Phuong Pham

Intermediate Macroeconomics
Paul Hancock
December 10, 2012
Class Paper 2
There are two items that stand out rom the inter!iew with Da!id Har!e" and
#ichard $o% &irst, #ose wanted an e'ample o a countr" where the kind o alternati!e
to capitalism proposed b" $ol and Har!e" is currentl" being practiced% (econd, #ose
seemed surprised to hear that Mar'ism has been or some time, and continues to be,
sub)ect to a taboo in the academ" and in the wider societ"%
(tarting the con!ersation b" talking about the image o cities, Da!id Har!e"
pointed out that while cities represent some o the best aspects o the human societ",
the" also e'hibit the worst attributes in which ine*ualit" is one o the most acute
conse*uences inherent in the capital s"stem% Citing the e'ample o Mondragon in
(pain, which was ounded in the mid+1,-0s when a Catholic priest in .orthern (pain
got together a handul o workers in the wake o se!ere unemplo"ment and
go!ernment/s indierence, and now is one o the most successul enterprises in (pain,
Da!id Har!e" e'pressed his belie that wealth should be e*uall" distributed in a societ"%
$orkers should be able to collecti!el" decide what to pa" and what to do0 and 1that is a
radical alternati!e to capitalism2% $o then brought up the brouhaha o $all (treet/s one
percent to highlight the startling ine*ualit" in the 3nited (tates where one percent o the
population make some 4%- million dollars a "ear, whereas it" percent o the population
ha!e to manage to make ends meet on thirt" thousand dollars a "ear% He asserted that
such ine*ualit" is non+e'istent in a world dominated b" non+capitalist economies like
Mondragon% $o contended that i a communit" o people who work in an enterprise sit
around and collecti!el" decide how to pa" its members, the chance that some people
become millionaires and some people are unable to take care o their kids is
e'traordinaril" unlikel"%
.o longer do we ha!e con!ersations about Mar'ism in uni!ersities% 1It/s hard to
ha!e con!ersations in uni!ersities, not in Har!ard, not in (tanord, not in 5ale2% 6
signiicant number o 6merican colleges instill the idea o capitalism into their students/
minds% Proession+wise, the consensus is that we do not mention Mar'ism and the likes
in our work% In other words, Mar'ism at large remains to be rowned upon b" the
societ"%
7n a dierent note, as reported in a $all (treet 8ournal article, current economic
polic" will lead to a recession in 2014, according to warnings rom the Congressional
9udget 7ice, and to rapid increases in the national debt% The article/s new sur!e"
showed that a !ast ma)orit" o economists belie!e the ederal go!ernment should
maintain or increase spending le!els ne't "ear : a shared opinion that stands in
contrast to steep budget cuts set to take place in 2014% In the short term, economists
recommend that go!ernment policies should not be tighten in 2014, but could be stricter
in 201; ollowing the result drawn rom the sur!e" b" the .ational 6ssociation o
9usiness <conomics% In the longer run, howe!er, the economists said the 3%(% must put
its iscal house in order% To ultimatel" reduce the ederal budget deect, ,0= o
economists said Congress should both increase ta'es and cut spending% This is in line
with >e"nesian economic models in which go!ernment spending is strongl" encouraged
and iscal polic" can be a powerul le!er to mo!e the econom" because the eect o
an increase in spending or a cut in ta'es will ha!e a positi!e impact on aggregate
demand%
$ith respect to monetar" polic", the &ederal #eser!e put into eect e'pansionar"
monetar" polic" b" purchasing securities on the open market, also known as open
market operations% The mo!e stirred some contro!ers" among polic" makers, with
opinions being e!enl" split as to i at all it had a positi!e impact on the econom"%
$hile current economic policies ha!e "et to pro!e eecti!e and are putting the
econom" at a deadlock, the arguments put orth b" Da!id Har!e" and #ichard $o
seem more radical and to be in consensus with other heterodo' economists% 9asicall"
the idea is that labor/s real reward should rise as ast as real output per worker and
institutional structure o capitalism to some e'tent e'erts inluence on crisis tendencies%
$ealth should be e*uall" di!ided among the nation0 and labor should ha!e as much
power in deciding how much the" should work and get paid as does emplo"er%