 Okay, thank you very much for coming to this book. Can I pass this microphone over to Victoria Chick who will be presenting the, or, yeah, I'll pass over to Janis de Firmus who will give the welcome on behalf of the department. Thank you and many thanks for joining us today. It's a great pleasure for me to welcome you to this book launch on behalf of the Department of Economics and the book that Janis launched today, I think it's a very important contribution to our understanding of the economics of Kalecki. And what I think is very important is that Jan emphasizes this monetary aspects of the work of Kalecki. We know that he has worked so much and has contributed so much to our understanding of the monetary aspects of Kalecki. And one of the reasons why in my view this is very crucial is because if we look for instance at the way that young heterodoxy economists think about Kalecki, in most cases they focus quite a lot on the real economy aspects of Kalecki. They know very well for instance his analysis about oligopolies, trade unions, the links between economic growth and inequality. His analysis about the business cycle, but what is very important is that they don't know very well the monetary and financial aspects of the work of Kalecki. And I think this book and overall the work that Jan has done on Kalecki highlights this and allows people to understand why for instance we have to read Kalecki in order to understand what is the impact of interest rates on investment, the role of corporate finance, how we can conceptualize central banking nowadays, debt management, all these issues are very important. I think that especially young heterodoxy economists are not very much familiar with them. And in most cases when they work on finance issues they rely, I mean especially if they use post case insights, they rely a lot on MISKI and I think the fact that we have this work of Jan is very important because it's a way for young economists to engage with this. Another thing that I would like to emphasize is that the Department of Economics has shown us is I think one of the very few departments that gives the opportunity to students both at the post graduate and the other graduate level to engage with Kalecki. For example, I mean in my macroeconomics module I always give students the very well known article of Kalecki about the political aspects of full employment, which is an article that emphasizes why it's so important to analyze economic phenomena in conjunction with the distribution of power between different classes. And I think students enjoy that very much and they overall enjoy very much the insights of Kalecki and it's really a pity that we don't have this in most economics departments. I mean Kalecki is not out in macroeconomics modules and finance modules. And again this is why I think that what Jan has done over so many years is quite important, it's very important because it's also a very good teaching material and hopefully in the coming years we are going to see Kalecki more in the teaching of economics. So it's a great pleasure for the department to host this event today. I very much look forward to the discussions and I'm so happy that so many of you friends, colleagues are here. And many congratulations to Jan for all the work that you have done for Kalecki and enjoy the event. Thanks a lot. It seems to write books as frequently as most of the rest of us send off postcards. It seems an almost daily event that there's a book launch here for one of his efforts. The last one I remember was the second volume of the Kalecki biography. And he I think very wisely chose to write another volume on Kalecki's monetary theory which really doesn't get the kind of press that a lot of Kalecki's work does. It sort of sits by one side and to have it brought out like this very often in this case by finding fragments of arguments and putting these arguments together that was a very great boon to us all. We have three wonderful speakers. The other thing that Jan manages always to do is to get the very best speakers. The first is Gary Dimsky. Now from the University of Leeds. He started his career in America more or less all over the place until he ended up in California at first at University of Southern California and then University of California at Riverside. But decided that Britain was the place to be because the population density was such that there was a real chance of academics talking to one another. And it's true. Thank you. It's true. That's why he's here and I'm delighted. In the States he also played quite a strong role in various government departments. And in Leeds he's also doing something for the city council. Very importantly from the point of view of putting this meeting together. He's on the committee of the First Kings and Economic Society and is looking at Kowalski perhaps from that point of view. So I give you Gary. I would like to introduce all the speakers at one time but it's a little awkward to do so I guess I'll break in each time. They have about 15 minutes maximum. 10 would be even nicer to say their peace. Gary. I appreciate that. I will do my best. Good boy. I'll watch out. I don't even have time. So I have a lot to say and I've been. Good now. And I've been in dialogue with Jan and learned from Jan so much over the years by both reading and talking with him. And so it was a I really wanted to do justice to this volume here which I think is a real milestone. It is true he writes many books but this is something special and I was able to distill my thinking about it. And I'm going to kind of read with expression what I've written so I can discipline my mouth and say all that I want to say. So Jan starts his book with a confession that it is true that Kowalski consistently underplays monetary factors. And indeed as he refined his formulations he pushed money even further into the background. Now this book here this is a scholar's book and its entry point therefore confronts its reader with a paradox. That is why a book called interest in capital about Kowalski. How does that work? Now my read my decoding of Jan's intention is the following highlighting the often implicit monetary components of Kowalski's work in an exposition his exposition that connects with Kowalski's overall vision of the capitalist accumulation process permits a deeper confrontation with the limits of neoclassical theory than what a critique that was based merely on the obvious mischaracterizations in neoclassical theory. To give an example if you if you've seen the May 2015 working paper by Jacob and Kumhoff that just brutally flogs the exogenous money theory you know you can do things like that and that's fine there it's descriptively wrong. But Toporowski has a deeper target here. He wants to take on the edifice of equilibrium based neoclassical macro theory both in its older and its newer forms and and like Kowalski's formal models these models too deemphasize the role of money in economic dynamics and so you know monetarism trivializes it and of course the DSGE model as we know eliminates it and I should say I know I'm I'm speaking Iqlama Kiiz but that's the level at which the book is written so with due apologies. His attack links this erasure to another erasure neoclassical theory's elimination of any role for the capitalist firm. There in that theory households are producers this simplification leads directly to another deeper theoretical deep theoretical error that Jan wants to correct the idea that interest is linked to profits in a zero sum relationship so just just to remind you the neoclassical model agents automatically earn an expected return are for saving and whether or for waiting if you will so whether you think of this are as an interest that you pay yourself or as a profit that your production earns doesn't make any difference notice that the real business cycle kind of morphed into DSGE and nobody really cared because it doesn't make a difference it doesn't matter there's only the representative thing that's at the center of this nothingness that's neoclassical theory in that framework are in the assumed availability of putty capital production technology governs agent choice rational agents automatically generate the finance that they need for the appropriate technology finance remains invisible because it's completely passive and dutiful you don't need to see it and therefore it's out of the theory this trade-off between interest and profit is one manifestation of what Keynes called the classical model and what's here called by Jan the Vexellian approach it's kind of because he's kind of making that monitorist connection pretty deeply in that model savings and advance are required to finance investment and aggregate demand has no role in economic growth now of course Keynes revolution against the classical Pagovian denial of the necessity of macro policy took on precisely these premises but how well here's where we come with the first really fundamental point that Jan's making Keynes angle of attack on the Vexellian argument that the interest rate itself governs the pace of economic growth builds on the notion Keynes goes by saying uncertainty begets fear and that destroys conventional beliefs and that gives rise to liquidity preference which undermines investment and it's not it's that not the absence of saving fair enough but fear and liquidity preference in turn can be offset in that Keynesian vision the vision we see in general theory by basically maintaining a robust level of aggregate demand by appropriate monetary policy etc so everything depends on government policy on what Minsky called big government big bank in the face of recession while this shows that how accumulation can falter it does not describe the actual dynamics of capitalist accumulation government stabilization policy takes center stage while capital and capitalist firms remain offstage Keynes has adopted what Minsky would later proudly describe repeatedly in conversation and in print as the wall street view of the capitalist economy I don't know if you're saying that when you were there with him in Berkeley but that was his mantra if you see that there's a sense in which you know he's kind of that wall street view it says a lot about the