Category: Economics
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An input–output model is a quantitative economic model that represents the inter-dependencies between different sectors of an economy. The idea dates back to the 18th century French economist François Quesnay, who developed a simple input-output model which he referred to as a ‘tableau économique’. Karl Marx’s economic analysis provided another early example involving a set…
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In recent years there has been a burst of interest in Modern Money Theory, or MMT. The essence of MMT is that sovereign currency-issuing governments, with flexible exchange rates and without foreign currency debt, are financially unconstrained and do not need collect taxes or borrow from financial markets to finance spending. This view, counter-intuitive as…
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Capital in the 21st Century is a book written in 2013 by the French economist Thomas Piketty which focuses on wealth and income inequality in Europe and the United States since the 18th century. The book was an instant worldwide success, with over 2.5 million copies sold by the end of 2017. Piketty’s central thesis…
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In the world of finance, a ‘bond’ is a legal contract whereby one party – the ‘issuer’ of the bond – is obliged to provide a cash flow to another party – the ‘holder’ of the bond. The holder will typically pay cash up front to the issuer in order to enter into this arrangement.…
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Local elections are taking place across the UK on the 7th May. Where I live in Surrey these will be to elect councillors for two new ‘unitary authorities’: East Surrey and West Surrey. I live in the latter, which is an amalgamation of six previously separate borough councils in the western half of the county.…
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By bombing Iran and spreading carnage across the Middle East, the US and Israel have put the cost of living crisis back in the headlines. (Has there ever been a more dystopian phrase than ‘cost of living’?) When prices skyrocketed following Russia’s invasion of Ukraine in 2022 we were told it was a one-off; but…
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In 1937 the Hungarian mathematician and physicist Jon von Neumann published a paper entitled A Model of General Economic Equilibrium, in which he set out an abstract mathematical model of an economy. Von Neumann’s model is still used widely today, particularly by Marxist economists. In this blog post I will provide a brief summary. The…
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It is generally agreed now by all but the most zealous capitalist apologists that conditions have not improved for ordinary people in the UK for some time. Recently I have been wondering if there is any data to back up this claim. And it turns out, there is. In this blog post I will go…
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A recent exchange in Sheffield between the Green councillors group on the one hand, and Trade Union & Socialist Coalition / Your Party supporters on the other, has raised an important question: what can councils actually do to resist austerity? For context, Sheffield council provides over 500 public services to the city’s half-a-million plus population.…
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Just over a week ago there was an online spat between two high-profile left-wing bloggers, Grace Blakeley and Richard Murphy. The disagreement began after Blakeley left a comment on one of Murphy’s blog posts and centred on the relationship between Marxism and Modern Monetary Theory, or MMT. (I won’t explain what MMT is here –…
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In a previous blog post, I derived the following simple expression for the price level: p = vw(1+H/wu), where v is the value of labour (that is, the inverse of labour productivity), w is the average wage, H is total profits, and u is the level of employment. I also derived the following expression for…
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The most ubiquitous economic metric is Gross Domestic Product, or GDP, which is a measure of the total value of goods and services produced by a country. There are two ways of calculating GDP: the ‘income approach’ and the ‘expenditure approach’ (there is also a third way – the ‘production approach’ – but that need…
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It’s fair to say that public services in the UK are in a bad way. The quality and performance of these services has declined significantly in recent years according to many studies, and confidence in public services is currently at an all-time low. The primary cause of this malaise is lack of funding: Local Authority…
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What are taxes for? Everyone thinks they know the answer to this question: To pay for public services. In this blog post, I will put forward the idea that this answer is incorrect, and that taxes do not pay for public services at all. This idea comes from an economic school of thought known as…
Groucho Marxism 