Book contents
- Frontmatter
- Dedication
- Contents
- Chapter 16 The Economics of Reindeer Herding: Saami Entrepreneurship between Cyclical Sustainability and the Powers of State and Oligopolies
- Chapter 17 European Integration, Innovations and Uneven Economic Growth: Challenges and Problems of EU 2005
- Chapter 18 Institutionalism Ancient, Old and New: A Historical Perspective on Institutions and Uneven Development
- Chapter 19 European Eastern Enlargement as Europe’s Attempted Economic Suicide?
- Chapter 20 The Economics of Failed, Failing and Fragile States: Productive Structure as the Missing Link
- Chapter 21 Emulation vs. Comparative Advantage: Competing and Complementary Principles in the History of Economic Policy
- Chapter 22 The Terrible Simplifers: Common Origins of Financial Crises and Persistent Poverty in Economic Theory and the New ‘1848 Moment’
- Chapter 23 Industrial Restructuring and Innovation Policy in Central and Eastern Europe since 1990
- Chapter 24 Capitalist Dynamics: A Technical Note
- Chapter 25 Neo-Classical Economics: A Trail of Economic Destruction
- Chapter 26 Modernizing Russia: Round III. Russia and the Other BRIC Countries: Forging Ahead, Catching Up or Falling Behind?
- Chapter 27 Economics and the Public Sphere: The Rise of Esoteric Knowledge, Refeudalization, Crisis and Renewal
- Chapter 28 Three Veblenian Contexts: Valdres, Norway and Europe; Filiations of Economics; and Economics for an Age of Crises
- Chapter 29 Civilizing Capitalism: “Good” and “Bad” Greed from the Enlightenment to Thorstein Veblen (1857–1929)
- Chapter 30 Failed and Asymmetrical Integration: Eastern Europe and the Non-financial Origins of the European Crisis
- Chapter 31 Renewables, Manufacturing and Green Growth: Energy Strategies Based on Capturing Increasing Returns
- Chapter 32 Financial Crises and Countermovements: Comparing the Times and Attitudes of Marriner Eccles (1930s) and Mario Draghi (2010s)
- Chapter 33 The Inequalities That Could Not Happen: What the Cold War Did to Economics
- Chapter 34 Industrial Policy: A Long-term Perspective and Overview of Theoretical Arguments
- Index
Chapter 33 - The Inequalities That Could Not Happen: What the Cold War Did to Economics
Published online by Cambridge University Press: 13 April 2024
- Frontmatter
- Dedication
- Contents
- Chapter 16 The Economics of Reindeer Herding: Saami Entrepreneurship between Cyclical Sustainability and the Powers of State and Oligopolies
- Chapter 17 European Integration, Innovations and Uneven Economic Growth: Challenges and Problems of EU 2005
- Chapter 18 Institutionalism Ancient, Old and New: A Historical Perspective on Institutions and Uneven Development
- Chapter 19 European Eastern Enlargement as Europe’s Attempted Economic Suicide?
- Chapter 20 The Economics of Failed, Failing and Fragile States: Productive Structure as the Missing Link
- Chapter 21 Emulation vs. Comparative Advantage: Competing and Complementary Principles in the History of Economic Policy
- Chapter 22 The Terrible Simplifers: Common Origins of Financial Crises and Persistent Poverty in Economic Theory and the New ‘1848 Moment’
- Chapter 23 Industrial Restructuring and Innovation Policy in Central and Eastern Europe since 1990
- Chapter 24 Capitalist Dynamics: A Technical Note
- Chapter 25 Neo-Classical Economics: A Trail of Economic Destruction
- Chapter 26 Modernizing Russia: Round III. Russia and the Other BRIC Countries: Forging Ahead, Catching Up or Falling Behind?
- Chapter 27 Economics and the Public Sphere: The Rise of Esoteric Knowledge, Refeudalization, Crisis and Renewal
- Chapter 28 Three Veblenian Contexts: Valdres, Norway and Europe; Filiations of Economics; and Economics for an Age of Crises
- Chapter 29 Civilizing Capitalism: “Good” and “Bad” Greed from the Enlightenment to Thorstein Veblen (1857–1929)
- Chapter 30 Failed and Asymmetrical Integration: Eastern Europe and the Non-financial Origins of the European Crisis
- Chapter 31 Renewables, Manufacturing and Green Growth: Energy Strategies Based on Capturing Increasing Returns
- Chapter 32 Financial Crises and Countermovements: Comparing the Times and Attitudes of Marriner Eccles (1930s) and Mario Draghi (2010s)
- Chapter 33 The Inequalities That Could Not Happen: What the Cold War Did to Economics
- Chapter 34 Industrial Policy: A Long-term Perspective and Overview of Theoretical Arguments
- Index
Summary
This chapter attempts to flag the profound changes that underwent economic practice and economic theory during the Cold War—from 1947 to 1991—as being at the roots of the present inequality crisis. Two aspects are raised. As regards the worsening inequality between nations it is argued that a key distinction between economic activities—at the core of the 1947 Marshall Plan—was increasingly marginalized as the tools of neo-classical economics carried the profession toward higher levels of abstraction.
As regards the worsening inequality within nations it is argued that a) the system of wage-setting changed from a virtual ratchet wheel effect, making wages practically irreversible without a devaluation, to a system of ‘internal devaluations’ (whether or not recognized by that name) and b) the distinction between financial capital and production capital—which had been there since the Bible and the Quran via Medieval church fathers and persisted in Continental European economics from Marx to Schumpeter—gradually disappeared, leading to the present financialization of economic life.
During the Cold War we find that a very successful economic practice—starting with the 1947 Marshall Plan—dominated economic policy up until and including the theoretical foundation for the Maastricht Treaty and the European Single Market: Paulo Cecchini's 1988 book The European Challenge 1992. The Benefits of a Single Market.
This period from the 1947 Marshall Plan to the Cecchini report 41 years later represents an important continuity. The insights from the Marshall Plan about the importance of a manufacturing industry were built into the original foundations of the European Union, and—in that same spirit—Cecchini argued in 1988 that almost all of the benefits from the Single Market would be the result of the increasing returns to scale mostly found in the manufacturing sector. However, the practice of the European Union after Maastricht slowly changed to represent almost the opposite of Cecchini's vision.
Simultaneously—but completely separately from what happened in economic policy—at the start of the Cold War Paul Samuelson brought David Ricardo's trade theory into the core of economics with two articles in The Economic Journal in 1948 and 1949.
- Type
- Chapter
- Information
- The Other Canon of EconomicsEssays in the Theory and History of Uneven Economic Development, pp. 923 - 946Publisher: Anthem PressPrint publication year: 2024