International Economics and the neoclassical paradigm (Part II) is common to find the next question in the free market preachers, followers of the school Kaustky Does neoclassical theory of international trade, is the cause that government policy, culture, society and business action behave according to the concentrations of class power, conscience consumption and predation of man and the environment? This refers to the performance of the theory and that such performance is not responsible for the interests of its application, in other words, this question leads to a conclusion: "the theory is correct, the application does." This euphemism for deceit, the prerogative of personal interest and the linkage of oligopoly power, justified in response positively or negatively, anarchy, subjectivity and the dehumanization of the system and model.
Keynes (1936), mentioned the matter: "if the free market work, there would simply poor." The idea of \u200b\u200bliberalism has been elevated to ideology as Kessinger (1984) and has fallen into a positivist dogma, elevating and praising a model but actually serves to locate, this location of the reality of the model has not been estimated if you want to an existing reality, therefore the theoretical formulation will remain no more than the set of variables, and reordering the chaos that is converted into an ideology: unconscious by the majority and cynical by some minorities. The free market has not worked because it was not implemented well, but even if it is implemented well (refer to U.S. history), it did not work that tends to concentrate capital selfish.
neoclassical doctrine, is a major loophole in Samuelson and interesting study on international trade by analyzing the factors of production of the nations in exchange processes by time intervals, in a dynamic and static, This analysis is known as Stolper-Samuelson theorem, returning the balance of chemical Gibbs, whose analytical structure is applied to the economy, in the famous thermodynamics of the same on the balance of economic systems.
The review of Samuelson, methodological and analytical, he helped shape the frontier of production possibilities, which together with the study of aggregates (a combination of Keynesian and neoclassical) could contribute to the axioms now studied in various universities in the world .
Rupture of real markets in the international economy, raised by some crisis in 1929, 1933, caused a particular emphasis on international economic policy of the flows of financial markets. This market was driven by the creation of international bodies like the International Monetary Fund and World Bank (Ossa, 2002). Everything indicates that Lenin (1917) was correct in his analysis of imperialism, saying that economics realized from the reductions occurred at intervals of history that its logical system would not beyond the banks or financial institutions .
The neoclassical, starts a trend to opt for cash, claiming the management of the IS-LM [1], and give more to the suppression of state intervention in the economy. Now the market is what makes the coercion and the right of all financial transactions, this means cutting a reconfiguration including Keynesian, given the monetary market, is used for economic, monetary and fiscal stabilization capital flows.
Friedman and Hayek [2] (1965, 1972, 1980), provide a new paradigm for the economy, that as a result of a seemingly outdated Keynesian model and social discomfort caused a reactionary state. Now the trend was to reduce their participation in economic policy, taking up references as the neoclassical theory and criticism of the Keynesian welfare model, the new variables would be managed economic liberalization, consumption as well shaft, the monetary structure, reduced inflation, among others. The international economy is reconfigured into their business processes and geopolitical changes that occurred with the new structural trend of the phenomenon of globalization, issues such as exchange rate, equilibrium interest rates worldwide economic integration and structural adjustment policies between the different processes of economic growth asymmetrical shape reality concocted by the turning point of historical change in what we know as neoliberalism.
Keynesian multiplier effect, it just took up a new application of increasing and decreasing returns, as part of the logic of liquidity and solvency of firms as a result of this the international trade underwent a significant change and cost in terms nominal value: the tendency of the market regardless of the trade balance and the production of goods and services as part of the analysis of the models, which deals with new operators, for instance, the inflation, interest rates, foreign exchange , the derivatives market, etc. (Kolwalczyk, 1992)
monetary policy and fiscal policy, should be prosecuted to the stabilization and economic liberalization, in order to rebuild the comparative and competitive advantages of different nations and multinational (Jones, 1967). Politics is not more than subversion of the ideology of the linkage of the power of private property or consortia oligopolistic imperfect competition in the various activities of the productive sphere. The speculation comes as a tool inherent volatility of financial capital, establishing a guiding principle: the optimal Pareto (partial equilibrium) in the financial markets, achieve higher levels of stability, liquidity and immediate recovery of the business cycle in economies level, encouraging capital investment by non-state intervention. (Williamson, 1985)
analysis of Stiglitz (1995), refers to levels of financial market information, will produce some fluctuations. This is applied to those international agencies involved in global policies on financing and economic recovery plans, especially to developing countries or simply not have benefited from their competitive advantage, much less satisfaction levels their basic needs, verbigracia Latin America and Africa.
J. Stiglitz, explores possible monetary unions as part of the integration of the new geopolitics, however critical of all these bodies in view of his position of service to the U.S. and not that of developing countries. The Greenwald-Stiglitz theorem, explains how a government should not make its action with the potential market failures, but first, to establish market failures as a standard and second to find the efficiency of state enterprises for their competitiveness , achieving budget balance with so-called rational expectations [4].
