24 January 2020
    Print publication:
    06 March 2019, pp 1-39

  • Summary

    INTRODUCTION

    Military conglomerates owned by or linked to state armies are a feature of economic and political systems across Southeast Asia. Often justified by military leaders on the basis of “alleviating” the burden of defence spending on government budgets, these companies can provide sources of funding entirely independent of civilian oversight. Military conglomerates thus commonly serve to entrench the power and autonomy of the armed forces from civilian control despite political transitions to more democratic modes of rule. Extensive scholarly work focused on Southeast Asia and regional contexts including the People's Republic of China and Pakistan has examined and theorized how military commercial interests — or “Khaki Capital” — shapes civilian control over the armed forces. However, the origins, evolution and contemporary implications of military capitalism in Myanmar remain little examined and under-researched.

    Myanmar is one of the most highly militarized societies in Southeast Asia and, indeed, the world. If soldiers, veterans and their families alone are considered, the lives of over 3 million people are currently or could in the future be directly shaped by military institutions and conglomerates which dominate major sectors of Myanmar's economy. This report examines the origins and evolution of military capitalism in Myanmar and its contemporary implications for reform of civil–military relations, veteran welfare and the peace process. It draws on interviews with thirty-eight veterans, civil servants, business people, policymakers, researchers and others with experience of military affairs and conglomerates. These interviews were conducted between September and November 2018.

    The report is structured in four sections. The first section situates military companies in the context of the political and economic legacies of colonial rule, while the second section examines the re-emergence of military conglomerates after 1988. The third assesses the politics of military companies in contemporary Myanmar, including where they sit in the larger context of shifting civil–military relations. It notes that government pensions appear to be more important in the welfare of the average veterans than the minimal benefit received from military capitalism. The fourth section outlines the role of military capitalism in attempts by the Myanmar government to end conflict since the 1990s, and then examines whether “Business for Peace” initiatives in ceasefire areas are likely to deliver welfare outcomes for average ethnic armed group soldiers, officers and conflict affected communities.

  • Military Capitalism in Myanmar: Examining the Origins, Continuities and Evolution of “Khaki Capital”

  • Gerard McCarthy
  • Book:
    Military Capitalism in Myanmar
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    24 January 2020
    Print publication:
    06 March 2019, pp vii-viii

  • Summary

    EXECUTIVE SUMMARY

  • • Military enterprises, ostensibly set up to feed and supply soldiers, were some of the earliest and largest Burmese commercial conglomerates, established in the 1950s. Union Myanmar Economic Holdings Limited (UMEHL) and Myanmar Economic Corporation (MEC) are two profit-seeking military enterprises established by the military after the dissolution of the Burma Socialist Programme Party in 1988, which remain central players in Myanmar's post-2011 economy.

  • • Military conglomerates are a major source of off-budget revenue for the military and a main employer of retired soldiers. Yet few veterans receive more than a small piece of the profits from UMEHL. The vast bulk of formal dividends instead disproportionately benefit higher ranking officers and institutions within the Tatmadaw.

  • • Military capitalism entrenches the autonomy of the Tatmadaw from civilian oversight. Despite this, obligatory or semi-coerced contributions from active-duty soldiers are a source of cash flow for UMEHL, effectively constituting a transfer from the government budget to the military's off-budget entities. The most significant source of livelihoods support for most veterans is the service pension dispersed by the Ministry of Finance and Planning (MoPF).

  • • Despite delivering suboptimal welfare outcomes for most soldiers and veterans while eroding the legitimacy of ceasefires, successive governments since 1988, including Aung San Suu Kyi's National League for Democracy (NLD) administration, have entrenched military capitalism by encouraging commercial activities of armed groups that enter into ceasefire agreements.

  • • Extending military pensions already paid by the Ministry of Planning and Finance to retired members of armed groups could deliver a far more consistent and tangible “peace dividend” than the commercial extraction of resources from ceasefire areas.

  • • More balanced civil–military relations, and fairer social outcomes for military personnel, will rely on civilian-led state institutions delivering effective and substantive welfare support beyond the commercially oriented welfare arrangements of military conglomerates.

