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Toward a New Instrumental Macroeconomics: Abba Lerner and Adolph Lowe on Economic Method, Theory, History, and Policy

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  • Mathew Forstater

Abstract

This paper argues that the ideas of Abba Lerner and Adolph Lowe contain overlapping and complementary insights and themes that may contribute to the development of a new approach to macroeconomics and that have rather specific practical policy implications. Lerner's notions of functional finance and money as a creature of the state are combined with Lowe's structural analysis to forge an approach to macroeconomic theory and policy that considers both aggregate proportionality and balance and sectoral relations and that addresses issues regarding monetary production and effective demand as well as ongoing structural and technological change. Such a "new instrumental macroeconomics," focusing on full employment, price stability, and a decent standard of living for all, has important points of contact with recent proposals promoting job opportunities through direct job creation with a public service corps that benefits communities while serving as a buffer stock of labor providing price stability.

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  • Mathew Forstater, 1998. "Toward a New Instrumental Macroeconomics: Abba Lerner and Adolph Lowe on Economic Method, Theory, History, and Policy," Economics Working Paper Archive wp_254, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_254
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    References listed on IDEAS

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    1. Warren Mosler, 1995. "Soft Currency Economics," Macroeconomics 9502007, University Library of Munich, Germany.
    2. Knapp, Georg Friedrich, 1924. "The State Theory of Money," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number knapp1924.
    3. Mathew Forstater, 1998. "Flexible Full Employment: Structural Implications of Discretionary Public Sector Employment," Journal of Economic Issues, Taylor & Francis Journals, vol. 32(2), pages 557-563, June.
    4. Mathew Forstater, 1997. "Policy Innovation as a Discovery Procedure: Exploring the Tacit Fringes of the Policy Formulation Process," Economics Working Paper Archive wp_221, Levy Economics Institute.
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    Cited by:

    1. L. Randall Wray, 2018. "Functional Finance: A Comparison of the Evolution of the Positions of Hyman Minsky and Abba Lerner," Economics Working Paper Archive wp_900, Levy Economics Institute.

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