the limits and the potentials of Minsky's view as well now enter in top Rasky's Kuleski and opus corpus this puts this capitalist firm center stage by focusing on corporate finance not liquidity preference the competition amongst capitalist firms which involves investing when financing conditions are favorable takes the place of liquidity preference so greed driven by fear of being overtaken by rivals takes the place of the fear of uncertainty that can kill capitalist entrepreneurial drive and capitalist firms competition gives rise to a business cycle whose life blood and and whose aggregate demand driven aspect is the economy's monetary circulation that monetary circulation is driven by what yon calls capitalist money it's the money of capitalists that you need to understand capitalist dynamics not the money of government there's another really provocative point in the book well worth much reflection and so that leaving that there a perhaps surprising implication of this approach something I hadn't fully realized is that interest is not limited by profit instead yon points out finance is flexible capitalists themselves and the banks on which they rely for credit are able to generate the work the money they need interest can be paid from the profits that will be realized once the investment thus triggered works through the expenditure multiplier so Kuleski is the shield that top Rasky uses to confront in a sense the hydroheaded beast in a certain way to build monetary elements into a framework that prioritizes the essential features of capitalism this shield lets him take on the neoclassical orthodoxy and also calls him to question implicitly in the main some heterodox understandings of capitalism so I've got five one is the romance with Schumpeter now keeping my two weeks ago I I met with the people over the I IPP at UCL and the whole that whole thing so I was kind of in my mind as I was reading this book the idea that understanding capitalist growth is continually renewed that understanding why capitalist growth is considered continually renewed requires that we make space for Schumpeter's entrepreneur no actually in top Rasky's Kuleski in world capitalists are not romantic dreamers they're fierce beasts who give no quarter and invest to dominate top Rasky reminds us that the core requirement for becoming a capitalist is to already own capital that's third fundamental point that's made here and basically the power of capital is the basis of the process we should not pine for worthy entrepreneurs whose blossoming requires only that they be connected with finance capitalism doesn't work that way in our work up in West Yorkshire and Leeds this is something that we're confronting as a reality how do you overcome that divide and level up and all that because it you know it is what it is it works as it works secondly there's a gentle corrective for the Keynesian stock flow consistent models Keynes his failure to ground his monetary theory and real-time dynamics driven by capitalist firms is reproduced in SFC modeling as such the SFC model is after all a rediscovery of the Tobin-Brenard macro portfolio equilibrium that's an accounting framework that emphasizes point-in-time stock consistency and largely ignores motion through time if you go and track trace through Tobin's work on that model through time you know he always reverts back to the equilibrium and I know there's kind of jumped the other way and you know it's a many many of our theorists today are working on having a fuller vision we have to keep in mind that that equilibrium is there as the test of the thing and once we you know go into other directions then it challenges are we in a sense pushing that framework beyond where it really can go as a description of capitalism this is something that's posing that in a sense yon puts on the table so this this framework accounts for a capitalism scorecard the balance sheets but doesn't track the circuits of capitalist circulation in time so in some sense there's this kind of dialogue that we always have to have with the regulationists with the circuit of capital folk and with SFC if we need all of those elements and of course that's one of our contemporary challenges as in a sense it was for Koletsky third this volumes argument warns again implicitly against the idea that purpose of smart government initiatives can rescue capitalism from its contradictions neither mission driven growth nor modern monetary theory are mentioned here in this book but both of those turns since both of those turn on the idea that the failures of capitalism can be effectively countered by available policy levers an idea that yon's book calls into question there is a debate to be had here fourth this volume briefly criticizes literature on the financialization of capital another really provocative finding in the book the idea that there's too much finance and reducing finance would be a cure my gut right i believe with that you know all my work on the megabanks and all of that but toporovsky reminds us that more finance can save capitalism from its own contradictions financialization embodies a crisis of one kind but it also presents a means of escaping from crisis could we not say that this is a kind of marxian dialectic in motion the insistence on the importance of modeling the capitalist firm and its financing process represents a view that planning and controls over investment finance which is mentioned a lot in this book that is explicit intervention into the drivers of aggregate demand and supply are needed no matter the form taken by the social relations of production so it has to be said that all that going all this way with toporovsky's drilling down into kolesky's vision of capitalism does entail some costs and there's some kind of points of critique or further discussion one is that yon's effort at making carving out a clear divide between the money of capitalists and the money of the state arguably goes too far it's a really provocative point to read and to reflect upon and so i think that it's important for us to think about state and economy polanyi and all of that but there's much to be said there that for further exploration secondly his assertion that capitalists do what kolesky says they do that they invest by fiercely investing they fiercely compete to generate profits is questionable in a world in which the circuits of industrial capital are paralleled by the increasingly dominant circuits of financial capital the latter based on speculation or buying to sell as menskin would put it so whereas capitalists made profits by exploiting workers in kolesky's time today there are capitalists who make profits by taking positions and fees in their own enchanted world to use allane libya's uh uh no phrase um and the rontiers of course are there with as earning their share of picketies one percent thirdly uh kolesky's two class formulation the assertion that workers are workers is also problematic in our time people are divided by processes of inter and intra-class competition into the class fragments that are described by stratification theory there's no recognition in this volume that the concentrated power of large capitalist firms and banks and their shadow bank empires has been used to super exploit those that are socially marginalized by divides of race ethnicity gender or national borders there's also no attention here to problems with developing nations now i got to say this is a short book and and we're making some fundamental theoretical points here so i'm i'll hang on for the the my finale in a minute uh so finally this volume's discussion of monetary policy leaves much unsaid about the new era of quantitative easing the transformation of money markets and position taking in pre and post crisis financial markets has forced central banks to be not just lenders of last resort or as peri merling would have it dealers of last resort but actually to be everyday participants backstopping the barely controlled and often out of control gyrations of the over leveraged financial markets in which the mega bank dominated networks stake out their positions that's the world in which we live that world rooted in the dollar's exorbitant privilege and sustained by the federal reserve catches western economies and debt tracks that are deepened by covert 19 now and by the ukraine war not much is said about it in this volume which would categorize these these machinations as components of the money of the state not the money of capitalists so i'm out of time so they just say that uh there's something to be considered and my final paragraph in the next crisis period a post trump us fed will lack perhaps the policy space that ben Bernanke was able to use to stretch the system to meet the 2008 minsky moment to create a post capitalism that can survive the 2030s we'll need more than economic insights that no matter how prophetic are rooted in the conditions of the capitalism of the 1930s this means that we cannot allow this stellar monetary theorist to rest we're going to need the next installation of top rasky's reflections as he and we follow the arc of history thank you so much for your attention who's uh making his way forward i'll start to introduce him bill ellen worked for many years for the bank of england um and since then and during that timing tank also advised the imf and various other bodies and wrote the time shortest articles on what the bank of england was doing and since then two books have have turned up um jan in introducing bill on another occasion uh described him as a central banker who thinks about what he's doing and i don't think you can really ask for a higher accolade than that um i think at the moment you're working for nisa or working yes working with nisa yeah uh he moves around a lot in good places um but he's spending a little time with us please keep track of the time yourself because i've come out without my watch 15 minutes maximum 10 minutes is better okay off you go thank you is this turned on yep okay thank you very much one of the many virtues of yans uh fascinating and perceptive book is that it devotes a lot of attention to chapters out of 12 to open market operations and that's what i'm going to talk about this afternoon