Vol. 8 No. 1 (1988): Jan-Mar / 1988

Vol. 8 No. 1 (1988)

Jan-Mar / 1988
Published January 1, 1988


The contemporary economic crisis
Celso Furtado
Brazilian Journal of Political Economy

An economic system isn’t a simple constellation of markets whose logic can be
explained by the behaviour of individual agents’ theory. It presupposes the existence of an
institutional framework and a regulator power capable of arbitrating the conflicts which
always manifest about the appropriation and allocation of scarce riches. According to the
author, the mechanisms of regulations are today seriously prejudiced as a consequence of the
new conformation that the capitalist economies have been assuming. In order to resolve the
contemporary economic crisis, new forms of políticaL organization will need to be invented
to conciliate the aspiration on the preservation of the cultural identity with the exigencies of
the modem technology and the emersion of transnational power. However, bringing forward
on this way should not deprive the auto-regulator capacity of those countries for which the
internal structure’s modernization is a priority.

JEL Classification: P16; P10.

Debts of developing countries
Rudiger Dornbusch
Brazilian Journal of Political Economy

This paper deals with the U.S. interest in the world debt problem. According
to the author, the debt problem (1) affects the profitability and even the stability of the U.S.
banking system; (2) is a part of the U.S. trade crisis, and (3) is a major foreign policy stake
in the debt crisis in that debt collection brings about social and political instability. The author
shows the debt facts and the origins of the debt problem analysing the major problem
of debtors. In the general framework named “transfer problem” is discussed the problem
of debt service where the author presents a case study of Mexico and Brazil. He concludes
showing five alternative solutions to the debt problem: an improved world macro-economy,
a facility, debt-equity swaps, a reversal of capital flight, and Bradley-style debt relief.

JEL Classification: H63; F34.

Wage policy, labor markets and industrial wages in Brazil, 1960-1976: An analysis by ownership and company size
Russell E. Smith
Brazilian Journal of Political Economy

This paper analyzes the relative roles of wage policy and economic conditions in
wage determination for production workers between 1960 and 1976 in five manufacturing
industries in São Paulo, Brazil. Analysis of three sub-periods considers the direction of the
influence of wage policy on real wages, the observed changes in real wages, and “wage drift”
relative to a predicted wage index based on wage policy. Results indicate that the impact of
the repressive wage policies during the 1965-67 and 1973 “wage-squeeze” periods varied by
size of the firm and ownership and with general economic conditions.

JEL Classification: J31; J38.

Problems of monetary control in Brazil
Armínio Fraga Neto
Brazilian Journal of Political Economy

The control of monetary aggregates in Brazil has to face three large problems: 1)
high government budget deficit, 2) the ineffectiveness of the interest rate as a policy instrument
in a high inflation environment; 3) unpredictable financial innovation. The first two
problems are especially important when one is trying to design stabilization programs. After
inflation reaches a certain level, standard monetary policies become powerless. Control of
the budget deficit (i.e. a limitation on the use of the inflation tax) becomes a necessary condition
for stabilization

JEL Classification: E31; E52.

The different aspects of wage rigidity and flexibility in Keynesian analysis
Edward J. Amadeo
Brazilian Journal of Political Economy

The paper analyses different aspects of the role of wages in Keynesian Economics.
It argues that a reduction in money wages – a policy prescription to fight unemployment
usually found in orthodox analysis – may have a negative effect on the level of activity.
Also, it argues that the conventional view of Keynesian macroeconomics (based on the rigidity
of wages) misinterprets Keynes’s own views in the General Theory. ln the book Keynes
points out that wide fluctuations of. wages are not desirable since they would lend instability
to the economic system.

JEL Classification: B22; J30; E12.

Multinationals old and new: the case of energy
Jorge Niosi, Philippe Faucher
Brazilian Journal of Political Economy

Present theories on multinational corporations (MNCs) and technology transfer
have achieved several! major breakthroughs. They are schematically summarized in this
work as the “established theoretical synthesis”, resulting from the contribution of three
major theoretical currents: the product cycle, the industrial organization and the theory
of foreign direct investment based on comparative advantages. This paper challenges the
assumptions of this synthesis: according to the author, it is but a raw conceptual mix of
theoretical generalizations based only on the manufacturing sector of American and British
MNCs. As an alternative, the author compares that synthesis with evidence coming from
one of the most active sectors in the North-South technology transfer: the energy industry.
The comparison will allow to shed some light on the limits of the theoretical model when
applied to a non-manufacturing industry, and to the relationship between developing and
developed countries.

JEL Classification: L22; L94.

Capital instability, uncertainty and the role of monetary authorities: a Minsky reading
Maria de Lourdes Rollemberg Mollo
Brazilian Journal of Political Economy

This paper is a study of the idea of the inherent instability of capitalism in
Minsky’s conception. We begin by describing how Minsky connects the idea of financial
fragility and instability with the instability of capitalism, Then we analyze two important features
of Minsky’s explanation of the economy’s inherent tendency toward financial fragility
and crises. The first is the subjective behavior of the economic agents, given the uncertainty
in the economic world. The second is the role of banks and monetary authorities when the
money supply is considered, as here, endogenous.

JEL Classification: B22; B31; G01; P10.

Notes and Comments

Debt convertion: reality and alternatives
José Serra
Brazilian Journal of Political Economy

This note discusses the possibility of converting external debt into investment.
For the author, this is already an ongoing phenomenon and should be guided by a policy
that issues how this should be done as an integral part of Brazil’s industrial policy.

JEL Classification: H63; F34.


Press articles on the new Plan of Economic Stabilization
Equipe de Conjuntura do CEBRAP
Brazilian Journal of Political Economy

Publicamos, a seguir, uma seleção dos principais artigos publicados na imprensa
brasileira, pela ordem de publicação, logo após a decretação do Novo Plano de Estabilização
Econômica, em 12 de junho de 1987.

JEL Classification: E31; E52.