The Economist also analyzes the processes holistically of contradiction in the international economy, with a more political and sociological, where the panacea to market imbalances is the state. And not a Hobbesian leviathan whose institutions or are monarchical (pure state) or anarchic (subject to liberalism), but rather to achieve proximity to civil society, all political equation subject to the criticism of the new world order. He also mentions that the asymmetry of information is the product of the nature of origin and purpose of the capitalist system, since that is one of the reasons why you will never achieve social justice, much less the Pareto optimal outcomes, and "the invisible hand does not guide or the individuals or companies, who seek their own interest-to the economic efficiency "(Sitiglitz, 2003). International trade has exactly this feature, where the factors are prey to predatory competition, noting that one of these agents is the labor force (the society), the asymmetry is reflected even in the social relations of production, analyzed at the time by Karl Marx.
The development of contemporary neoclassical paradigm is also presented by Mundell and Fleming [4], continuing dialectics the very thought of this doctrine. Based on an equation such as Keynesian IS-LM curves, developed by Hicks ever try to analyze the levels of impact of changes in exchange rate levels and interest rates income of a nation open economy where capital markets and real, that is, financial markets and productive. Unlike Hicks equation, variables are added to the trade balance, in order to analyze the way the government affects the efficiency of an open economy, in other words to adjust fiscal and monetary policy to achieve balance and welfare in terms of international trade both markets.
Mundell (2002) considers that the State is serious actor on politics to ensure not only international trade, if not elevated to an ideal of economic integration and transfer of capital to the argument of the monetary union, which is why this economist has been a frequent precursor of the euro. This new neoclassical approach (with Keynesian recognition) offers a new global course of the same national and international agencies that monitor the economic, monetary and fiscal policies. (Central banks and international organizations, governments, etc..) (Blanchard, 2006).
Some limitations of the Mundell-Fleming model is, as Martha says Bengoa Calvo (2006): the contradiction that exists in the handling of the price elasticity of demand for exports and imports in the short and long term, since in the short run elasticity is less than unity, the opposite effect in the long run, breaking the restriction proposed by Fleming, the second limitation is that not "consider the budget constraints of an economy "and the third point relates to, but provides for changes in real exchange rates does not take into account the expectations of exchange rates at deadlines.
Note that reconfiguration of the system as they occur and gaps of inequality and poverty increase, the neoclassical paradigm presented in the first instance a defense against Keynesianism and then an alliance of an empirical and political, this is indicative of the uncertainty of their ideology, thus explaining the development of their models
Currently, there is another vision of the international economy , represented by Paul Krugman, this Economist breaks with the neoclassical, the study at the basis of observations that occur in the envelope and information of the factors, the behavior of the inputs, the contradictions of laissez faire, etc. Check the Heckscher-Ohlin theory, and mentions that only nations with similar economies manage transfers of capital and the set of mechanisms for the allocation of factors, adding an analysis similar to Fleming on real exchange rates and nominal specific periods . It also analyzes how nations in exercises like trade, share a symmetric information exchange.
The physical characteristics of the countries that trade with each part of the international business processes, in contrast to the wealth of nations Smith, Krugman suggests the union of space and fiscal-monetary policy, as part of the economic and geographic expansion of a nation. Contradicts the neoliberal argument for the creation of competitive and comparative advantages of some countries are based on salary reduction as an essential part of the economies of scale, low inflation rates, and variable implementation of technology as panacea economic contractions and promotion growth. (Krugman, 1996)
Notes
[1] The IS-LM model, consider the analysis of aggregate demand in relation to the money market. While the IS curve shows the movements of interest rates and their impact on investment levels, the LM curve shows the changes in aggregate money supply and its impact on income levels. See Spot, T. "IS-LM Model: The Basics. Department of Applied Economics, University of Alcalá. Retrieved March 15, 2009, online: http://www2.uah.es/economia_aplicada/POL_ECO/mancha/modelo% 20is-lm.pdf [2] Founders of neoliberalism. Friedman's main works are: Capitalism and Freedom, monetarist economics, essays on positive economics, freedom of choice: towards a new economic liberalism, etc. For his part, Hayek, has important works such as monetary theory and the business cycle, the pure theory of capital, and economic individualism, capitalism and historians, etc.
[3] rational expectations theory is that actors in the economy adjust their decisions in the consideration of evolution or trend this information. Is the estimated future macroeconomic variables such as inflation, interest rate, exchange rate, etc., Which can alter the direction of the economy. Ie, the state uses "rational expectations" to adjust your budget based on this information for future planning based on their needs.
[4] The Mundell-Fleming model of the international economy lies in the real market equilibrium (IS) and non-production market (LM) in relation to the stability of interest rates, national income and the exchange rate movement as the main factor of first two. The function of this model is: (IS), where Y = aggregate income, C = consumption, I = Investment, G = procurement, XN = Trade balance, YT = disposable income, and e = r = interest rate. And finally, the equation that makes up the (LM) is:, where M / P = a supply of real money balances, L (r, y) = the aggregate demand in the economy. The state plays an important role, because its action is directly related to "M" and "G".
References (both parties)
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