At the heart of the defence of modern day capitalism is the view that it is an innovation machine powered by competition and rivalry. In its ambit, the fittest survive and the leanest grow, goes the argument. In practice, however, it is precisely in the area of innovation that capitalism today affords private firms legal monopolies in the form of patents. And such protection is proving increasingly difficult to justify in the context of the huge investments being made by firms in acquiring and hoarding patents (not inventions) and financing litigation costs incurred to defend themselves against patent violation suits. Since these investments rarely lead to new innovations and often serve to block technological advance by others, patents are losing their sheen even in the mainstream media.
Inclusive green growth or extractive greenwashed decay?
The debate over the Green Economy rages on next month in Rio de Janeiro, at the International Society for Ecological Economics meetings, the Cupulo dos Povos alternative people’s summit, and the UN’s Rio+20 Earth Summit. Proponents and critics of ‘green growth’ capitalism will butt heads using narratives about valuations of nature and the efficacy of markets.
No Magic Wand: Liberalization and Structural Transformation in India
Suranjana Nabar-Bhaduri, Guest Blogger
In November 2011, the UPA coalition government in India announced its decision to allow FDI in multi-brand retail. Proponents within the government and media argued that this decision would address the supply bottlenecks in the Indian distribution system; facilitate the transfer of knowledge and skills; generate more employment; accelerate economic growth; improve production know-how and promote exports. Following stiff resistance from some of its coalition members, and opposition parties (which was driven more by political motives, considering that the NDA, now in the opposition, had strongly pushed for FDI in retail when it was in power), which saw the Indian Parliament come to a standstill, and opposition from groups of domestic traders and retailers, the UPA government decided to suspend opening multi-brand retail to FDI in early December. Critics of FDI in multi-brand retail argued that by endangering the survival of local stores across the country, the move would potentially result in large-scale job losses across the country. Furthermore, it is likely to result in predatory pricing by multinationals; put farmers at the mercy of big retailers; and disrupt rather than strengthen supply chains by encouraging monopolies of global retailers.
Spotlight G20: Will Mexico Lead Action on Biofuels, Food Crisis?
How much have U.S. ethanol policies pushed up corn prices? And how much have these higher prices cost developing countries dependent on imports for their staple foods? And if one of those countries is the chair of the G20, will it use its considerable influence over the agenda to demand policy changes?
The answers to the first two questions are clear from my new study, “The Cost to Mexico of U.S. Corn Ethanol Expansion” U.S. ethanol expansion has pushed prices up 20% or more in recent years, and that cost Mexico, which imports one-third of its corn, an extra $1.5-$3.2 billion from 2006-11.
The answer to the last question is less clear. Mexico is indeed the chair of the G20, whose vice ministers of agriculture meet tomorrow in Mexico City to set the G20’s food-security agenda in advance of the June 18-19 G20 summit. The Mexican government issued a report that suggests little ambition on food security, but hopefully our biofuels report will bring home why Mexico should lead and not follow on biofuels in the G20.
Standing up to Jamie Dimon: Is it SAFE?
Jamie Dimon’s bravado railing against financial reform has morphed into contrition and a heavy diet of humble pie. After reportedly referring to Paul Volcker’s support of the “Volcker Rule” ban on risky proprietary trading and Federal Reserve Bank of Dallas’ President Richard W. Fisher’s support for downsizing the nation’s biggest banks as “infantile” and “nonfactual”, Dimon, President of JP Morgan-Chase is now admitting “egregious mistakes” as his bank reports a minimum of $2 billion in losses on risky trades that just a few weeks ago he defended against press reports which he called a “tempest in a teapot.”
A Policy for Industry
India needs to draw up a coherent industrial strategy by learning from developing countries that have successfully employed industrial policies.
A PANEL discussion in Doha, Qatar, as part of the 13th United Nations Conference on Trade and Development (UNCTAD XIII) brought together some economists and policymakers to provide new perspectives on industrial policies in the South. It became evident that industrial policies have been significant, if unsung, forces behind the much-trumpeted “emergence” of some developing economies as major players on the world stage.
The Path to a Stronger Democracy Lies in Strengthening Community
Two new books examine how putting capitalism before community has distorted the economy and put democracy at risk.
I participated in a panel discussion last week to help launch The Occupy Handbook, in which I and about 60 others made contributions. It was mostly composed of economists and mainstream journalists, and the focus was income inequality. One wouldn’t expect anything much different from a discussion of Occupy Wall Street, which after all made “the 1 percent” a household tag line for what is unfair about the American economy. Read the rest of this entry »
The Failure of the Euro?
Triple Crisis blogger Mark Blyth was recently interviewed by Simon Tilford from the Centre for European Reform. They discuss European crisis management, unexpected and expected problems with the Euro, the possibilities of economic reform in the periphery countries, and whether Germany can change its mind.
Originally posted by The Watson Institute.
Pollution: The Great Leveller
A harried parent called a few weeks ago. She wanted to know if the pollution levels in Delhi were bad and if so how bad. The answer was simple and obvious. But why do you need to know? Her daughter’s prestigious school (which I will leave unnamed) had sent a circular to parents, saying they are planning to shift to air-conditioned buses because they were worried about air pollution. She wanted to know if this was the right decision.
My answer changed. The fact is that pollution levels are high and we do need to find ways to bring them under control. But the solution is not to think that the rich can find ways to avoid breathing the air, and so keep pollution at bay. I asked her if the school was also planning to build an air-conditioned funnel for walkways and an air-conditioned gymnasium so that children would not be exposed to this foul air. Read the rest of this entry »
The Wealth of Nations and the Poverty of Economics
The new book (and the accompanying blog) by Daron Acemoglu and James Robinson Why Nations Fails is a popular version of their academic papers (several with Simon Johnson, the ex IMF chief economist) on the topic [read a brief summary here]. The main idea is that institutions and not geography or culture are the key to economic development. That is for the most part true.
They use South and North Korea (and Nogales, México and Arizona) as an example of countries that share the same culture and geography, but have very different institutions, and, as a result, a huge disparity in income per capita. Jared Diamond is correct to point out that, in part, technology is geographically determined. No plants and animals to domesticate, and provide for a large surplus (Diamond uses the old classical notion of surplus), and higher population density (with the diseases and immunities associated to those Germs) and no advantages associated to a more developed division of labor (Diamond is also Smithian in that sense), with the consequent development of technology (Guns and Steel). But the problem is that this won’t help you understand why England and not China industrialized (the opposite extremes of the Eurasian continent). Read the rest of this entry »