Vol. 23 No. 4 (2003): Oct-Dec / 2003

Vol. 23 No. 4 (2003)

Oct-Dec / 2003
Published October 1, 2003


A new consensus on monetary policy?
Edwin Le Heron
Brazilian Journal of Political Economy

By analyzing the documents issued by the Bank of Canada, an original monetary policy can be seen. The Canadian monetary policy tries to maintain its autonomy, whilst at the same time respecting floating exchange rates. The numerous innovations are the foundation of a New Consensus on monetary policy. Far from the dilemma rule versus discretion of the former Monetarist and Keynesian methods, a new dilemma will be the focus: that of credibility versus confidence. Here, the anticipations of the economic agents, the behavior of financial markets and the price of assets play a dominating role. Based on the innovative experiment of the Bank of Canada during the 1990s, the characteristics of the New Consensus will be explained. Far from making independent central banks some high-powered institutions, it shows them instead to be “statues with feet of clay”.

JEL Classification: E50; E52; E58; N42.

Height and decay of the hypotheses of efficient markets
Luiz Antônio de Oliveira Lima
Brazilian Journal of Political Economy

Eugene Fama defines a market as efficient if it fully reflects the existing information about the fundamental values of a financial asset. According to this hypothesis this kind of market makes available to the agents the optimal options for investing their money, leading in consequence to an efficient allocation of capital. The aim of this article is to show that this condition in fact does not exist in economic reality and as consequence to discuss how the alternative forms of asset markets guide the process of investment. The alternative forms of allocation imply that economic agents do not follow the ideal model of “full rationality”, but that they follow one “weak form” consistent with decisions that must be taken in condition of uncertainty. This analysis will allow us to construct more realistic models of financial markets considering not only their conditions of normality as well as the circumstances that explain their instability and crises.

JEL Classification: G3.

Financial Markets, External Shocks and Policy Responses: The Case of Brazil 2001
Lauro Vieira de Faria
Brazilian Journal of Political Economy

This paper evaluates the macroeconomic response of the Brazilian government in 2001 following the emergence of sharp negative events in both the external and internal sectors with particular focus on monetary and exchange rate policies. It points out that the kind of macroeconomic reaction depicted by the standard Mundell-Fleming model is of little practical importance in a small open economy engulfed in dollar denominated debts and experiencing a confidence crisis like Brazil’s. The Brazilian economy operates as if there were some sorts of ceilings for the exchange rate and for interest rates, in a clear departure from the assumptions embodied in the “pure” model. In this kind of environment another set of actions is required to fight a dangerous exchange rate overshooting and that is proven by the events of 2001. Whilst the actions taken by the monetary authorities proved successful at that moment the paper shows that they came with sizeable real and financial costs as collateral. Therefore, the paper argues in favour of another set of macroeconomic responses which should have been preferred if we were to avoid such costs.

JEL Classification: E58.

Brazil “delivery”: The political economy of the Lula government
Leda Maria Paulani
Brazilian Journal of Political Economy

This paper discusses the new Brazilian government’s economic policy at the beginning of 2003. It argues that surprisingly the government of PT (Worker’s Party) has fallen into the perverse logic of “credibility”. This logic implies the death of macroeconomics and will impede the imperative retaking of growth. Furthermore, it demonstrates that the arguments of government to justify this unconditional surrender to orthodox economics makes no sense because it is not possible to prove that Brazilian economy was falling down a precipice at the beginning of the new administration. It also suggests that the spurious identification between responsible administration and liberal economic policy may be pointed as one of the reasons of this astonishing result.

JEL Classification: F65; G28; O54.

Conceptualising globalisation, cultural identity and democracy
Jan-Erik Lane
Brazilian Journal of Political Economy

Communitarianism offers a rationale for the growing relevance of communities. Its key question is also the one that globalisation makes highly relevant, namely: Who are we? What way of life do we wish to support? Communitarianism underlines the politics of mutual respect as the democratic state’s proper reaction to multiculturalism. Such a politics of mutual respect would be truly global. The paradox of globalisation is that it both makes communal politics more salient while it at the same time calls for a politics of mutual respect which may reduce ethnic and religious conflict. Globalisation increases the search for communal identity. However, a politics of mutual respect may reduce conflicts between communities and enhance global respect for different cultures, where different civilisations accept a common core of institutions.

JEL Classification: F2; M14.

From Keynesian to Schumpeterian State
Wagner Leal Arienti
Brazilian Journal of Political Economy

This critique aims to introduce Jessop’s hypotheses on post-Fordist state. Based on regulation approach, the Keynesian and welfare state is taken as the ideal type state that underpinned the Fordist accumulation regime until the 1970s. In order to response to the crises of Fordism and Keynesian state, new policies have been directed to reform state apparatus and policies. The Jessop’s main hypothesis is that a “hollowed-out” Schumpeterian workfare state is the best form to support the post-Fordist transition. In spite of pointing out some problems, the paper calls attention for the heuristic values of Jessop’s hypotheses on post-Fordist state and their potentialities to guide case studies.

JEL Classification: P1; P16.

Protectionism in Retrospect: Mihail Manoilescu (1891-1950?)
Roxana Bobulescu
Brazilian Journal of Political Economy

This paper examines Mihail Manoilescu’s Theory of Protectionism. Its main point was the defense of a permanent or general protection of high productivity sectors, contrasting with List’s temporary protection of infant industries. Manoilescu’s reasoning goes into a contradiction. He argued that the productivity of agriculture and the productivity of industry would equalize in the long-term. In that case, protection would no longer be necessary. So, his argument needs an additional assumption, that is variable costs of production. Manoilescu mentioned the presence of increasing returns in industry and decreasing returns in agriculture in an appendix. This assumption renders his theory very similar with Graham’s argument and contemporary main- stream analysis of trade and protection (P. Krugman, I. Magaziner and R. Reich).

JEL Classification: B27; F10; L52; O24.

Three stories about the history
Igor Zanoni Constant Carneiro Leão, Anna Luísa Barbosa Dias de Carvalho
Brazilian Journal of Political Economy

This paper discusses the concepts of collective and individual history present in the modern Western mind: the Jewish-Christian, the materialist and the psychoanalytic ones. We think that, although they relate dialogically and presuppose each other, they have some particularities that strengthen them, giving a greater meaning to the search of human freedom and of a world social order more democratic and fair.

JEL Classification: B00; Z12; Z19.

The Reign of the Capital
João Antonio de Paula
Brazilian Journal of Political Economy

The article examines some constitutive aspects of capitalism from a historical and institutional point of view. The basic argument developed in the article is that the constitution of a specifically capitalist mode of  roduction entails the imposition of some institutions whose general meaning is the dissolution of the particularities that  are typical of the pre-modern world. The result of this process is a pseudo-universal sociability whose main instance is the fetishism of commodities.

JEL Classification: B14.