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From Financial Crisis to Stagnation
The Destruction of Shared Prosperity and the Role of Economics

$113.00 (C)

  • Date Published: February 2012
  • availability: Available
  • format: Hardback
  • isbn: 9781107016620

$113.00 (C)

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About the Authors
  • The U.S. economy today is confronted with the prospect of extended stagnation. This book explores why. Thomas I. Palley argues that the Great Recession and destruction of shared prosperity is due to flawed economic policy over the past thirty years. One flaw was the growth model adopted after 1980 that relied on debt and asset price inflation to fuel growth instead of wages. A second flaw was the model of globalization that created an economic gash. Third, financial deregulation and the house price bubble kept the economy going by making ever more credit available. As the economy cannibalized itself by undercutting income distribution and accumulating debt, it needed larger speculative bubbles to grow. That process ended when the housing bubble burst. The earlier post–World War II economic model based on rising middle-class incomes has been dismantled, while the new neoliberal model has imploded. Absent a change of policy paradigm, the logical next step is stagnation. The political challenge we face now is how to achieve paradigm change.

    • Emphasizes the roots of the current crisis in economic and financial deregulation starting ca.1980
    • Puts politics and ideas no less than economics at the core of the argument
    • Offers an extremely accessible narrative, with no jargon or math
    • Intelligible to broad audiences reading mainstream business economics or politics
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    Reviews & endorsements

    'Thomas Palley has provided a penetrating analysis of the Great Recession, the weakness of the policy response, and the role of economic ideas in both. If we are to avoid the Great Stagnation – and build a more equitable and sustainable economic future – economists and policy makers must fundamentally change the way they think about economics and politics. Mr Palley points the way.' Ron Blackwell, Chief Economist, AFL-CIO

    'Thomas Palley's carefully argued study combines an acute critique of conventional economic thinking with thoughtful and stimulating proposals to fix America's broken economic policies.' Thomas Ferguson, University of Massachusetts, Boston, and Senior Fellow, Roosevelt Institute

    'In the depths of the Great Depression, John Maynard Keynes wrote that 'nothing is required, and nothing will avail, except a little clear thinking'. Thomas Palley here renews that message for our time.' James K. Galbraith, author of Inequality and Instability: A Study of the World Economy Just Before the Great Crisis

    'This is an outstanding book: clear, concise, and comprehensive. It shows that the economic crisis is the result of economic policies derived from flawed ideas and flawed ideologies. Read it and recommend it to your friends. It provides a map to overcome the great stagnation and to return to shared prosperity.' José Antonio Ocampo, Columbia University, Former UN Under-Secretary-General for Economic and Social Affairs and former Finance Minister of Colombia

    'In this perspicacious and persuasive book, Tom Palley shows how conventional economic thinking led ultimately to the disaster of the Great Recession and how it is now threatening to culminate in the Great Stagnation. His thoughts on how to avoid that and how to recover are compelling and important.' Clyde Prestowitz, President, Economic Strategy Institute

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    Product details

    • Date Published: February 2012
    • format: Hardback
    • isbn: 9781107016620
    • length: 258 pages
    • dimensions: 229 x 152 x 16 mm
    • weight: 0.52kg
    • contains: 26 b/w illus. 26 tables
    • availability: Available
  • Table of Contents

    Part I. Origins of the Great Recession:
    1. Goodbye financial crash, hello stagnation
    2. The tragedy of bad ideas
    3. Overview: three perspectives on the crisis
    4. America's exhausted paradigm: macroeconomic causes of the crisis
    5. The role of finance
    6. Myths and fallacies about the crisis: stories about the domestic economy
    7. Myths and fallacies about the crisis: stories about the international economy
    Part II. Avoiding a Great Stagnation:
    8. The coming Great Stagnation
    9. Avoiding a Great Stagnation: rethinking the paradigm
    10. The challenge of corporate globalization
    11. Economists and the crisis: bad ideas revisited
    12. Markets and the common good: time for a great rebalancing.

  • Author

    Thomas I. Palley
    Thomas Palley is an economist living in Washington, DC. He is currently an Associate of the Economic Growth Program of the New America Foundation in Washington, DC. He was formerly Chief Economist with the US-China Economic and Security Review Commission. Prior to joining the Commission he served as Director of the Open Society Institute's Globalization Reform Project and as Assistant Director of Public Policy at the AFL-CIO. Dr Palley is the author of Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism (1993) and Post Keynesian Economics (1996). He has published in numerous academic journals and written for The Atlantic Monthly, American Prospect, and Nation magazines. His numerous op-eds are posted on his website He holds a BA from the University of Oxford and an MA in International Relations and PhD in Economics from Yale University.

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