as he rightly points out open market operations have been assumed away into irrelevance by a lot of theorists and so it's a very valuable contribution from him to have kind of resurrected them from oblivion and they are an essential feature of central banking and of monetary policy of course they've been undertaken on a colossal scale since the financial crisis they haven't always been essential to central banking under the gold standard they were not necessary strictly and they were widely thought to be undesirable um the stereotypical bank of issues they were called in those days confined itself mainly to discounting bills of exchange um it determined the discount rate and the quantity of bills that it was willing to hold if if holders of its banknotes return them in exchange for gold as they could the bank of issue was supposed to let its gold reserves fall in parallel so that money market conditions got tighter at interest rates went up and that was the automatic magic mechanism of the gold standard the rules of the game um the reason why open market operations were thought to be undesirable was that they interfered with the direct relationship between the central bank's gold reserves and the domestic monetary situation they were away of bending the rules of the game and of course that's also the reason why they were thought to be a good idea the purpose was to absorb some of the shocks that were imparted by the automatic functioning of the gold standard so the central bank has accumulated reserves to excess in good times when it was plentiful and interest rates were low so that they could release the gold in bad times when interest rates were high so it was a kind of cataclysmical thing yeah and describes how the federal reserve discovered the power of open market operations by accident in 1922 when the federal reserve banks looking for income started to buy government securities so as to make their income bigger and happened to notice for their statistical department noticed that when they did so the demand for credit from the commercial banks got smaller and it was the federal reserve too in the early 1930s which pioneered the extension of open market operations into what's now called quantitative easing by purchasing such large amounts of government securities that the commercial banks ended up with large excess reserves and that's been hailed as a great success by monetarists and with some justice but even so the scale of quantitative easing in 1931 to 1933 amounted to the equivalent of something like two or three percent of GDP in other words only a fraction of the amounts that have been done in the past 13 years that was still in the gold standard era just when exchange rates floated open market operations became not just a good idea but essential their purpose was often described in the Vexellian language that Jan uses in Chapter 10 keeping market interest rates in line with the so-called natural rate my making bank rate effective was what Richard Sayers called it in his history of the Bank of England now jumping forward a bit in 2009 quantitative easing was an emergency response to the collapse of the banking system since then it has gradually become the preferred technique for monetary easing there have been other devices which have been used but they all been dropped quantitative easing has kind of endured quite rightly and extremely usefully Jan's book draws attention to the immutable but widely forgotten relationship noted in 1963 by James Tobin between monetary policy and government debt management it's more relevant than ever today is certainly more than 1963 quantitative easing in effect has greatly shortened the maturity of the government debt nowhere more so than in this country I don't think this has been widely recognized at least until recently if a central bank is free to do quantitative easing then there is unavoidably a latent conflict between its freedom and the treasury's ability to discharge its responsibility to maintain stable public finances of course in this country the central bank isn't completely free to do quantitative easing it needs in advance the approval of the treasury for each tranche as it were a quantitative easing that being so it's hardly at least hard for me to understand why the treasury has been ready to give its approval for such large amounts one probable reason though it can't be the only one is that in March 2020 when the coronavirus pandemic became obviously serious quantitative easing was represented in part as a market maker of last resort operation or a dealer of last resort operation and that was in an environment where government bond markets had ceased to function as the seriousness of the of the pandemic became apparent now the treasury needs a reliably liquid market in which it can be confident that it can sell its securities and a market maker of last resort was certainly needed at that time in March 2020 but the functions of a market maker are to facilitate trading by quoting bid and offer prices and to achieve price discovery by matching bids and offers over time so market makers buy and sell the bank of England didn't buy and sell it bought and bought and bought now the only possible interpretation of its actions is that despite what it said it wasn't acting as a market maker at all in any meaningful sense it was actually pursuing a rather loose form of yield curve control in which it didn't announce its objectives for bond yields and maybe didn't have any precise objectives for bond yields but nevertheless suppressed the market forces that were otherwise have caused yields to rise and by doing so as I explained shortened the maturity of the debt and there aren't many instances of yield curve control in monetary history that I'm aware of both the United States and this country employed it during the Second World War to keep down the interest cost of government debt of course there was a huge amount of borrowing going on then and in both cases there was a period not entirely unrelated of post-war inflation and the rise in bond yields so a substantial fraction of the cost of the war was bought borne by bond investors who suffered real losses on their assets much more recently Japan has used and is still using yield curve control for a prolonged period and hasn't experienced any significant inflation in Britain inflation has increased as you all know in the past year and bond yields have gone up a bit up to the end of February 2021 quantitative easing had produced a large market profit for the treasury which they had taken and spent of 112 billion pounds but the treasury is also responsible for losses which will have been incurred in the latest year and for future losses if bond yields continue to go up so Jan is quite right to say that open market operations have a fiscal component it's a very big fiscal component and more generally monetary and fiscal policy are ultimately indivisible so Jan's decision to say so much about open market operations is timely and welcome and a very important contribution to the current debate about monetary policy and debt management as I said recent writers on monetary policy have generally assumed them away even the Bank of England has tried to separate open market operations from monetary policy by not allowing its monetary policy committee to decide exactly what open market operations is to be done and they have to choose from a menu which is approved by the executive body of the bank they should know better I hope that they and many other people will read Jan's excellent book and learn from it thank you very much Next on our menu is Jeff Tiley Jeff also has a variety of careers he's spent a great deal of time having been trained as a statistician at UCL at the ONS office for national statistics and is one of probably the three best informed people on the national accounts still pouring over those works at TUC but many other things have claimed his attention as well when the ONS moved to Wales that was the end of Jeff and the ONS and he worked for a while for the treasury no offense to Wales no offense to Wales just offense to the ONS quite rightly too and well it was a rather silly move they should have known they'd lose all their good people but anyway worked for the treasury for a while and then at some point decided to come back to UCL where he trained as a statistician to do a master's degree in economics and he came across me and he came across Keynes and the combination was irresistible so he did a PhD on Keynes in the post Keynesian frame of reference Keynes betrayed which is probably still his best single work I'm much happier now in the TUC and tremendously productive both his work on the national accounts and on Keynes are proceeding as he goes and he will have interesting to set things to say about Jan's book in 15 minutes or less at most thank you Vicki sorry about the small handouts hopefully it's appeared on the screen well thank you for inviting me and thank you for the introduction Vicki so at one level I have much sympathy for Jan's project in reviewing Kalecki's monetary analysis is reviving monetary debates which have been a central preoccupation of my work but he appears to resolve the debates in favour of Kalecki citing and I think agreeing that monetary factors are of no fundamental importance for the mechanism of the business cycle and rejecting the notion that the rate of interest affects the dynamics of the real economy and when it comes to policy the regulation of private investment was the most problematic way of securing full employment I argue exactly the opposite in my book Keynes betrayed which Vicki's just mentioned and and Jan knows this not least because he reviewed the hardback in 2008 he did so in an extremely generous way and I've always been incredibly grateful for his willingness to give time to my work and for the broad reach of his scholarship nearly 20 years ago he introduced me to J. A. Hobson and only last year to the equally valuable Jean-Claude Leonard Simone de Cismondi um anyway my so my remarks are organised in four sections first I'm going to try and put matters in the context of post Keynesian debate then I'm going to set out my take on Keynes very quickly third I'm going to comment