Archive for the ‘Cause of US decline in 1970s’ Category

Marky Blyth Great Transformations

January 21, 2012 Leave a comment

Marky Blyth’s book mainly states that ideas should be accounted for when explaining economic behaviour. His these are that ideas provide stability and not institutions in situations of Knightian uncertainty (you don’t know the future or your own interests). This makes sense, it is not institutions that make us feel safe but our knowledge of the way the world works. To this end a large number of ideas are covered in the book comparing Sweden and the US. The other theses are that ideas are required to attack, dismantle, set up, and operate stabely new institutions of economic governance. In the US an Denmark both countries developed embedded liberalism where employment was valued over inflation and both business and labour were embedded in the state structure that mediated the two. There is then a shift in the 1970s towards the self regulating market liberalism using monetarism and other financial creeds that is continuing today. This is important because Blyth shows that economic change BEGINS with ideas. Agents actively try to win the debate of ideas and after the 1960s business was gaining ground because it redefined its own interests and how to achieve stability in the economy and organized itself in a way that it could use the concentrated influence of its wealth to change popular opinion in the US and elite opinion in Sweden. The ideas behind what is good for the economy (mainly low inflation and investment versus high employment and consumption) are therefore not natural economic processes that result from exogenous shocks but a result of internal dynamics. This book is somewhat  frustrating because it clearly shows how money talks and how it came to talk over the years, but it also shows how agents have power and can induce change (usually if they are well organized and have money and deal well with public relations). The current theory of chnage argues that domestic economic shifts towards conservatism occur because of technological developments, increased competition, or external shocks, Blyth shows that before any of these can have an effect the ideas for them to play out must be set. For Blyth there is a limit to what action governments can take set by the ideological environment. Therefore Swedish bourgeoise leaders acted as socialists in power because they had no alternative ideas before resuscitating monetarism and the current Neoliberals govern as conservatives because the limits of the possible choices of action are already set. This is worse in Europe because the highly conservative EU regulates economies from the center.

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