February 4th, 2021

Creative Destruction

An interview with Claudio Petruccioli

Claudio Petruccioli is an Italian politician who was president of the Italian national broadcast network RAI from 2005–2009.

I joined the Communist Party when I enrolled in university, in 1959. I didn’t belong to a leftist family, but it was a working class family. My grandfather was a worker, my father was a technician. The first in my family to attend university, I was born in a tradition of work but was drawn towards intellectual labor. If I think of the day in which I decided to be a communist, it was probably when I was fifteen and I went to the library in Umbria. I found a small book titled “Wage Labor and Capital” sitting on the table. They were lectures Marx had given to a worker’s club in London. I read the book in one sitting, and when I finished I felt like I had just understood precisely how the world works.

I was born in 1941, the immediate postwar years. They were difficult years, but my family never went hungry. So my shift to the left was not born of my immediate conditions. Why did I join the communists and not the socialists? It was because the socialists were forming a government with the Christian Democrats. It wasn’t because I was hostile to religion; the Christian Democrats repulsed me because they were the ruling party, and they imposed strict cultural limits (Machiavelli's Mandragola was considered a theatrical text that could not be publicly performed). So the only leftist opposition for me was the Communist Party.

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February 4th, 2021

Changing Bases

An interview with Emanuele Macaluso

Emanuele Macaluso was an Italian trade unionist and politician with the Italian Communist Party (PCI).

I clandestinely joined the party in 1941, when the country was under fascist rule. I was 17 years old and had almost finished my studies. At the time, I was studying at the Mining Institute of Caltanissetta, in Sicily. There was a strong underground organization in town led by a worker called Calogero Boccadutri, who ended up becoming our cell chief. I formed a small anti-fascist group and was convinced to join the PCI by a friend of mine, Giannone, who came to visit me at the hospital when I had tuberculosis. He gave me the address of Calogero Boccadutri, and when I left the hospital, I contacted him and joined. My relationship with the PCI began like this, in hiding. I was responsible for political education, for our newspaper, and for our library. These were so important that, when Caltanissetta was bombed, my friend Michele Cala, died trying to save them. This is how I started my political life as a clandestine communist militant.

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February 4th, 2021

Party of the Future?

An interview with Giuliano Amato

Giuliano Amato was a member of the Italian Socialist Party and Italian Prime Minister from 1992–93 and 2000–2001, Treasury Minister in 1999–2000, and Minister of the Interior, 2006–2008.

I joined the Socialist Party when it broke with the communists in 1956, after the invasion of Hungary by the Soviet Union. The political culture when I entered was one which stressed the protection and expansion of social rights—my early experiences were in a mountainous region of Tuscany where marble was drawn for Michelangelo and other sculptors. My constituency was formed by miners extracting this marble, and in 1963, when the Socialist Party first considered a coalition with the Christian Democrats, the miners were absolutely horrified. They couldn’t believe that the party would stand with their employer in government. When the coalition took place, I left the party and joined a leftist formation named PSIUP, the Socialist Party of Proletarian Unity. This gives you an idea of the importance of class politics and social rights for myself and for those around me.

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January 28th, 2021

Revolution, Reform, and Resignation

In the 1980s, the left abandoned its language of transformation. Can it be regained?

Some time in 1991 I was invited to give a talk to the Andalusian Confederation of the Spanish Socialist Worker’s Party (PSOE). Afterwards, the secretary of the confederation walked me back to my hotel. I asked him why there was a widespread atmosphere of demoralization within the party. He answered “Nos hicieron hablar un idioma que no era el nuestro”: “They made us speak a language that was not ours.”

Note that the secretary did not evoke the industrial restructuring of the 1980s, which significantly reduced the Party’s industrial working class base. He did not refer to the emergence of television, which reduced the importance of the party machine in mobilizing that base. He did not point to cultural transformations in Spanish society, which rendered new ideological dimensions politically salient. Instead, he identified the root of the party’s transformation in the language by which party leaders were expected to address their supporters, publicly interpret the world, and justify their policies. What was this language that was not “ours”?

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January 22nd, 2021

Inflation, Specific and General

The many causes and effects of inflation

Concerns over a generalized “inflation” loom in the recovery. Yet the prices that most heavily factor into the cost of living for US workers—housing, health, and education—have already been rising for decades. The question we should be asking is whether the extension of the welfare state is the cure for, rather than the cause of, these trends.

Until 1980, the annual rate of change of the Consumer Price Index (CPI), the weighted measure of the cost of a basket of core consumer goods, increased at an accelerating pace in every business-cycle expansion, reaching double digits during the 1940s and 1970s. Inflation—its causes and consequences—was at the heart of economic debates throughout this period, when the discipline of macroeconomics took its current form. While we understand individual industry price changes in terms of supply, demand, and market power, our conceptual tools for understanding inflation remain weak.

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January 16th, 2021


The Control Data Corporation and global value chains

In March 1976, Deputy Secretary of the Department of Defense (DOD), William “Bill” Clements invited William “Bill” C. Norris, CEO and Chairman of the supercomputer producer Control Data Corporation (CDC) to a closed-door meeting at the Pentagon. Secretaries and undersecretaries from the United States Army, Navy, and Air Force were to attend, as well as a selection of spokespersons from the public university system and private sector. Clements requested Norris come prepared with “any important aspect of Defense management or posture that… warrants perspective” and to be candid in his comments.

Preparing for the meeting, Norris wrote a note. The subject was “East-West trade.” The DOD was not giving enough “attention” to export administration, Norris penned. The fact that the Department was “inconsistent” in reviewing export applications for computer technology to Central and Eastern European countries created an “unhealthy,” “adversarial” relationship between industry and the military, he continued.