on the what I see as the a priori nature of Kalecki's critique and fourth I'm going to try and look at some sort of reconciliation so Jan opens his book wanting to detach Kalecki from Keynes but I'm not the right person to do this my reading of Keynes leads me to contest Keynesian economics on two main grounds on theory I want to get away from simultaneous equations that are opposed to Keynes's method and then on policy I want to emphasise monetary factors with fiscal in second place it has always seemed to me that Kalecki rivals both moreover while the policy debate was fundamental it has been obliterated in his review Jan noted that relevant debates with Kalecki but omitted from Keynes's collected writings and here Kalecki himself is a little slippery he claimed to discover the general theory ahead of Keynes but at the same time disputed Keynes's central conclusions around the rate of interest for me if Kalecki has precedent it is precedent for Keynesian economics I sense in Jan's book some discomfort on the monetary front he notes that Kalecki may have been too confident about the explanatory power of his mathematical models but for me an opportunity has been missed not only to confront the two approaches in a more neutral manner but also to confront some of the murkiness of the economic debate that we're all interested in so to my take on Keynes because the policy debate was obliterated I'm obliged to revive the arguments that Kalecki dismissed on the assumption that unfortunately you are not all familiar with my Keynes portrayed above all Keynes was concerned with the cause and prevention of crisis the focal point of his analysis was the classical theory of interest and on page 75 Jan emphasises how money capital and bank credit make that theory redundant Keynes broke the link with supply side factors of thrift and technology and argued instead that the rate of interest could be set by policy makers over the 1920s policy makers had allowed dear money to prevail and he regarded this as the fundamental cause of the great depression he required of policy makers cheap money policy a secular policy of low interest rates across the spectrum from short term to long immediately this was a precondition for recovery but more substantially it was critical to the prevention of future crisis his cycle process followed then from the interplay of the rate of interest investment and animal spirits captured by his marginal efficiency of capital as illustrated on my small handout and on the chart behind me my concern was always beyond just history I began to get preoccupied with dear money as I did my phd research in the late 1990s I saw the volker shock and financial liberalisation as bringing bringing to a decisive end the cheaper money of the golden age and restoring the monetary environment of the 1920s so on the chart we moved from point K with high investment and low interest to point V with low investment and high interest but this was increasingly coming alongside excess not least in the dot-com boom on this view dear money becomes combined with a shift in the MEC to get exaggerated investment outcomes at point G or Greenspan according to the president of the 1920s this would not last and sure enough it didn't I'm bound to find some vindication for my accounts in the subsequent and ongoing crises of the 21st century but as the crisis hit policy got even worse as we all know for some after some immediate rescue action policy makers reverted to time the OECD caused for austerity that would be brutal for some countries and fundamental to the idea of austerity is the notion of living beyond our means so excess at position Greenspan meant that we had to suffer at best point Volcker but immediately given the collapse in the MEC that is characteristic financial crisis the even worse point Bernanke needless to say Keynesians of all types were united to how with rage but with the MEC lost in the algebra of Keynesian and Kaleckian economics the full force of Keynes's argument is not brought to bear for me Kalecki is concerned with the economics of this collapsed MEC and plainly the difficulties of revival are immense but let me first let me stress first that we confront these difficulties because policy makers were ignorant of or disregarded Keynesians prescription prevention second even in the case of fiscal policy it is more difficult to make without recognizing the existence of point K we were never living beyond our means we were and still are living in the economic disaster zone of a dear money economy and we can and we must live greatly better let me now turn to my third main point that Kalecki's critique was a priori and impervious to outcomes Jan Sides commentary from 1933 with Kalecki arguing the rate of interest is endogenous to the credit cycle I want to stress he was doing so just as politicians were for the first time making progress with not only reducing interest rates but with wrestling money monetary policy from the hands of central banks and financial interest Britain came off the gold standard in September 1931 treasure cheap money began on the treasury's lead from 1932 most important for the world was Roosevelt in 1933 who literally built the Federal Reserve in Washington DC to take policy out of the hands of the Federal Reserve Bank of New York other countries followed suit as they followed Britain and the US off gold so incidentally I see the failure of the world economic conference will rather differently to Jan in 1933 this was less a victory for nationalists and progressive and protectionist forces and more a victory for the left and progressive political forces and finally there was the athlete government their cheap money policy was explicitly motivated by Keynes's reasoning and of course their first act I think it was was to nationalize the Bank of England but Jan tells us having set out a full account in his studies in economic dynamics of 1943 Kalecki never came back to his reflections on the role of the rate of interest in the long-term evolution of capitalism I would contend that the athlete government and the gold notes more generally vindicated Keynes's approach and as I showed earlier undoing that approach has once again proved disastrous my colleague on the panel Bill in his book about monetary policy in the 1950s reports that Keynes's colleagues Richard Kahn and Joan Robinson were hostile to the end of cheap money and Kahn took his complaints to the Radcliffe committee in 1958 but apparently Kalecki was silent I would be interested to know whether Jan thinks this acceptable so let me turn to reconciliation in his book I sent sense and attempt to doing so on Jan's part he sees Kalecki coming around to Keynes's approach to interest rate policy and advocating debt management techniques to set low interest across the spectrum my minor objection is the approach gives too much emphasis to open market operations and not enough to Keynes's tap issue mechanism my major objection is that the policy is set only in the context of fiscal policy and more specifically in the context of funding deficits I want to offer an alternative reconciliation based on Keynes's sense of power relations that is notably absent from Keynes's approach in Jan's account this comes from the interplay of capitalist wealth and the corporate sector with investment critically contingent on the willingness of capitalists to part with their wealth but going beyond these specific mechanisms I sense throughout Jan's work in the broadest sense a fundamental unease that the world can so easily be redeemed through monetary reform having for the past seven years thought about Keynes from the perspective of the labour movement I am increasingly in agreement that monetary reform coupled with fiscal policy falls short of capturing the full implications of the general theory I wrote about this under the title a second internationalism of labour in the progressive economy forum book of essays the return of the state which was edited by Jan and Sue Konsman so another book for the collection on this view the rate of interest needs to be understood from the perspective of class forces more broadly as the return to wealth and in a symmetric way we might understand wages likewise as the return to labour with any notions of natural rates firmly dismissed the implication is that both are set according to power relations and then the disasters of capitalism follow from orienting the system to wealth and in this way policy is less about technocratic adjustment of the monetary system and the government's fiscal policies but a wider and perhaps binary reorientation of the economic system with the needs of labour rather than the needs of wealth paramount with class forces operating on a global basis this changed orientation must also operate on a global basis hence the internationalism of labour you can read separately how it operates not least in my blogs on the TEC website for free but I want to close on a different point in the general theory Kains was preoccupied with preserving a role for market forces and individual initiative I fear too often markets conflated with capitalism so any solution partly grounded in private initiative is rejected out of hand but the general theory tells us that the market may not be so dysfunctional when oriented at the interests of labour the athlete government proceeded with a number of nationalisations but were content with this broader approach on this view socialism is but on this view socialism is not defined by its approach to the state and market it is defined by its approach to wealth and labour thank you Jeff thank you very much first question should fall to you and I wish the others of you would build it back here as if there may be questions addressed to you I think it's better if you start right can I thank thank you all for coming can I thank very much all their all the speakers for their generosity in commenting on on my book the generosity not only in saying nice things about it the book but but also in unsettling me with doubts which which will no doubt contribute to further work I want to thank the post Keynesian economic society for sponsoring this a particular to Gary who has spoken ever club off ski who's helped to