Advanced Political Economy Lectures

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These are the first two lectures of my Advanced Political Economy class at the University of Western Sydney. The class offers an in depth critique of the failures of neoclassical theories, as well as detailing my approach to a new economics. Click on the links to download the Powerpoint slides for the lectures.

Lecture 01: Part 1 – Introduction to subject/Failure of Neoclassical Macro

APE2012Lecture01A

APE2012Lecture01B

APE2012Lecture01C

Lecture 02: Failure of Neoclassical Macro (Demand and Supply)

APE2012Lecture02A

APE2012Lecture02B

About David Lawson

-Worked as a real estate agent in 2009, have since left the industry because I now see that it is all fuelled by euphoric expections and debt -Started to become concerned about the global debt bubble after reading 'The Credit Crunch' by Graham Turner about a year ago and have since followed Steve Keens debtwatch blog -Competed a Bachelor of economics in 2004 specalising in iternational trade and finance -Lived in the USA for 5 years of my life, have witnessed first hand there frivolous spending patterns and watched our country become the same over the course of last 10 years
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10 Responses to Advanced Political Economy Lectures

  1. cliffy says:

    Thanks for these Dave. Very generous of you to post these Steve.

  2. alainton says:

    @steve question

    How does a new firm then rationally enter the market? If it has to lower the average rate of profit then it will divert investment from that sector, if it has to offer lower wages then labour will flow to other sectors. It could only enter the market through accepting lower profits through self financing- which most SMEs tend to do – or through innovation to lower costs. This is looking more like Adam Smith than Marshall – very classical/schumpeterian – monopoly profits attracting a swam of new entrants.

  3. alainton says:

    @steve The theory of moral sentiments was written before Smith’s visit to France. when there he was subject to the ideas of Quesney and Cantillon. Smith kept the same term ‘invisible hand’ but took a revolutionary step – replacing god with the concept of a self regulating system – the circular flows like those of blood that influenced William Petty and through him Cantillon and Quesney. You are unfair because as a result Smiths microeconomics were MACROFOUNDED, based on the circulation of physical goods and money.

    BTW Say missed two things in his presentation of a much older idea. Firstly the concept from Cantillon that the entrepreneur regulates the gap between supply and demand by filling in the opportunities presented by uncertainty, and secondly from Stuart that this gap had to be filled by credit. As in the empty ships leaving from French colonies shipping staple goods – which was Says model. ‘Say

  4. Steve Keen says:

    It’s actually rather Schumpeterian Andrew; check the Theory of Economic Development, where he details 4 ways in which a firm can enter. I summarise those in my Managerial Economics lectures–see the lectures tab.

  5. Endless says:

    Steve,

    Debt analysis, suggest rents should fall. With out making too large a generalisation, they are not. Here in Inner Brisbane, they have risen, significantly. Not so much as to compensate for a lack of capital growth, but if rents continue to increase or hold ground, at some point this will surely soften the house price fall.

    As I would also argue, will the significant slow down in new homes being built, this has an impact on supply — which has some impact on house prices, even if one accepts the significance of Debt.

  6. cliffy says:

    Endless,

    The way I see it:

    Rents come from wages, profit, debt, or savings.

    However, there can be redistribution of funds from other regions. The two important redistributive dynamics are:

    1. Rentals by foreigners can tap into the wages, profit, debt and savings of other regions [e.g. Foreign students mum and dad or savings funds, tourists]

    2. The transfer of tax revenues taxed outside a region transferred into a region [e.g Mining royalties into rental subsidies].

    If there are more people looking for the same housing then, because it is unlawful to live on the street, rents will rise up to the maximal extent that wages, profit, debt, and savings can fund.

    From the data below:

    – housing starts has kept up with employment growth in Queensland
    – foreign debt has pumped but it is hard to see how it would pump into inner city rents
    – perhaps your city has won a share of the increase in foreign students, who I would imagine would be inner city and renters?
    – that mining boom up in Queensland do workers rent in your area?

    Data:

    17400 more people were employed in Queensland at the end of Feb 2012 than Feb 2011.

    [ABS: 6202.0 – Labour Force, Australia, Feb 2012]

    16270 housing starts in Queensland Nov 2012 to Oct 2011.

    [ABS: 8731.0 – Building Approvals, Australia, January 2012]

    Average total earnings per person in Queensland grew by 2.0% from Nov 2011 to Nov 2012.

