Abstract: This article proposes a collaboration between post-Keynesians and feminist economists with regard to macroeconomic policies aimed at the socialization of investment, in particular the proposal for the government to act at once as the Employer of Last Resort and as a social provider. This is particularly important in the UK because the coalition government's Spending Review and Plan for Growth have dismantled public services and welfare benefits while emphasizing a narrow range of productive activities. This strategy threatens to widen the inequality that has led to low levels of demand and reliance by low- and middle-income households on unsustainable borrowing in order to maintain living standards. The article therefore contributes to current debates about alternative macroeconomic policies: it argues that the current emphasis on austerity needs to be replaced by a social provisioning approach that requires us to first pose the question of what the economy should be for.
Key words: inequality; austerity; feminist economics; post-Keynesianism; Employer of Last Resort
This article contributes to debates about alternative macroeconomic responses to the present crisis. Whereas previous financial crises were thought to be limited to certain regions in terms of both their effects and causes, this crisis strikes at the heart of a system, the Anglo-American one, which was, until so recently, praised for its "efficiency," "depth" and capacity for "financial innovation" around the world. That is why, alongside the emphasis on reforming the international financial system, questions about the relationship between the process of financialization and the so-called real economy have emerged which challenge the sustainability as well as desirability of financialized models of growth. For instance, the rise of household debt has been scrutinized in the light of the unequal income distribution that, since the 1990s, has led to insufficient demand at the global level (Seguino 2010: 181). And wealth concentration, the other side of income inequality, has been identified as one crucial factor leading to the growth of the markets for assets-backed securities (Lysandrou 2011: 232). The "inequality" lens has thus opened up the debate, originally limited to calls for financial reforms, to the exploration of the complex link between increasing inequality at the global level, the lack of aggregate demand and the process of "financialization" of the Anglo-American economy that have contributed to the present crisis.
For a brief moment this seemed to have created the possibility of moving beyond financialized growth. Between 2008 and 2009 international policy making experienced a Keynesian resurgence, with fiscal stimulus packages widely launched in G20 countries, including in European countries (Giles, Atkins and Guha 2008; Mason 2010). In the UK this was accompanied by a radical critique of the pre-crisis narrative of financial innovation that had fueled a transaction economy (see CRESC 2009). This moment, however, was soon brought to an end as "financial and allied elites quickly recovered from the traumas of 2007-2008 by closing ranks and recycling the old mystifying narratives" in particular those about the social value of finance and the importance of market responsive regulation. With no significant political actors who could push for an alternative agenda (see Froud, Moran, Nilsson and Williams 2010: 108) the opportunity for radical change was missed. Four years on the crisis has become, in the UK as well as in many other European countries, a fiscal one and the richness of this debate has been reduced to the question of the extent to which public spending needs to be cut in order to regain the confidence of financial investors. Fiscal imperatives have come to replace earlier reformist agendas and questions about the role finance has played in the crisis have been removed from public debate. To be sure, the reduction of public spending has recently been accompanied by a new focus on "rebalancing" the UK economy. …