to organise this I want to thank the economics department for supplying Janis D'Afermos to to welcome us all on behalf of the department for also for paying for the reception which awaits us downstairs in SG 37 after after we've had some discussion Oxford University Press I really want to thank Oxford University Press for for publishing this book publishing it with footnotes you know for those of us that write books regret the time regret the trend in in in publishing or putting the footnotes at the back so you've lost your place by the time you've chased up the footnote or at the end of the chapter in which case you have to look for the chapter Oxford University Press is still doing footnotes I'm very pleased about that the Oxford University Press also offered copies of this book for sale at 45 part a discount of 20 pounds or 45 pounds I thought this was outrageous because I actually have an author's discount to buy them at 40 pounds if you want to buy a copy I will make available to you a copy for 40 pounds I have copies here the the the title which I think Gary referred to the the title actually comes from the the title of Birnberg's a classic book on interest and capital and and reverses in a sense what Birnberg did was put forward a viewer that's utterly opposite to the one that I put here Birnberg argued that the rate of interest really doesn't need much explanation the real what he meant by the rate of interest was the rate of profit and that does need explanation true up to a point but the rate of interest is still there and I agree with Jeff on this it does require explanation even if one's critical of the property is attributed to it I want to thank Victoria Chick from whom I learned the fundamentals of monetary economics Jeff Tiley who who shared with me this education in monetary economics with Vicki but went in the direction of Keynes's ideas in in debt management and if we had more time I would explain the difference between Keynes's ideas of debt management and Kalecki's but I'll just leave it as an interesting topic for someone's for an article. Bill Allen I want to thank in particular for his book on the Bank of England and the government debt which came out unfortunately too late for me by that time I had written most of this book but it's it's fundamental because he looks at quite a lot of the same the same material that I looked at that Kalecki was commenting on on war finance Bill actually looks at it from the point of view of what the Bank of England was doing and its contribution to debt management so you know I think the book deserves Bill's book deserves a higher profile then I gave it in this in my book I just want to record with sadness my debts to two people Yosel Shatinski and Julio Lopez Yosel Shatinski was the editor of Kalecki's collected works who died in at the beginning of February and Julio Lopez who died nearly two years ago and with Julio Lopez I was sorry with Yosel Shatinski I was working on a book on Kalecki and Bretton Woods and I don't want to overload you but this book is now available and just to forewarn you it will be the subject of a presentation later this year let me just say make a few comments on on the substance of the book I mentioned in there that Kalecki's ideas didn't change much through his life his equations did I mean he saw himself as a pure mathematician and so what he did is successive volumes of essays on the business cycle was that he took it to change the equations and then he tended to drop the material on the or include some material on monetary economics only to drop it later on so what I do in this book is in the first part of the book he picks up these fragments in the first chapter this is concerned with the financing of investment then there is the his criticism of fixellian theory now this is this is the sore point for for Jeff this the idea that there is a relationship between the rate of interest and the business cycle and inflation and then there's a further couple of chapters on debt management in the context of world war finance and this includes Kalecki's critique of the Bretton Woods plans and what I do then in my book is there's a middle section which discusses some fundamental principles I talk about a you wanted to have the speakers have mentioned this this idea of capitalist money and let me just give you some some quotations from from an early just to show that this isn't a peculiarity of Kalecki in his early draft of his general theory in a drafting title monk mother monk reproduction theory Cain's cited in in a typically equivocal style a pregnant observation made by Carl Marx so the subsequent use to which he put this observation was according to Cain's was highly illogical in Cain's his few quantity Cain's Marx pointed out that the nature the nature of production in the actual world is not a some economists seem often to suppose a case of transforming commodities into money and then the money you know using the money to obtain another commodity or more commodity or effort as Cain said that may be the standpoint of the private consumer but it is not the attitude of business which is a case of money being transferred being used to buy commodities which is used which are exchanged for even more money in other words for parting with money commodity or effort in order to obtain more money so this is Cain's explicitly endorsing this idea that it's capitalists who had the money and in turning it over in the markets they are trying to make more money Cain's gave the source of his Marxian discovery as H. L. McCracken's value theory in the business side rather than Marx himself and then went into typical Cain's ready to polemics with the underconsumption is Hobson, Foster and Catchey's Major Douglas and so on that idea of capitalist money was not so was not just in Cain's you find a similar argument being put in the in Rosa Luxemburg in her anti-critique Luxemburg went into some more prolics discussion of the social requirements necessary for production and capitalist economy including the division of labor production of capitalist economy but the exchange of commodities on the market is an internal or family matter among capitalists the required money for this process of course comes out of the capitalist pockets as every employer must lay out the money capital in advance and returns into the pockets of the capitalist class after exchange on the market has taken place so this is this is Luxemburg's version of what Cain's had just said and then we have Kalitsky's version in his essay on the business cycle but then this is a point that recurs later on it's referring to the technical elements of the money market in which he's trying to explain why investment is possible without price savings this is because the expenditure of capitalists is converted into profits for others the outlay on construction of the fixed asset is by no means frozen as some people think and released only as the capital is written off but it's already returned in the course of construction in the form of profits accruing to the firms whose sales are directly or indirectly connected with construction if during a particular period more money is spent i.e. out of bank deposits then pro-tanto more money flows back into the banks in the form of realized profits so this is Kalitsky arguing that it's you you don't need more money you need a higher turnover of the money that's already there let's let me move on with the Kalitsky's oh yes the fiscal management of debt which Jeff mentioned yes this is important but it's important in order not to cause a rise in liquidity preference one point Kalitsky writes about the importance in debt management that you've got a certain level of liquidity preference what Kalitsky meant by this was a certain proportion of wealth portfolios which wealthy people want to hold as liquid assets then the government should be issuing bonds in in proportion to that debt short-term bonds and long-term bonds in proportion to that debt why because the banking system will expand credit to maintain this kind of maintain the funds available for the investment in these assets in fact when as the government spends that money that that money will accrue to these wealth portfolios so it's a it's a time problem rather than anything else the this is where actually development economics comes in in with an interesting differentiation different circuit because whereas in the capitalist economy money goes from one capitalist pocket into another capitalist pocket in developing countries it the money that capitalists and governments spend go into the pockets of the pre-capitalist wealthy classes the landowners money lenders and so on and for him for Kalitsky financing development is really all about making sure that they don't have too much of this money so that the financial system becomes unstable I know it's mentioned the the fable on on on debt repayment which is actually it took me a while to work out is is really the fundamental explanation of why it is that it's liquidity that is needed for debt management rather than a surplus or a profit from the real economy so let me conclude by by making a few links with the monetary economics and the monetary dilemmas of our time we live in a time of of new vexellionism this resurgence since the 1980s of this idea that the economy can be regulated by the rate of interest our monetary policy committees sitting down together and agreeing to change changes in the rate of interest this goes entirely contrary to Kalitsky's ideas I would argue also even to Kainses ideas the the whole what but so the we the the arguments that Kalitsky was making really have to be made again and I try to do this in the book but the other intriguing uh and relevant point for today is is the discussion of debt management it's absolutely clear that after after covid with the the rise in in government debt we are much more in a situation like that during the second world war when debt management is hugely important and this is why the final section of this book is on central bank operations and securities and concluding on the on this idea that inflation targeting taken too far given the limitations of economic forecasting really simply makes monetary policy endogenous