    ($1033.30 per week at Nov 2012)

    [ABS: 6302.0 – Average Weekly Earnings, Australia, Nov 2011]

    Credit Card Balances in Australia grew 2.2% from Jan 2011 to Jan 2012

    ($49.1 billion at Jan 2012)

    [RBA: C1 CREDIT AND CHARGE CARD STATISTICS]

    Net Foreign Debt in Australia grew 13% Dec 10 to Dec 11

    ($735.4 billion at Dec 11)

    [RBA: H05 AUSTRALIA’S NET FOREIGN LIABILITIES]

    Company Profits Before Income Tax in Australia Sep 2010 to Sep 2011 contracted 11%

    ($47.1 billiion at Sep 2011)

    [ABS: 13500DO017_201203 Australian Economic Indicators, Mar 2012].

    <b<[If you want to see the significance of mining to Australia now you want to check out that reference at the link below and take a look at "Table 7.3–Company profits before income tax, QUARTERLY–By broad industry" time series]

    Mining Profits

    Refinancing of Established Dwellings (extending the mortgage) in Australia rose 22% from Jan 2011 to Jan 2012.

    [ABS: 5609.0 – Housing Finance, Australia, Jan 2012].

    ($3.5 Billion during Jan 2012)

    Short Term Arrivals rose 4.8% from Jan 2011 to Jan 2012

    (502,500 in Jan 2012)

    The number of student visas granted in Australia rose 5.9% from the 6 moths to Dec 2011 to the 6 months to Dec 2012.

    (123598 student Visas Granted 6 month to Dec 2012)

    [http://www.immi.gov.au/media/statistics/study/_pdf/student-visa-program-report-2011-12-31.pdf]

  7. Derek R says:

    Steve,

    Excellent stuff!

    Thanks once again for putting these lectures on the web. I’ve only listened to lecture 1 so far but I found it very informative. I didn’t know about the Ricardo/Say connection nor the Marx/Keynes one, so I was particularly interested in those parts.

    And listening to you talk about Keynes’ thoughts on uncertainty and unpredictabilty makes me think that Keynes and von Mises actually have more in common than the Austrian economists might realise.

    Now for lecture 2…

  8. Steve Hummel says:

    “makes me think that Keynes and von Mises actually have more in common than the Austrian economists might realise.”

    Indeed, but it really only points up the fact that they agreed on the uncertainty and unpredictability of capitalism. Keynes and the Austrians are the supposed polar opposites of modern economic thinking, but they are in fact only two false choices that fight each other while the real problem remains unexamined. That problem is wage slavery, emphasis slavery, that will continue on in ANY economic system which does not find a way to monetarily free its citizens…..even though it may craft an elegant and mathematically rigorous theoretical framework, it will only possibly free the business entities in the system, not the individuals inhabiting it. And actually it won’t even do that because the businesses within the system will still be chasing the inadequate demand that forces them into manic exporting in search of its sufficiency.

    Keynes’ theories were the statist solution for finance that they knew (consciously or unconsciously) that they could conveniently manipulate, demonize and replace with the devolved neo-liberal version of finance capitalism we see afflicting us today.

    While we are on Keynes we should remind ourselves that he had a first rate economic mind, but was not a totally honest researcher. He somewhat condescendingly referred to “Major” C. H. Douglas as a private in his General Theory, and yet much of his work is again, a statist plagiarizing of Douglas. Keynes in fact admits in The General Theory, the reality of the “Gap” in purchasing power Douglas discovered. Keynes in The General Theory:

    “Thus the problem of providing that new capital-investment shall always outrun capital-disinvestment sufficiently to fill the gap between net income and consumption, presents a problem which is increasingly difficult as capital increases. New capital-investment can only take place in excess of current capital-disinvestment if future expenditure on consumption is expected to increase. Each time we secure to-day’s equilibrium by increased investment we are aggravating the difficulty of securing equilibrium to-morrow.”

  9. Endless says:

    That’s an interesting perspective Cliffy, thanks. Certainly my area of inner Brisbane would entice Foreign students, but not so sure it would be a mining workers area.

  10. Bhaskara II says:

    Test of formula capability of wordpress.

    $latex \frac{\mathrm{d} (\frac{\mathrm{dX(t)} }{\mathrm{d} t})}{\mathrm{d} t}=-x(t) $

    Formula should be above if it works.

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