Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Hollande drops Keynes in favour of Schumpeter

Nicolas Sarkozy's Socialst challenger Francois Hollande will today unveil his economic proposals. According to Le Monde there are several circles of economists who have elaborated Hollande's economic policy proposals. Among the dominating figures are Harvard economist Philippe Aghion, Bruegel director Jean Pisani-Ferry, industrial policy specialist Elie Cohen and social policy expert Gilbert Cette, the paper reports. ,,The Socialists are today engaged in the transformation the Social Democrats in Scandinavia have already gone through several years ago", Les Echos quotes Aghion. ,,The Keynesian model of of relaunching consumption would today aggravate our external deficit. Our thinking is now much closer to Schumpeter who emphasizes the role of innovation for growth in the medium to long term."

What a narrow reading of Keynes. You could also launch an employment stimulus programmes geared towards import substitution...

Obviously France is an electricity exporter. What is France's main import dependence?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 04:09:00 AM EST
[ Parent ]
Plus, 80 years later, we still fail to understand "in the long run we're all dead"...

It's far too easy to only aim for the medium to long term -this means that any significant results would be after Hollande is no longer president, and that a whole generation would have been pretty much sacrificed in the meantime.

I am also getting annoyed by the constant talks of "innovation" everywhere (not least in my boss's mouth). Sure, it's central to many technological success stories. But the bulk of economic activity (or of unemployed workers) is not particularly innovative. Are we to let it down the drain?

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Jan 26th, 2012 at 04:34:24 AM EST
[ Parent ]
Another Keynes aphorism we fail to understand is the euthanasia of the rentier.

Schumpeter is famous for his concept of creative destruction. But in the end he's just a kinder, softer Hayek.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 05:57:43 AM EST
[ Parent ]
Is he? Never got around to reading his stuff but I doubt Hayek would say something like this:

Joseph Schumpeter - Wikipedia

Joseph Schumpeter: Capitalism, Socialism and Democracy. 1942 (Zitat:,,Can capitalism survive? No. I do not think it can.")., sowie: ,,... capitalist order tends to destroy itself and ... socialism is ... a likely heir", ,,My final conclusion therefore does not differ ... from that of all Marxists." Zitiert bei Alfred Müller: Die Marxsche Konjunkturtheorie - Eine überakkumulationstheorietische Interpretation. PapyRossa Köln, 2009 (Dissertation 1983), S. 338.
by generic on Thu Jan 26th, 2012 at 09:59:07 AM EST
[ Parent ]
How interesting:
Today, Schumpeter has a following outside of standard textbook economics, in areas such as in economic policy, management studies, industrial policy, and the study of innovation. Schumpeter was probably the first scholar to develop theories about entrepreneurship. For instance, the European Union's innovation program, and its main development plan, the Lisbon Strategy, are influenced by Schumpeter. The International Joseph A. Schumpeter Society awards the Schumpeter Prize.

The Schumpeter School of Business and Economics opened in October 2008 at the University of Wuppertal. According to University President Professor Lambert T. Koch, "Schumpeter will not only be the name of the Faculty of Management and Economics, but this is also a research and teaching programme related to Joseph A. Schumpeter."

On 17 September 2009, The Economist inaugurated a column on business and management named "Schumpeter." The publication has a history of naming columns after significant figures or symbols in the covered field, including naming its British affairs column after former editor Walter Bagehot and its European affairs column after Charlemagne. The initial Schumpeter column praised him as a "champion of innovation and entrepreneurship" whose writing showed an understanding of the benefits and dangers of business that proved far ahead of its time.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 10:30:20 AM EST
[ Parent ]
Where Schumpeter lives in Hayek-land is on the matter of recessions/depressions.

For Schumpeter a recession was necessary to "correct" "misallocation of resources" notably labour.

Krugman has gone over the evidence for this in his columns over the last year.

His conclusion is that Schumpeter's theory isn't borne out by the evidence and it's all a bit incoherent.

Players like The Economist love the "creative destruction" and "innovation" soundbites from Schumpeter - but his work doesn't seem to hang together that well in the end.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Jan 26th, 2012 at 10:53:52 AM EST
[ Parent ]
Schumpeter's "creative destruction" is the destruction wrought by depressions, out of whose ashes entrepreneurship will usher in an innovated economic world.

