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An economic policy for the fifth long wave

  • Angelo Reati

    (Technical University of Lisbon)

  • Jan Toporowski

    (University of Amsterdam)

The paper starts by reviewing a recent contribution on long-waves, in order to recall the essential points of a theory that, better than any other, is able to explain the long term development of capitalist economies. Considering that the present technological revolution in ICT is part of the broad phenomenon of a new long wave, it follows that the main focus of economic policy should be to support the diffusion of the new technological style and to favour the institutional changes required by such an objective. On the basis of a selective view of what is deemed crucial to foster the full implementation of the new long wave, four broad guidelines are suggested: (i) a Keynesian policy for demand; (ii) a policy to re-establish the primacy of productive capital through systematic concerted open market operations to regulate liquidity in the financial markets; (iii) a reconstruction of the employment relationship that, while taking into consideration the requirements of the new technological paradigm, preserves the essential features of the “European social model”; a targeted flexibility of labour, that contrasts with the all-out market flexibility that results from the neoclassical theory, is also suggested; (iv) a regime for intellectual property rights that avoids the drawbacks – both ethical and economic – of current US practices.

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Paper provided by EconWPA in its series GE, Growth, Math methods with number 0510008.

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Length: 43 pages
Date of creation: 21 Oct 2005
Date of revision:
Handle: RePEc:wpa:wuwpge:0510008
Note: Type of Document - pdf; pages: 43. published in BNL Quarterly Review n. 231, December 2004
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  1. Harcourt, G C, 1969. "Some Cambridge Controversies in the Theory of Capital," Journal of Economic Literature, American Economic Association, vol. 7(2), pages 369-405, June.
  2. Jonathan Michie & Maura Sheehan, 2003. "Labour market deregulation, 'flexibility' and innovation," Cambridge Journal of Economics, Oxford University Press, vol. 27(1), pages 123-143, January.
  3. Goodhart, Charles, 2001. "What Weight Should Be Given to Asset Prices in the Measurement of Inflation?," Economic Journal, Royal Economic Society, vol. 111(472), pages F335-56, June.
  4. Freeman, Chris, 2001. "A hard landing for the 'New Economy'? Information technology and the United States national system of innovation," Structural Change and Economic Dynamics, Elsevier, vol. 12(2), pages 115-139, July.
  5. Reati, Angelo, 1998. "A Long-Wave Pattern for Output and Employment in Pasinetti’s Model of Structural Change," MPRA Paper 1663, University Library of Munich, Germany.
  6. Luigi L. Pasinetti, 2000. "Critique of the neoclassical theory of growth and distribution," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 53(215), pages 383-431.
  7. Richard R. Nelson, 2003. "The Market Economy, and the Scientific Commons," LEM Papers Series 2003/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  8. Kleinknecht, Alfred, 1998. "Is Labour Market Flexibility Harmful to Innovation?," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 387-96, May.
  9. C. Goodhart, 2001. "What Weight Should be Given to Asset Prices in the Measurementof Inflation?," DNB Staff Reports (discontinued) 65, Netherlands Central Bank.
  10. Brouwer, Erik & Kleinknecht, Alfred, 1999. "Keynes-Plus? Effective Demand and Changes in Firm-Level R&D: An Empirical Note," Cambridge Journal of Economics, Oxford University Press, vol. 23(3), pages 385-91, May.
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