to the business cycle so I I want to once again thank thank all the speakers uh well I guess we have a we have some time for discussion I hope so yes uh thank you yet thank you very much I'm for a few questions from the floor I'm sorry I won't call most of you by name because I can't see you very well um raise your hand and address the person to whom your comment is is directly yes entry trade ah with interest rates so low in recent times how does that relate to the um what you were saying about the power of monetary policy surely that's happened Keynes's Keynes wanted interest rates near to zero they're not far from zero they're they're they're negative in real terms with inflation also um quantitative easing um I wonder what the panel thought about uh the impact on income distribution on inequality of quantitative easing um yeah that's I guess that's the right question andry thank you um I don't think I don't think interest rates are that low I think interest rates on government bonds in advanced economies are incredibly low maybe in some other economies are pretty low but if you if you want to take a view of the broader return to wealth if you want to regard the interest rate as a broader return to wealth then it's incredibly high um lots of post Keynesians are writing at the moment about the search for yield you know since the global financial crisis when policy rates have gone low there has been a search for yield so investors are looking overseas for Turkish corporate bonds or whatever you want real estate bonds and things like that so I think a lot of money is is being channeled into high return investments perhaps too much money channeled into high return investments which are which are probably dangerous and fundamentally I think it's a different kind of a cheap money policy to the sort of cheap money policy that Keynes Keynes envisaged envisaged a very regulated financial regime envisaged capital control and so on and so forth so he wanted low interest rates that would that would directly affect investments in the domestic economy and and like was for other economies so I think that that world is quite different um but the other thing is that you know Keynes wanted cheap money and he thought that you know certainly in the first instance you had to stop interest rates being high to stop the great depression so that that bit was kind of succeeded but then at that point you might still need fiscal policy because the MEC has collapsed firms don't have any confidence so you need some fiscal policy to get things going and contrary to um much discourse there was fiscal policy in the 1930s there was fiscal policy in the UK and of course there was fiscal policy in the US under the New Deal so policy makers were acting to support the economy which was pushing the MEC out from the sort of slumped one to a to a better place so things were getting so things were were working in a way that they're not doing that because that's that's one thing you know it's not it's now it's all about monetary policy it's all about the power of the bank bank it's all about QE um but it's been nothing about fiscal policy so it's that there's a sort of answer in that ramble that one it's it's a very different cheap money policy that we've got at the moment um not in a regulated environment and an absence of fiscal policy um and I think it's probably a dangerous cheap money policy as well at the moment because of the the way money is being pushed into all sorts of investments around the world that might be a bit precarious and you know we might be seeing some retreat from those investments at the moment um yeah top you asked about inequality um and I'm not really very profound to say except to make the obvious point that you have to distinguish between wealth inequality and income inequality and the wealth inequality will have been inflated if you like by quantitative easing which has forced down bond deals and forced up asset prices so that the wealth of people who own assets already has gone up whereas that of those who didn't hasn't um and one might expect that as quantitative easing ends or even gets reversed if ever ever happens that the wealth inequality will adjust back income inequality I I have uh no explanation of and I think that it's that the causes must be quite profound and certainly beyond my comprehension yeah let me just say a word about uh inequality and QE um in a sense that just to comment that I pointed to the provocative distinction that Jan makes in his book between the money of the state and then the money of capitalists and um one thing that that leads back to it and I as I was uh preparing my remarks I was thinking well you know the financial system and backstop by the Fed and so on is kind of in his category of the money of the state and the the ideas the capitalists are taking care of themselves and so on and in a certain way quantitative easing is the extension of that what we see is the explosion of asset prices widening inequality uh disenfranchised workers um and angry and taking self-destructive actions such as brexit and election of Donald Trump and all of that um and I think in some sense the question one reason to really read and reflect on Jan's book is because I already debated this with Solana uh was what is a capitalist you know what is the capitalist is is that you know that buccaneer I'll eat you for lunch capitalist you know the bill grows types um financial capitalists in our day are they the same ultimately Jan provocatively said well M M prime okay fair enough what about the C in the middle and what about the labor that used to earn that money now you say yeah it goes across borders that's right uh but that problem is now globalized so I think that you know there's a profound reflection that we all have to have because if I'm not mistaken the labor party itself was going very softly softly when it came to their chance even under the Corbin days to critique the city of London everybody's afraid about that beast and these people are what they're basically you know tax haven enabled uh tax payment avoiding shall we tax wealth or shall we just let everybody pay more money and turn off their heat this coming winter you know these issues are right on the table and we have to ask ourselves who is this capitalist and uh what is the relationship to something called labor so while I challenged the adequacy of those and of course you know we we rip each other apart the working class versus the afro-caribbean britain is ended all that you know we rip each other apart but basically um those questions are there who is labor who is capital and how does that come together those are the fundamental things that in koleski's work are always front and center thank you very much for the excellent contributions um my question piggybacks a little bit on andrew's um a lot of the speakers rightly criticized a rather narrow space that monetary policy uh occupies these days mainly focusing on interest rate management and uh to some extent open market operations so my question firstly directed to jan based on koleski's monetary economics what new action or intervention could monetary policy take to think a bit more creatively about ensuring prosperity in in the light of the challenges that we face today and I would also welcome other speakers to contribute to answering that question based on on your expertise thank you very much can i just say that the um the i think the real function of the of the central bank in in this situation um is a technical one and it should be this one of uh the assistance with debt management uh if you want to call it um the uh you know the broker of last resort or or whatever the it's really to to maintain and regulate the the liquidity of the at the capital market so that the government uh can uh issue the bonds or or obtain the financing that it needs but also so so to ensure that the markets do not get so liquid uh that that they become unstable and the that's um i think it's it's it's this technical role i'm i'm i'm in this respect i guess i'm a bit old-fashioned i i think that they um i i believe that it was the same thing about banking as well i think i i think they should maintain a low profile uh and not and not put themselves forward as uh as masters of the universe because uh that that way lies hubris and disaster i agree completely with everything that yen said i think that when people join several banks they should be required like doctors to take the Hippocratic oath first do no harm and the harm that they could do is as yen said to um not um uh do what they need to do to enable governments to finance themselves properly and uh importantly to to contain surges in inflation which uh do great social damage and need to be stopped the one is that um keep in mind that um actually uh everybody will remember the rebuilding macro economics project that uh nisa sponsored and uh some work was done by some people in this room and i participated in some of those dialogues and one of the dialogues was whether or not in the view of many of the parts of the core participants whether fiscal policy is still counted as macro policy uh so that this this reminder of these connections is is fundamentally important uh because that was it was just written out uh by many people and the masters of the universe comment is right on point uh there's there's things you can do but you can't do everything and so in some sense uh there and that's where actually then the management of debt becomes something that is a way of refreshing and renewing some of that commitment to social spending when necessary support payments when necessary and so on that is that we're not living in the world in which every household has to balance its budget every year every month therefore so much the state this is a way of reinterpreting refreshing that argument that compassionate uh and and constructive approaches to infrastructure and social welfare have to be part of the discussion uh when i was working in california with the legislature there uh the very wise woman who was in charge of the state the set of the finance for the state used to say a budget is about who you are as a people and uh that's something that gets completely forgotten