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Economics Policies of the COVID Era

Paper Session

Sunday, Jan. 9, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: Association for Evolutionary Economics
  • Chair: Rojhat Avsar, Columbia College Chicago

Geopolitics and Financial Profitability, the Big Pharmaceutical Dispute

Alicia Girón
,
IIEC-UNAM

Abstract

Faced with the necessary measures taken by governments to stop the spread of the virus, fiscal policies were established to face the fall caused by the closure of the global economy. Just at that moment the ring opened for the big pharmaceutical companies to achieve a vaccine in a short time that would generate great profits for their shareholders. Unlocking the economy to prevent the losses of non-financial corporations from continuing to decline was a priority given the fracture of global production chains; an imminent and necessary return of the workforce to reestablish the production process and guarantee the profitability of the institutional investors who dominate the financial circuits in the global economy. The dispute to create a vaccine based on the profitability of the shareholders of the pharmaceutical finance capital lies in a merchandise whose use value psychologically provides the plaintiffs, return to the 'normality' prior 2020.

The vaccine is a commodity that will position the shareholders of pharmaceutical industry companies in a profit economy where, beyond stopping the pandemic and contagion and deaths, the important thing has been to restore the economic order regardless of the informality of the employment, nor the decrease in the income of wage earners, the failure of small and medium-sized companies, fractured value chains that have maintained a dual economy for several decades. Inequalities within countries and between nations have come to light not only because of the questioning of who has the technology to produce vaccines, but also of the governments that had the money to purchase them and that are controlling production. Beyond freeing up knowledge and technology to produce vaccines, the evidence is the geopolitical role that the pandemic is playing as it crosses countries leaving them in disparity with others.

Higher Education: How a Neoliberal Policy Exemplar Could Reconfigure the State's Social Provisioning Role

Lynne Chester
,
University of Sydney

Abstract

Government lockdowns and restrictions to arrest the COVID-19 pandemic have caused widespread societal and economic disruptions. Also exposed has been the pernicious impact of the past forty years of neoliberal policies including the transformation of the perceived role of higher education (through universities and colleges) from serving the ‘public good’, through knowledge creation, to the pursuit of profit and efficiency as the state has increasingly withdrawn direct funding. The neoliberal business model around which the provision of higher education, around the world, is structured has high dependencies on precarious workers as teachers, student fees financed by income-contingent loads, and international students (the education-migration nexus).

This paper discusses the weaknesses of the neoliberal higher education business model, starkly exposed by the COVID-19 pandemic, and how the praxis of conventional mainstream economics reproduces the ideology of neoliberalism and legitimates neoliberal provisioning of higher education through constitutive and co-constitutive relationships.

To redress the inequalities and inequities created and embedded by the neoliberal higher education model — as an exemplar of the policies of the neoliberal state — it is contended that the discipline of economics generally, and conventional economics as taught in higher education particularly, needs to return to its social science roots of pluralism and interdisciplinarity if it is to contribute understanding of, and policy advice to address, complex and pressing real-world problems like global pandemics and the climate crisis. This ‘return’ will also jettison a key support for the ideology of neoliberalism, and actively contribute to a reconfiguring of the state’s role in social provisioning beyond higher education.

Sustainable Development Goals as a Problem in the Change of Techniques

Massimo Cingolani
,
Italian Society of Economists

Abstract

The paper addresses the question of attaining the Sustainable Development Goals (SDGs) as a problem in the change of techniques, drawing on theoretical debates that took place in 1960s as part of the wider controversies on capital theory. It builds on contributions by Leontief, Pasinetti, Nell, Kurz and Salvadori and others with the view to discuss the question of the technological change implied by the Sustainable Development Goals and the associated sectoral price structure that derives from this change. The final purpose is to discuss implications for accounting prices to be used in the assessment of SDG investments.

The paper is dedicated to the memory of Eugenia Correa, who accepted and commented on a first draft in a session she organized on “Financialization processes in emerging and developing economies” at the 16th International Conference Developments in Economic Theory and Policy. Bilbao (Spain) on 27th-28th June 2019.

