The Responsible Economy
Routledge – 2013 – 256 pages
In the last two decades, a remarkable consensus developed in Economics around pro-market reforms; reflected in Friedman-esque polices of tax cuts, deregulation and its promotion of free trade and globalization, though entirely Keynesian, with any slowdown in the economy to be countered by aggressive monetary policy. This book takes the view that the pro-market consensus was wrong in both its microeconomic and macroeconomic theory and practice. After the financial crisis, liberal economists have argued that we need new regulations, notably to control the financial services sector. Frank sees the issue is more fundamental, arguing that whilst enforcement of regulations can limit some of the greater excesses of behaviour, the important intervention is to set up a full set of institutions and legal framework that encourage good behaviour.
In policy terms, the book argues for a return to an earlier consensus that emphasised high social investment in the infrastructure and in education, and a monetary policy that smoothes out (rather than seeks to prevent) economic fluctuations. Frank opens new ground in his argument for a re-building and strengthening of non-market institutions that encourage good behaviour and a return to institutions such as usury laws, cooperatives and building societies, defined benefit pensions, and trade unions.
1. Introduction: Markets 2. The Role for Good Behaviour and Incentives to Sustain It 3. Incentives and Behaviour 4. Inflexible Labour Markets 5. Trade: The Breaking of Contracts 6. The Complacency Equilibrium 7. Cowboy Keynesianism 8. Macroeconomics of High Profits 9. Company Pensions and Benefits 10. Non-Profits and Voluntary Organisations 11. Challenging the System 12. Back to the Future: The Artisan Economy 13. Responsible Economics and the Responsible Economy
Jeff Frank is Professor of Economics at Royal Holloway and Bedford New College, University of London