  • Foreword

  • Gerard McCarthy
  • Book:
    Military Capitalism in Myanmar
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    24 January 2020
    Print publication:
    06 March 2019, pp v-vi

  • Summary

    The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

    The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

    The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

    THE EDITORS

    Series Chairman:

    Choi Shing Kwok

    Series Editor:

    Ooi Kee Beng

    Editorial Committee:

    Su-Ann Oh

    Daljit Singh

    Francis E. Hutchinson

    Benjamin Loh

  • Chapter 16 - The Qualitative Shift in European Integration: Towards Permanent Wage Pressures and a ‘Latin-Americanization’ of Europe? (with Rainer Kattel)

  • Erik S. Reinert
  • Edited by Rainer Kattel
  • Book:
    The Visionary Realism of German Economics
    Published by:
    Anthem Press
    Published online:
    30 March 2019
    Print publication:
    15 February 2019, pp 477-512

  • Summary

    Introduction: Types of Economic Integration and Definitions of Capitalism

    US economist Hyman Minsky jokingly used to claim that there are as many varieties of capitalism as Heinz has pickles, that is 57 varieties (Minsky 1991). In this paper we argue that economic integration provides a similar analytical problem: economic integration can take many forms, and some are more conducive to wealth and freedom than others. Colonialism was probably the first form of international economic integration, and a very close form of integration at that. Intuitively we understand that what the European Union has attempted to achieve – ever since Winston Churchill called for ‘a kind of United States of Europe’ in a 1946 Zurich University speech – is something qualitatively very different from colonialism.

    In this paper we argue that European economic integration has made a qualitative shift from one type of economic integration to another, from a Listian symmetrical economic integration to an integrative and asymmetrical integration. We argue that this change – originating in a new definition of the nature of capitalism – is measurably threatening European welfare, first in the economic periphery and secondly potentially also in the core countries. We argue that the new and enlarged Europe is undergoing structural change towards a Latin-Americanization, including a larger spread in wages (more inequality), wages falling as a percentage of GDP (in favour of the FIRE sector: Finance, Insurance & Real Estate), and the formation of pockets of urban wealth and an impoverishment of the countryside. These phenomena, which are clearer in the EU periphery than in the core, will increase the cost of economic cohesion and increase social tension. This development is aggravated by the timing of the enlargement in the present phase of the techno-economic paradigm, a period that already under normal circumstances is characterized by deflationary and downward pressures on wages, like in the 1930s.

    We argue that this analysis of qualitatively different types of economic integration escapes traditional economic analysis for three basic reasons: a) because of different definitions of capitalism, b) because of what Nobel Laureate James Buchanan refers to as the ‘equality assumption’ of standard economics (Buchanan 1979: 231ff): that economic activities are qualitatively alike as carriers of economic growth, c) because we assume that a nation or group of nations can be producing far from its production possibility curve; in other words we do not assume full employment.

  • Chapter 10 - Austrian Economics and the Other Canon: The Austrians between the Activistic-Idealistic and the Passivistic-Materialistic Traditions of Economics

  • Erik S. Reinert
  • Edited by Rainer Kattel
  • Book:
    The Visionary Realism of German Economics
    Published by:
    Anthem Press
    Published online:
    30 March 2019
    Print publication:
    15 February 2019, pp 321-364

  • Summary

    Typologies of Economic Theory and the Two Canons

    We have recently argued that when focusing on very long-term longitudinal trends in economics, two ideal types of economic theory appear to have co-existed parallel over an extended period of time. These ideal types can be seen as constituting two separate filiations – to use Schumpeter's term – and they come into occasional methodological clashes. Werner Sombart fittingly calls the first tradition activistic-idealistic, a tradition born with the Renaissance. The second type of economic theory he calls passivistic-materialistic, a tradition having its origins with Mandeville and Adam Smith and solidifying as the ‘a-priori method’ with David Ricardo. The purpose of this paper is to outline the characteristics of the two traditions – the tradition behind today's mainstream and ‘The Other Canon’ – and to discuss the position of Austrian economics in this context.

    In most sciences, periodical and radical gestalt-switches terminate old theoretical trajectories and initiate new ones. In a Kuhnian paradigm shift the scientific world moves from a situation when everybody knows that the world is flat, to a new understanding when everybody knows that the world is round. This happens in a relatively short time. Lakatos’ idea of ‘degenerating scientific research programmes’ that gradually shift to ‘progressive’ ones convey a similar idea. In this respect economics is different. In economics the theory that the world is flat has been living together with the theory that the world is round for centuries. We describe this apparent lack of paradigm shifts in economics by the co-existence of these two long-term parallel filiations, where weight and influence periodically tilt back and forth between two alternative Weltanschauungen.

    Today evolutionary economics – based on a tradition founded by the Austrian Joseph Alois Schumpeter – represent the most important challenge to the mainstream. However, evolutionary economics has, in our view, so far had an unnecessarily limited scope. This tradition now focuses relatively narrowly on innovations, including neither Schumpeter's own interest in financial matters, nor addressing to any extent the broader issues of uneven economic growth and employment on a world level which are, at their origin, intimately tied to Schumpeterian mechanisms. And, by bringing simple ‘Schumpeterian’ variables into mainstream equilibrium models, his message is being domesticated and made innocuous. As in the case of Keynes, the mainstream again shows a great ability to usurp, absorb, and subdue threatening alternative theories.

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