in these days i can't resist this one either um and basically i agree i think one of the but the trouble is i think the horse may have bolted here you know we should have done fiscal policy in 2008 uh to get the economy going and then start thinking about what a proper economic system might look like uh but we didn't uh so the qe i suspect has fostered more for that you know rather than resolve the crisis i suspect it's exacerbated the debt imbalances and the financial disarray uh so it makes me quite fearful you know that so maybe there is no easy answer to the question because as a result of not doing the right things 10 years ago we might have created a bigger mess that would be even harder to clear up now yes he's leaving yeah thanks for this um i'd be particularly interested to particularly um from yan um your view on whether interest rates themselves can actually um have much of effect on inflation particularly on the inflation we're seeing at the moment and i guess back to similar to other questions whether you know we should be looking at non-interest rate mechanisms whether that is other forms of monetary policy like people have been talking a bit about the use of reserve requirements which i think was a debate in the 1970s about how that should be done but also i guess what other policies fiscal policy or is there nothing we can do when it's you know supply side inflation yeah okay i um on on the on the question of of inflation and the the rate of interest um i i would uh refer you to uh what canes called gibson's paradox this is in uh the treatise on on on money or it's gibson's paradox or gibson's paradox was discovered in the by statistician called gibson in the 19th century it really goes back to uh took and his history of prices uh in in in the mid uh in early in the middle of the decades of the 19th century this is the discovery that uh interest rate if you look at the the progress of interest rates and the progress of inflation they're both uh uh pro cyclical variables they both tend to rise in the boom and fall in the recession and the uh the the root question is how can that be well uh because the whole uh the the the whole of uh the the kind of neoviccelium project is around the idea that they should be inverse that you raise interest rates and the rate of inflation should come down um and uh but it but it doesn't historically and the the way it's got round in this by in the statistical models as soon as you use lags of course if you introduce so the appropriate lags you you you can get uh you can bring back your idea that uh yes if you raise interest rates now then in a year and a half to two years time this may bring down the the the rate of inflation but it may not on the on the non-interest rate mechanism mechanisms reserve requirements or so yes i think that one um you know one does need to maintain uh control credit but i think one of the ways in which one one important ways in which one can do this is by controlling the liquidity in securities markets banking today is all about uh lending against uh security and if they um so uh you know if the bank if the central bank is doing its job properly regulating the liquidity of securities markets uh they they should be less of this uh uh uh uh uh you know less pressure on uh on on asset prices and less less possibility that the um the system will become unstable but it's not uh it's not something where there's a simple answer and the problem with you know the the the the the the the the old joke about you know the to every complex uh difficult uh problem there is a solution that's uh uh simple clear and wrong it's a simplicity you know any sim if anyone comes comes forward with a simple uh solution the chances are it's uh it's wrong and and the rate of interest inflation targeting was one of those i'm afraid yes bill um these one of the questions was can interest rates be effective in dealing with and cost driven inflation and and i think that it's helpful in thinking about that to look back at the pandemic when the main features were firstly the production went down a lot because people couldn't go to work and um uh production facilities closed down um but incomes were maintained by furlough schemes and other government subventions so that there was a very large budget deficit so households in aggregate not every one but in aggregate built up large amounts of money because they couldn't spend it but they were getting paid it and it's not entirely surprising that when the whole thing came to an end they could go out and spend money the prices went up because they all wanted to do home improvements and whatever um that was foreseeable and it could have been dealt with either by taxing away some or all of the money that was floating around or by putting up interest rates so that there was an incentive to save it rather than spend it if either of those things have happened then the demand for products wouldn't have gone up and the prices wouldn't have gone up so the answer to your question i think is unequivocally yes right during that lockdown i and after i saw jaji chata the director of nether consistently make the point uh in these meetings of treasury folk and others uh on these tuesday morning sessions that um yeah people people got the savings we need to spend money what's the problem there was no problem but i would also just comment that you're going to see a pillorine of the federal reserve chair uh in the u.s and the bank of england chair here because they're faced with almost impossibly complex choices with no simple answers as jan has said and it's just easy to make actually both of them whipping boys or uh well we acted too late we didn't do the right thing it's it's way more complicated and uh so we have to be careful there was not a magic bullet that could have been fired i think um maybe there isn't a magic bullet and the the problems of coming out of the pandemic are obviously incredibly complicated and the the nature of global supply chains the lack of production at home but i think that we have to distinguish what's happened since the pandemic with what was going on before the pandemic because i think before the pandemic the major problem in the world goes back to that uh distributional question was the wealth had an awful lot of money and labor didn't have a lot of money um and yeah jan alluded to underconsumption and overproduction arguments and i think that was probably the more dominant feature of the the global economy that the global economy had been producing too much for too little spending power so for me that was the underlying situation before the crisis and of course policymakers kept trying to somehow make that better by reducing spending power even more which wasn't working then we have the pandemic and a different set of problems but i don't think it it gets away from the fact that there's this very fundamental dislocation between a mass of wealth in the hands of very few people and just not enough money in the hands of workers and people who buy stuff so whatever the answer to the immediate question of inflation that the bigger questions are around that broader distribution between wealth and labor and i think it's very important not to lose sight of this and turn it into where the central bankers are doing the right thing or the wrong thing at the moment because as gary says they've you know they've been dealt a very bad hand but you know maybe they started it in 1980 or whatever so far we haven't had an answer which is simple but wrong thanks yeah going back to the question about inflation whether it's demand-driven or cost-driven um i've been doing some work on this and the us at this point in time inflation the us is slightly different to inflation in the eurozone there are different factors affecting trends it's the demand factor is stronger in the us it almost doesn't exist in the eurozone and that's one point and if you look at the actual figure statistics then you see that half the inflation rate in the eurozone is due to two things energy and unprocessed foods so to my mind this is a very clearly cost-driven and i have the same question as a colleague there i think i think raising interest rates at this point in time at least in the eurozone is wrong and somehow laggard seems to be holding back but i i mean i'm looking for this simple but wrong answer and i don't have that you know okay if that's wrong what do you do price controls galbraith 1970s said price control strategic big firms that you can't control uh that you can actually you know follow in and control supervise survey you uh price makers in other words so there is no i mean taxing is is another sort of probably way of going about it but it is a big question right now and interest raising interest rates probably will produce you know recession sort of deep in recession so we have the next set of problems to be discussing soon thanks let me just start an answer to that by just mentioning that the colleague who worked in our country has now moved to umass amherst isabella vapor has written a very well-received book about china very excellent book and she made a she did an op-ed i think in the new york times or the guardian okay in which he basically took it in you know she analogized and said isn't this your time to start thinking about it for the reasons you're mentioning and she speaking of pilloring she was pilloried by no less than paul krugman in a in a sexist and gendered way now he backed off he's an arrogant guy as we know but um but still i i would ask the question because we've got people here with a great government experience in the uk would would we reach a point where price controls even in some of the sectors such as you're mentioning would could be on the table for this government or another government okay i can i can i can imagine it i mean i think it would be a um it would it would happen if there'd been a serious failure uh to contain inflation by fiscal policy or monetary policy yeah but if you get into a really chaotic yeah uh dislocated disordered situation yeah it might happen not impossible with trade war with europe and all of that possible yeah okay can i say that they the very significant intervention here is uh has been maria drage's