The nihilism of magic ponies.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 11:08:21 AM EST
[ Parent ]
perhaps Hollande has understood that French capitalism is desperately short of entrepreneurship. It seems that his emphasis on "innovation" points in that direction : French capitalists have never been interested in that, only in extracting rents.

Perhaps he will offer compulsory remedial classes in entrepreneurship and the sustainable creation of added value?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jan 26th, 2012 at 11:47:58 AM EST
[ Parent ]
You're right about the rent extraction (Spain suffers from the same problem).

On Hollande, I think that's just wishful thinking. Hollande doesn't have his own economic ideas, but he relies on "experts". If Le Monde is right about who his "experts" are and their ideas, especially their advocacy of Schumpeter over Keynes, then we're fucked.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 12:03:19 PM EST
[ Parent ]
Any idea what "innovation" is meant to mean?
by Colman (colman at eurotrib.com) on Thu Jan 26th, 2012 at 05:59:03 AM EST
[ Parent ]
Magic technofairy solving the problems the organisation fail to solve?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Thu Jan 26th, 2012 at 06:00:03 AM EST
[ Parent ]
It's the new magic pixie dust.

There used to be Research and Development. Now there is Research and Development and Innovation.

In Spain we used to have an Economy Minister and a Ministry of Education and Science. Then in 2008 ZP decided to separate a Ministry of Education, Social Policy and Sport and create a ministry of Science and Innovation. Now we have a Finance Minister, an Economy and Innovation Minister, and a ministry of Education, Culture and Sport.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 06:07:44 AM EST
[ Parent ]
"Hollande drops Keynes for Schumpeter" means "Hollande sees nothing wrong with a lost generation".

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 11:37:37 AM EST
[ Parent ]
there is a real alternative on offer, by another candidate...

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jan 26th, 2012 at 05:04:49 AM EST
[ Parent ]
funny that she also says that she will reduce the deficit. Perhaps she will be cast out for such sacrilege, from the Halls of All Progressive Economists Must Consider Keynsian Stimulus as the Only Solution.
by rootless2 on Sun Jan 29th, 2012 at 04:36:27 PM EST
[ Parent ]
BMWs.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jan 26th, 2012 at 05:31:32 AM EST
[ Parent ]
Then you just need to raise marginal income taxes...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 05:58:22 AM EST
[ Parent ]
Well, that is in Hollande's programme.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jan 26th, 2012 at 06:13:59 AM EST
[ Parent ]
Or high-end vehicle licensing fees.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 06:25:31 AM EST
[ Parent ]
I think this is mostly communications. Say "innovation" and maybe even "reform"; don't admit to Keynesianism whatever you do.

Not that I think any of those mentioned are rabid Keynesians...

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jan 26th, 2012 at 05:34:57 AM EST
[ Parent ]
As you know I'm not a fan of Bruegel.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Jan 26th, 2012 at 06:00:34 AM EST
[ Parent ]
France Imports
France imports were worth 41841 Millions EUR in November of 2011. France is the third-largest trading nation in Western Europe. French principal imports are: machinery and equipment, vehicles, crude oil, plastics and chemicals. Its main import partners are European Union members (Germany, Belgium, Italy, Spain), United States and China.

Browsing around machinery and equipment, vehicles appears to be a reflection of France position in the global chain of airplane manufacture.

So oil would probably be it.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Jan 26th, 2012 at 05:59:05 AM EST
[ Parent ]
Migeru:
,,The Socialists are today engaged in the transformation the Social Democrats in Scandinavia have already gone through several years ago"

The road to irrelevance is so Serious.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Jan 26th, 2012 at 06:02:20 AM EST
[ Parent ]
@yanisvaroufakis

The FT has a column on the crisis of capitalism and the Davos folk are talking about it too. Only the Centre Left thinks C-ism is 'natural'.
by Colman (colman at eurotrib.com) on Thu Jan 26th, 2012 at 06:05:01 AM EST
[ Parent ]
The Economist has a rather worried note about the cooperative model of a firm.
by rootless2 on Sun Jan 29th, 2012 at 04:37:33 PM EST
[ Parent ]

Display:

Occasional Series