Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism

Thomas I. Palley

Princeton University Press, Jul 16, 2000 - Business & Economics - 264 pages

Business papers today are in a triumphant mood, buoyed by a conviction that the economic stagnation of the last quarter century has vanished in favor of a new age of robust growth. But if we are doing so well, many ask, why does it feel like we are working harder for less? Why, despite economic growth, does inequality between rich and poor keep rising? In this wide-ranging and provocative book, Thomas Palley pulls together many threads of "new liberal" economic thought to offer detailed answers to these pressing questions. And he proposes a new economic model--structural Keynesianism--that he argues would return America to sustainable, fairly shared prosperity. The key, he writes, is to abandon the myth of a natural competitive economy, which has justified unleashing capital and attacking unions. This has resulted in an economy dominated by business.


Palley's book, which began as a cover article for The Atlantic Monthly in 1996, challenges the economic orthodoxies of the political right and center, popularized by such economists as Milton Friedman and Paul Krugman. He marshals a powerful array of economic facts and arguments to show that the interests of working families have gradually been sacrificed to those of corporations. Expanding on traditional Keynesian economics, he argues that, although capitalism is the most productive system ever devised, it also tends to generate deep economic inequalities and encourage the pursuit of profit at the expense of all else. He challenges fatalists who say we can do nothing about this--that economic insecurity and stagnant wages are the inevitable results of irresistible globalization. Palley argues that capitalism comes in a range of forms and that government can and should shape it from a "mean street" system into a "main street" system through monetary, fiscal, trade, and regulatory policies that promote widespread prosperity.



Plenty of Nothing offers a compelling alternative to conventional economic wisdom. The book is clearly and powerfully written and will provoke debate among economists and the general public about the most stubborn problems in the American economy.

Contents

• Debunking Economic Naturalism: 3
• Structural Keynesianism: 5
• Politics before Economics: 8
• Structural Keynesianism versus Economic Naturalism: 10
• Economics and the End of the Cold War: 11
• Lessons for Europe: 13
• Making Sense of the Economy and Economics: 14
• Creative Destruction and Conflict: 15
• The Significance of Economic Policy: 18
• Economic Knowledge and the Formation of Economic Policy: 20
• The Need for a New Economic Voice and a New Economic Conversation: 22
• Plenty of Nothing An Overview: 24
• Capital Mobility and the Rise of Business Power: 29
• Unions Labor Law Political Culture and the Decline of Solidarity: 31
• The Institutionalization of Deflationary Bias: 38
• Deflationary Fiscal and the Attack on Government: 41
• The Internationalization of Deflation: 45
• Fixing the Disordered Economy: 47
• The State of the American Dream: 49
• Running Slacker: 53
• Becoming More Unequal: 57
• Becoming More Insecure: 59
• Becoming More Stressed: 63
• The End of Economic Growth?: 65
• The Logic of Economic Power Part I Diagnosing the Problem: 70
• Power and the Distribution of Income: 73
• The Verities of the System: 74
• The Arithmetic of Transactions Costs: 78
• Transactions Costs Bargaining and Income Distribution: 79
• The Sources of Declining Transactions Costs: 81
• The Impact on Government: 83
• Conclusion: 86
• The Logic of Economic Power Part II Policies for Prosperity: 87
• What Is to Be Done?: 90
• Leveling the LaborMarket Playing Field: 95
• Free Trade: 98
• Policies for FullEmployment: 100
• The Economy as a Corridor Policy Effectiveness and Economic Structure: 102
• The Triumph of Wall Street Finance and the Federal Reserve: 104
• The Origins of Deflationary Policy Bias: 106
• Consequences of the Triumph of NaturalRate Theory: 109
• Monetary Policy as Surrogates Income Policy: 110
• The Verities of Inflation: 114
• The Political Economy of Economic Policy Making: 116
• The Political Economy of Deflationary Monetary Policy: 119
• Central Bank Independence and the Institutionalization: 121
• Reforming the Federal Reserve Bank or Did You Know That the Fed Was Owned by Citicorp?: 122
• America Needs a FamilyFriendly Federal Reserve: 123
• From New Deal to Raw Deal The Attack on Government: 126
• Taking Government Out of the Labor Market: 127
• The SavingShortage Hypothesis: 133
• Blaming Households: 136
• The Government Deficit and the Attack on Government: 139
• Understanding Current Budgetary Policy: 143
• Blaming Government for the Trade Deficit: 145
• The BalancedBudget Amendment: 149
• Conclusion: 154
• Free Trade and the Race to the Bottom: 156
• Free Trade as Systems Competition: 157
• How Important Is Trade?: 158
• A Framework for Analyzing Free Trade: 160
• The Impact of Trade on the Economy: 162
• Systems Competition Free Trade and the Race to the Bottom: 170
• Common Markets: 171
• Third World Assistance and the Debt Trap: 173
• International Money Who Governs?: 176
• Speculation and the New Face of International Money Markets: 177
• The Current System: 179
• Why Exchange Rates Matter: 182
• How Finance Capital Came to Dominate the International Monetary System: 183
• Where Next? What Is the Right Way to Organize International Money Markets: 190
• Structural Keynesianism and Globalization: 194
• Globalization and the Problem of Economic Leakiness: 195
• The Structural Keynesian Response to Globalization: 196
• Conclusion: 200
• Recipe for a Depression: 202
• Household Debt and the Danger of Wage Deflation: 203
• Prolonged Recessions Fragile Recoveries: 204
• The Fragile Household: 206
• The End of Automatic Stabilization Policy: 208
• The Deflationary Fed: 210
• Demographics and Economic Depression: 211
• Labor Markets and Business Domination: 212
• Conclusion: 213
• Ending Economic Fatalism: 214
• Notes: 215
• References: 223
• Index: 229

About the author

Thomas I. Palley is Assistant Director of Public Policy (Economics) at the AFL-CIO and the author ofPost-Keynesian Economics: Debt, Distribution, and the Macro Economy.

Bibliographic information

• Title: Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism; Book collections on Project MUSE; Princeton paperbacks
• Author: Thomas I. Palley
• Edition: illustrated, revised
• Publisher: Princeton University Press, 2000
• ISBN: 0691050317, 9780691050317
• Length: 264 pages
• Subjects: Business & Economics / Development / Economic Development; Business & Economics / Economic History; Business & Economics / Economics / General; Business & Economics / Economics / Theory; Political Science / Public Policy / Economic Policy