suggestion that what we need in europe is uh is an oil energy cons a cartel uh formed within europe uh and you know if anything is it is going to make that kind of price control work it will be it will be something like this and coming from the the mouth of the former head of the european central bank yeah but that's where you know in your book again people need to read the book and reflect on it because you had various key points talk about how there's a need for planning and in control and it has to be cross border what are those institutions you know we have the different rules they're even debating in europe what are the rules we're going to use majority rule etc you know are they going to change some of the things so where is that that cartel of consumers what would be the mechanism oecd come on you know that's not going to happen we're you know how would that work and so on there's there's huge institutional challenges to be resolved even at the global scale even as we speak i guess we need to go to your breton woods book can i be cheeky and ask two short questions um first one um you mentioned the shortening of maturity of the bank of england balance sheet and sort of consolidated public liabilities as a result of of qe um do you think there's a danger that the bank gets worried about as interest rates rise bond yields um rise capital losses and costs to the balance sheet and react by um perhaps aggressively trying to sell off quantitative tightening because it doesn't have the option of letting them mature in the same way that the us does because they're shorter if it did that what do you think the effects might be particularly in terms of financial stability and government debt management and can i just quickly ask one other short question um my reading of kaleski as gary pointed out and to a degree jone robinson is is that they mentioned monetary things here and there sort of for a few pages and then then move on is it because they just don't think they're that important and interesting and it's sort of obvious how public balance sheet works and bank mechanics of lending works um in contrast to some economics today there's lots of discussion about the sort of nitty gritty of of monetary balance sheets it what would kaleski and jone robinson think of sort of modern monetary discussions um would it be fair to say that there's too much focus or is it another reason that their their comments are so scattered so i stop there thank you let me go first um it's a i mean it's a very big question um the bank of england unfortunately bought very long maturity bonds so the half life of their portfolio is eight years which means that by 2030 they'd still have half as many as they've got now which would almost certainly be too many um so then i i obviously selling them actively in the market is a kind of slightly more scary thing to do than just letting them run off there's no particular reason i think if why it should be more disrupted to the market it's just kind of bureaucratically more intimidating because you something you're kind of doing yourself rather than something you're letting happen um to my mind by far the best way of doing it would be uh well there are two ways of doing it but i've proposed one way of doing it in one sense rather quickly but i won't go into that because life's too short um but if they're going to just do it uh in the way that you would expect i think that the simplest thing to do would be just to say every year to the debt management office we'd like you to sell this amount on our behalf and then they combine that with the regular debt management sales program the guys in the debt management office know what they're doing and that's probably quite the least disruptive we're doing it i can't see why that should be particularly problematic but obviously there'll be a limit to the amount that they could do each year and it might not be predictable at the end at the beginning of the year how much they'd be able to get through that year there might be complications but again we haven't really got time well i haven't got time to go through them unless you want to be here all evening last question i think it's the second question sorry i was uh taken what was the second question oh yeah yeah i i think that the Kelly's Key and Joan Robinson were were mostly writing in in this long period between uh 1929 and i guess the the the 1970s um when the uh in the financial systems around the world had become discredited had become illiquid and the uh uh you know this caused a whole heap of problems for government debt management which actually uh you know Bill describes Bill writes about in in in his book quite nicely because the the the capital markets the bond markets were relatively illiquid uh i think what they what's happened since then is the 1970s 1980s you have you know the the the shift in pension fund shift towards funded pension schemes pouring of money into into capital markets another you know boom and bust after 2000 so you you have a you know there is a sense in which finance has become much more visible because it's more unstable and i guess they would probably if they if they were around in uh at the turn of the 20th to 21st century they would they would have they would possibly have written much much more about finance but it was at the time when they were writing you know in fine finance was something that caused problems for for government borrowing it caused it was causing problems the problems of international debt which had to be managed but not uh in not the the type of problem the problems of instability instability of asset prices which we've uh come to be used to perhaps one more question here is one i was just asking for a clarification i don't know maybe jan or gary you mentioned that the book challenges the way stock flow consistent modeling um the place of equilibrium so i didn't really catch it like how do you what's the place the equilibrium takes in stock flow consistent modeling and what is the challenge just clarification okay just briefly um the where uh when tobin and brain are there's a paper from i think 1968 where they talk about the adding up constraint and the fact that you know there's a there's a kind of ball rose law thing or you know that that if if n minus one markets are in equilibrium then the nth will be as well but when you do one of these models if you if you're kind of looking at n minus one markets whatever you're not taking care of is going to be sloshed into the nth market and you could have some very perverse and unanticipated um you know implications for what would have happened to everyone's portfolio so they it's a warning that you have to make sure that everything's going to balance out that you know there now that's those are models that are full of substitution effects and lots of interest rate and risk and all this stuff it's a real you know uh sort of market efficiency kind of a frame now as we take that forward into our era and and so on uh that logic still pertains because of course it is true that you always have to watch for that when you do something that has multiple assets a model with multiple assets and especially when you're tracking dynamics through time you're always pulled back to that equilibrium and that becomes a test of whether or not a model is a good model is one of the tests um it it becomes a real constraint in the sense that you are insisting that everything's going to add up using the asset markets uh and and their quasi equilibrium as the frame for that while lots of other stuff can be going on in the flow space of your model that you're not controlling for so this is why I said it's it's I mean Yanis was up here and he's one of the one of the real masters of this uh sort of approach and yeah Joe's here and there's people in this room who are just amazing at it and um and the challenge is you know how do you tell stories about the dynamics the flow dynamics or the circuits whatever you want to call it in real time talking about the dynamic with a rich enough frame of asset markets that you've got a real economic framework to talk about especially in our age of financialization we're going to need you know asset markets we're going to need debt markets and so on how do you do that in a way that doesn't sell out your your description of the real movement through time to implicitly a return to an equilibrium that you don't believe in that model assists on it but I saw um one of our friends from uh Limerick University uh just again uh pilloried in a uh rebuilding macroeconomic session by one of the leaders of that uh enterprise and basically basically said don't tell me about stock flow consistent modeling every general equilibrium model every DSGE that we insist on as our badge of honor what we do as neoclassical economists we always are stock flow consistent now and I I mean what I did not say because it was not the moment would have been that's because there ain't nothing going on in your model but that was not the moment to make that comment well I think it's time that we stopped this session said there it is uh and I hope that you'll join me in thanking all our wonderful speakers for this afternoon's entertainment enjoy there is downstairs a reception uh with bubbles and uh with refreshments provided by the economics department uh if I you know where it is so you follow uh I'll we'll be bringing the the copies of the books downstairs sorry sorry t-shirt I can't see come here sorry you're recognizing when it's close yeah thank you so your specs so you're you're not a stick but you're smacking the digital there's a oh no is it all right am I okay oh yeah yes you're closer yeah yeah there's shit hello hello how are you sorry I couldn't hear you I mean some people uh-oh send it again I don't know where it went I'm very very sorry I'm taking a lot of risk in order to return shit sorry sorry I know it takes nerve yeah yeah so I think it actually we've gone towards higher risk I'll just make it all very positive yeah we'll just return to well yeah so not my point which over the past two years later so do you remember doing well so they're not getting very much of yourself okay I'm investing in real estate I'm investing in overseas and it's