Ecological Economics and Money: Nadal Responds to Daly

Alejandro Nadal

The Triple Crisis Blog and The Daly News blog are engaged in an interesting discussion of how the field of Ecological Economics treats money, partly in response to Alejandro Nadal’s piece on Triple Crisis, “Money Matters, Mr. Daly.” Herman Daly posted a comment there and posted a piece on the subject on his own blog, “Money and the Steady State Economy.” Rob Dietz also has a related post there, “Money is a COW.” Here, Nadal, author of the forthcoming volume from Zed Books, on the macroeconomics of sustainability, responds:

I’d like to make three comments:

1. For a very long time trade liberalization was the only dimension of macroeconomic policy that attracted the attention of scholars concerned with sustainability. That monetary reform is now being discussed in this connection is a step in the right direction. Both Daly’s and Dietz’s contributions will help move the debate to a field of analysis that has been badly neglected.

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Global Imbalances Are Much More than the US-China Relations

Triple Crisis Blog invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. This piece is based on a question from a reader on the over-valuation of the Yuan.

Martin Khor

The problem of global imbalances is widely seen as a major issue to be resolved if the world economy is to be on track for a sustained recovery.  And this problem is also usually discussed as arising from the economic relations between the United States and China.

In this view, the US has been over-consuming beyond its means, thereby having a large trade deficit, while China has been growing as a result of exports, thus earning large trade surpluses and investing them in US treasuries, thereby making the US over-consumption possible.

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Ask an Economist: Carbon tax or permits?

James Boyce

Triple Crisis Blog invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Do you think that carbon/pollution/energy taxes could be a mechanism that helps us reduce our use of fossil fuels, while bringing funds to the governments that need them to pay their climate debt?

Boyce: Pricing carbon – via taxes or permits – is crucial to reduce the use of fossil fuels. Taxes and auctioned permits are equivalent: the only difference is that taxes set the price and let the quantity of emissions vary, whereas permits set the quantity and let the price vary. Both yield revenues to governments.

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Ask an Economist: Assistance Still Needed for the Poorest

Ilene Grabel

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Will we finally see an IMF/WB policy that truly acknowledges the rights of the poor and the least developed countries?  Will the reforms of the IMF/WB push for localization and food sovereignty as ways to face poverty?

Grabel: Certainly the IMF/WB have been discussing the poor and the poorest developing countries a good deal of late, especially in relation to the effects of the financial crisis on the most vulnerable. And some of the assistance packages that they’ve negotiated have paid somewhat more attention to the most vulnerable groups, such as pensioners (though concrete financial support for the most vulnerable groups has been pretty scant).

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Ask an Economist: Invisible Hand and Employment

Alejandro Nadal

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Do economists have a successor paradigm to the “invisible hand” theory, in which it is NOT expected that everyone should need to be employed? Perhaps something like Random Welfare, coupled with more environmental respect.

Nadal: First, the invisible hand paradigm should have been abandoned since 1974, when the Sonnenschein-Mantel-Debreu theorem was first published. This result showed that after 200 years, the invisible hand metaphor remained just that, a metaphor. There was never an invisible hand “theory” showing how, in the general case, equilibrium prices were formed. If this was a paradigm, it was more for ideological reasons than “scientific” superiority.

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Ask an Economist: What is the Role of the EU?

Ilene Grabel

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: What is the role of the EU in the changing economic environment of the world?

Grabel: A couple of triple crisis entries have dealt with the EU and its relevance for the development community.  See, e.g., here, here, here and here.

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Ask an Economist: Is Liberalization the Answer?

Kevin Gallagher

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: The IMF and the World Bank claim that the only way to deal with the current crisis is through further liberalization. Aren’t globalization and free trade what caused poverty and global warming in the first place?

Gallagher: I’m not sure that these two institutions claim that “the only way” to deal with the crisis is through further liberalization. The IMF has just called for a levy on bank balance sheets and has cautiously endorsed capital controls to stem inflows of speculative capital. They also called for fiscal stimuli a year ago.

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Ask an Economist: IMF Supports Some Financial Taxes

Ilene Grabel

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: The Financial Transfer Tax (FTT) has received a lot of notice in Europe but few mainstream economists in the US are engaging the issue. Is the FTT a realistic option and is it feasible?  How could it be implemented?  Is the IMF likely to include it in the paper they are preparing for the G20 on options to pay for the economic crisis?

Grabel: Many progressive economists and civil society organizations have come out in favor of a FTT. For example, on this blog, see discussion and references to studies of FTTs, and also see the discussion of a recent study of a FTT referenced in the Bretton Woods Update.

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Ask an Economist: Would Financial Reforms Help Developing Nations' Banks?

Matias Vernengo

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Would financial reforms that seek to de-link services and overturn Volcker’s rule present an opportunity for banks in emerging countries who still follow these principles to overtake their more established northern counterparts?

Vernengo: The preliminary question to be asked would be why banks in the developed world have an edge in the first place.  Credit creation and international trade in different periods have been for the most part denominated in a single national currency that functions as world money.  The pound had that role during the Gold Standard and the dollar since World War II.  The advantage of financial institutions in the hegemonic country derives from the fact that they lend in the world currency, and have access to a risk free asset (domestic government bonds) and a lender of last resort that can act on a global basis.

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Ask an Economist: Would Financial Reforms Help Developing Nations’ Banks?

Matias Vernengo

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Would financial reforms that seek to de-link services and overturn Volcker’s rule present an opportunity for banks in emerging countries who still follow these principles to overtake their more established northern counterparts?

Vernengo: The preliminary question to be asked would be why banks in the developed world have an edge in the first place.  Credit creation and international trade in different periods have been for the most part denominated in a single national currency that functions as world money.  The pound had that role during the Gold Standard and the dollar since World War II.  The advantage of financial institutions in the hegemonic country derives from the fact that they lend in the world currency, and have access to a risk free asset (domestic government bonds) and a lender of last resort that can act on a global basis.

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