Financialized Classification Systems and Public Policy: An Intersectional and Institutional Approach to Crisis Response

Avraham Baranes
,
Elmhurst University
Carrie Coward Bucher
,
Elmhurst University

Abstract

This paper examines the disproportionate impact of crises on marginalized communities through the lens of classification systems. Fourcade & Healy (2013) show that classification systems represent the underlying structures that dictate how institutions sort individuals based on various categorical data (race, class, gender, etc…). Using an intersectional and interdisciplinary approach, we argue that: 1) classification systems are the primary way in which aid and access to social provisioning systems are determined; 2) in the context of the Veblen-Foster dichotomy, these systems reflect the community’s ceremonial habits of thought and are grounded in invidious distinction; and 3) classification systems in neoliberal institutions are increasingly financialized and based on financialized logic. Under financialization, the social provisioning system is increasingly based on what provides the greatest return to shareholders (Lazonick & O’Sullivan 2000; Krippner 2005; Palley 2007). As such, modern classification systems lead policymakers to distribute and organize aid based on what stabilizes the position of shareholders, with aid provided to non-shareholders conducted either as an afterthought or only arriving after much debate. Following the work of Fourcade & Healy (2017) and Cottom (2016), we find that these financialized classification systems have contributed to the disproportionate impact of crises on marginalized communities, as these systems are grounded in racist, classist, and sexist institutional structures. Ultimately, shared prosperity requires an eschewing of institutionalized neoliberal classification systems; our paper provides an important foundation for this process.

Secular Stagnation as a Result of Economic Maturity or Deepening Underdevelopment?

Gregorio Vidal
,
Metropolitan Autonomous University-Iztapalapa
Wesley Marshall
,
Metropolitan Autonomous University-Iztapalapa

Abstract

In the spring of 2021, prominent economists continued developing the idea of secular stagnation, an argument first used by Alvin Hansen in the 1950s, accounting for the trends of deflation, slow growth, and especially low growth rates of investment and employment. We argue that there are multiple fallacies in this argument, starting with the fact that these macroeconomic tendencies are present in economies that could by no means be considered mature, such as that of Mexico or any other Latin American country. In this paper, we offer a different explanation, and argue that the slowdown in production, investment, and employment is a result of the evolution of the global trends of financialization. We argue that the interests of financial rent have continued to dominate to an ever greater extent, and that productive interests in their broadest sense, have become ever more marginalized, as measured by productive credit, productive investment, and the wage share in national production. We posit that the most rigorous academic framework for analyzing the consequences of such fairly recent tendencies in the US and Europe - including the growing precariat class - is classic underdevelopment studies, which analyze the causes and consequences of income disparity, the shallowing of national markets, productive dualism/ structural heterogeneity, and the external constraint.

From the Crisis of Financialization to the COVID Crisis: In Search of a Collective Action between Market and State

Faruk Ulgen
,
University Grenoble Alpes-France

Abstract

This article is an exploratory essay on the optimality of co-regulation models for systemic financial stability. It focuses on the weaknesses of collective action in the face of systemic shocks and argues that to deal with systemic financial crises and to fight unexpected events of societal magnitude such as the current Covid-19 pandemic, we need robust preventive public action. The article argues that in economic life, financial stability is to the viability of society what public health is to the lives of citizens. In order to imagine alternative ways of organizing markets between individualistic private view and public planned vision, the article assesses the relevance of polycentric governance -in the tradition of M. Polanyi and V. Ostrom & E. Ostrom- as a collective regulatory action. In order to situate these approaches in relation to financial instability, I take a holistic institutionalist perspective on the Minskian problem of what might be the possible palliative therapy to mitigate capitalism’s tendency to produce systemic financial disasters. This shows that the financial system displays the features of a basic infrastructure common to the whole society. Financial stability then proves to be a public good and a societal concern. In line with the characteristics of public goods, a few criteria are suggested -such as size, scope and criticalness- to establish the conditions for a relevant regulatory framework. I use a distinction criterion between commons and global public goods according to their relative systemic criticalness: If an issue has a global character, it would fit well with a monocentric, top-down “power-over” organization and governance model (for instance, systemically important financial institutions), whereas the commons could be organized and governed through bottom-up and polycentric “power-with” mechanisms (local, cooperative banks, for instance).
JEL Classifications
  • B5 - Current Heterodox Approaches
  • H5 - National Government Expenditures and Related Policies