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January 9th, 2021

The Deflationary Bloc

Living in Hyman Minsky's world

“An effective way to write the history of the last thirty years of the twentieth century,” economist Albert Hirschman wrote in 1985, “may well be to focus on the distinctive reactions of various countries to the identical issue of worldwide inflation.” Writing just as the global “great inflation” of the 1970s was abating, Hirschman could not have understood how right he was. As Claudia Sahm has recently written in the New York Times, the fear of the great inflation of the 1970s still dominates the thinking of the Federal Reserve, even as its recent messages indicate some acceptance of higher inflation.

Economists lack a good understanding of what causes inflation—and its inverse, deflation. In introductory macroeconomics curricula, Milton Friedman’s mantra “inflation is always a monetary phenomenon” remains central. By this, Friedman meant that excessive price growth happens when a state loosens the supply of money, thus over-expanding the monetary base. However, recent research

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December 3rd, 2020

Transition Theory

On Jairus Banaji’s A Brief History of Commercial Capitalism

Capitalism is either eternal or it isn’t. There are people who defend the first view, or something close to it—the multivolume 2014 Cambridge History of Capitalism opens in Babylonia, circa 1000 BCE—but it is much more plausible that capitalism, like most other social phenomena, has its origins in specific historical developments. The trouble is that, once you’ve got everyone to agree that capitalism has a history, you have to define what capitalism is and then explain when, where, why, and how it emerged.

Of course, no one thinks you can date the transition the way you can specify when a battle took place or a patent was filed. But even after abandoning false precision, those who’ve grappled with the problem of defining and explaining capitalism’s emergence have been unable to agree even on which centuries and continents were involved.

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November 25th, 2020

Development, Growth, Power

An interview with Amit Bhaduri

Amit Bhaduri was internationally selected professor at Pavia University and visiting Professor at the Council for Social Development, Delhi University. His six books and more than sixty journal articles have consistently scrutinized the foundations of neoclassical economic theory and presented theoretical and practical alternatives. Among his most widely cited contributions, co-authored with Stephen Marglin, is the Bhaduri-Marglin model. Distinguishing between wage-led and profit-led growth, the model has given way to a wealth of research on the relationship between the functional income distribution and effective demand. In other work, Bhaduri has studied technological change in agricultural societies, articulated and criticized the social consequences of finance-led growth, and developed just and equitable alternatives to standard models of development.

In anticipation of his forthcoming article on social democracy in PSL Quarterly, and a Phenomenal World series on the topic, we begin this interview by discussing alternatives to financial liberalization, before turning to a discussion on the future of welfare politics, development strategy, and contemporary models of economic growth.

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November 18th, 2020

The Student Debt Crisis is a Crisis of Non-Repayment

Think of the student debt crisis as an overflowing bathtub. On the one hand, too much water is pouring in: more borrowers are taking on more debt. That is thanks to increased demand for higher education in the face of rising tuition, stagnant wages, diminishing job opportunities for those with less than a college degree, and the power of employers to dictate that would-be hires have the necessary training in advance. On the other hand, the drain is clogged and too little water is draining out: those who have taken on debt are increasingly unable to pay it off.

The last post in the Millennial Student Debt project used a new database of student debtors and their loan characteristics (matched to demographic and economic data in the American Community Survey) to document the former phenomenon, both in aggregate and particularly as it pertains to disadvantaged communities along multiple dimensions. Specifically, it showed the rapid growth of student debt levels and debt-to-income ratios in the population at large, among people of all income levels. But this growth is concentrated among non-white borrowers, who have higher debt conditional on income and whose increased indebtedness over the past decade-plus is greater than for white borrowers. That racial disparity is particularly pronounced in the middle of the income distribution. It also showed that student-debt-to-income ratios have grown fastest in the poorest communities since 2008. This post uses the same data to document the latter: non-repayment by student loan borrowers is getting worse over time, especially so for non-white debtors.

Over the last ten years, as outstanding student loan debt has mounted and been assumed by a more diverse, less affluent group of students and their families than was the case for prior cohorts, a common policy response has been to wave away its impact on wealth, both individually and in aggregate, by saying that the debt finances its own repayment. First of all, so the claim goes, student debt finances college degrees that in turn pay off in the form of higher earnings, enabling debtors to repay. Second, expanded allowance for income-driven repayment (IDR), by capping debt service as a share of disposable income, eliminates the worst forms of delinquency and default. The first claim says that repayment is inevitable, the second that it need not take place. Both claims together, however, serve to rationalize higher debt, higher tuition, higher attainment, and the forces driving all three.

IDR was designed to address a liquidity crunch: since students are graduating with more debt, they may not earn enough immediately upon entering the workforce to pay it down. That failure of earnings to align with debt service obligations means that a program to defer those obligations until earnings are realized would ameliorate delinquency and default, at the cost of capitalizing unpaid interest into a higher principal balance. The creation and expansion of IDR programs in the early 2010s did indeed serve to stop the growth of delinquency by the mid-2010s and reverse it, to the point that the share of accounts delinquent now is lower than it was before the Great Recession, despite the amount of debt and the number of debtors having increased continuously since then. For that reason, many higher education policy analysts have proposed further expanding the program.

But IDR programs will never be successful as a solution to the student debt crisis, because they’re designed to address a liquidity problem rather than the real problem—solvency. The problem with student debt is a problem of wealth—students and their families are taking on debt because they don’t have enough wealth to afford increasingly-costly, increasingly-mandatory higher education. The debt then itself exacerbates wealth disparities that the higher education it “paid” for doesn’t rectify.

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