1 Ikus https://www.unibertsitatea.net/blogak/heterodoxia/2015/07/14/ezkereskuin/.

2 Ikus http://bilbo.economicoutlook.net/blog/?p=31403#more-31403.

3 Ingelesez: “I am also tracing the evolution of ‘left’ macroeconomic thinking, or rather, the absence of it, in the late 1960s as the Bretton Woods fixed exchange rate system collapsed and fiat currency freedom was taken up by governments around the world.”

4 Ingelesez: “The rot was setting in during the early 1970s, which is surprising because it was the period when the Bretton Woods fixed exchange rate regime had just collapsed and despite some vain attempts to salvage it (Smithsonian Agreement etc), the writing was on the wall. Fixed exchange rate regimes are difficult to maintain and so compromise the policy independence of currency-issuing nations that they should never be a model for any progressive political movement. (…) he (O’Connor) effectively adopted the mainstream macroeconomic notion that a currency-issuing government is financially constrained.”

5 Ingelesez: “In 1973, after several years of work, American sociologist James O’Connor published his book “The Fiscal Crisis of the State”, which was considered by many on the ‘left’ to explain why the Keynesian policy era had failed. This book and the derivative literature that followed it was extremely influential among ‘left’ scholars…”

6 Ingelesez: “While that was true during the Bretton Woods fixed exchange-rate system, where governments had to contrain their expenditures to meet the central bank requirements to sustain the currency parity, it was certainly not true after 1971, when President Nixon, effectively ended the gold convertibility and floated the US dollar.”

7 Ingelesez: “… by adopting the mainstream view that a currency-issuing government (in the era of fiat currencies) was financially constrained and could not run continuous fiscal deficits he failed to create a new theory of the state fiscal relations that would underpin a coherent and powerful ‘left’ narrative.”

Are gehiago, “In the period following the publication of the Fiscal Crisis of the State a myriad of left-wing and socialist orientated articles, academic papers, books emerged which reflected the fact that the authors had begun to absorb the underlying message – that currency-issuing governments were financially constrained.”

8 Ingelesez: “… these intellectuals started steering the progressive agenda down the wrong road. The essential ideas that we find in Abba Lerner’s work on Functional Finance were lost to this group of scholars.

It didn’t take too much imagination to understand that once the ‘left’ stopped questioning whether governments faced financial constraints or not, their capacity to articulate a broad, wide-ranging progressive policy agenda became deeply compromised.”

9 Ingelesez: “The same holds today of course. I often have conversations with The Greens at various levels, who hold themselves out as the progressive force in Australian politics. The conversations come to a dead-end when they tell me in one form or another that the Government cannot ‘afford’ or cannot ‘pay’ for full employment or some such, or needs to ‘tax more fairly’ to ensure the rich pay for the spending.”

“… in the early 1970s, just as governments were becoming financially unconstrained and floating their exchange rates, which freed their central banks from engaging in official foreign exchange market intervention, the intellectual (Marxist) ‘left’ was becoming besotted with notions that the deep crisis was to be found in the lack of taxing capacity of governments.”

10 Ingelesez: “The situation became worse when the ‘left’ started incorporating the increasing global nature of finance and production-supply chains into their analysis. They wrongly assumed that these trends further undermined the capacity of states to spend and maintain full employment.

The ‘fiscal crisis of the state’ and ‘globalisation’ were held out as the two major impediments to state sovereignty. Nothing could have been further from the truth. But the ‘left’ bought it and in the 1970s, the neo-liberal resurgence as Monetarism, then privatisation and austerity, became virtually unchallenged and the ‘left’ disappeared up its own post-modern whatever.

(…) James O’Connor had taught the ‘left’ that the government was financially constrained and could not run continuous deficits because it would run out of money.”

11 Ingelesez: “The surge in Monetarist thought within macroeconomics in the 1970s, first within the academy, then in policy making and central banking domains, quickly morphed into an insular Groupthink, which trapped policy makers in the thrall of the self regulating, free market myth.

… overwhelmed the debate about monetary integration that was being conducted along ‘Keynesian’ lines at the time – that is, the recognition that there had to be a federal fiscal capacity in order for the union to be effective.

The introduction of the Monetarist inspired Barre Plan in 1976, …

Across Europe, unemployment became a policy tool aimed at maintaining price stability rather than a policy target, as it had been during the Keynesian era up until the mid 1970s. Unemployment rose sharply as national governments, infested with Monetarist thought, began their long-lived love affair with austerity.

The ‘left’ was disappearing…

… the French people realised the Barre austerity plan was a disaster.”

12 Ingelesez: “After indulging in the early Monetarist experiments under Giscard d’Estaing and Barre, the political fallout associated with the sharply rising unemployment demonstrated the poverty of that policy framework and led to Mitterrand’s election.

His government immediately set about doing what a sovereign government should do: use fiscal and monetary policy to expand employment, reduce unemployment and expand the social wage.

But the French were still intent on remaining in the European Monetary System (EMS)…”

13 Ingelesez: “… the French socialists in power had a choice. They could retain its policy sovereignty and pursue its legitimate domestic objectives by floating the franc or remain within the EMS and subjugate its domestic policy freedom to the dictates of the Bundesbank.

… the French government fell lock step into the increasingly dominant Monetarist policy approach that involved using rising unemployment as a policy tool to discipline the inflation process. (…)

The socialists were abandoning their principles to become part of the neo-liberal political convergence that captured social democratic parties in most advanced nations during this period.”

14 Ingelesez: “Various bureaucrats, supported by free market orientated academics worked overtime to convince everyone that the unemployment was not a result of a lack of jobs created by excessively restrictive fiscal and monetary policy, but rather a sign that people were not searching for work hard enough and were lulled into a welfare dependent lassitude.”

15 Ingelesez: “The ‘non-fiscal crisis of the state’ had, in fact, become, an outright state-led attack on the unemployed justified by the belief that austerity was the only alternative available to governments.”

16 Ingelesez: “And now the hard left in Greece is doing worse.

I think the literature that emerged from the Marxist scholars like James O’Connor in the early 1970s was not only substantially wrong its presentation of macroeconomic theory (particularly in terms of its characterisation of the fiscal opportunities available to the fiat currency issuing governments) but was so influential among the practical ‘left’ – trade unions and other activists – that it provoked the downhill path of progressive opposition.

Neo-liberalism in its macroeconomic manifestation faced little opposition. Sure enough progressives attacked the retrenchment of welfare states, the privatisation schemes, the outsourcing and all the rest of it.

(…) The acceptance of key Syriza officials of continued austerity and continued membership of the Recession Cult (aka the Eurozone) really starts back in the early 1970s.”