On capital, saving, and investment in the twenty-first century: a reply to Hein

With our book Saving and Investment in the Twenty-First Century: The Great Divergence (published as open access), we present a comprehensive theoretical explanation as well as empirical evidence for the phenomenon of low interest rates observed in the OECD countries and China and make various economic policy recommendations based on it. We have developed a new capital-theoretical approach to address these important issues. In what follows, we will discuss some of the more critical parts of Eckhard Hein’s otherwise very sympathetic review of our book.

Saving and Investment in the Twenty-First Century: The Great Divergence – some comments from a post-Keynesian perspective*

This contribution discusses the book Saving and Investment in the Twenty-First Century: The Great Divergence by von Weizsäcker/Krämer (2021). It touches upon the underlying theoretical perspectives, von Weizsäcker’s neo-Austrian view and Krämer’s short-run Keynesian theory, and it proposes an alternative based on post-Keynesian distribution and growth theory. It also reviews the economic policy proposals of the book with respect to government deficits and debt, as well as international coordination of current-account balances, and finds broad agreement with modern post-Keynesian proposals, with some deviation when it comes to macroeconomic policy coordination among monetary, fiscal and wage/incomes policies. It concludes that these economic policy agreements should not be taken as a surprise. The requirements of stabilising government deficits and debt, in the face of an excess of private saving over private investment at full employment, and an excess of the private desire to hold net financial assets over the private-sector supply of financial liabilities, are based on solid national income and financial accounting. They are thus compatible with different macroeconomic theories regarding long-run equilibrium and adjustments towards it.

The Late Middle Ages, 1350–1530

The period after the Black Death saw a dramatic demographic reversal and significant structural economic change, including the withdrawal of lords from direct farming. Vale and Chilterns remained distinctive, but in some links were strengthened and experiential differences were reduced. This chapter examines how perceptions of village space were affected by a steepening of village hierarchy and by increased geographical mobility. Great divergence between settlements is revealed in terms of forms and possibly strength of engagement and attachment. The character of social space in villages is examined in part through an innovative study of the reach of church bells, based on fieldwork carried out during the project. Field names are used to uncover shared stories and local traditions, which may have been cultivated and used especially by senior tenants.

The Return of Global Asymmetries

`The last three decades have witnessed the reversal of the ‘great divergence’ between the centre and the periphery that characterized the nineteenth century and most of the twentieth. The promise of this ‘great convergence’ was a much more symmetric world where prosperity and power would be much more equally distributed, where nations would abide by a rules-based international order and where effective global institutions would help ensure an adequate provision of global public goods. Economic analysis helped foresee how such a world would function. In contrast to those in vogue in the early post-war decades, the workhorse models for international trade, money, and finance of the late twentieth century all emphasized symmetry in international relations. Countries could be big or small, developed or poor, capital exporters or importers, but the same mechanisms and rules applied to them. It was only a matter of time before they would converge, or possibly trade places. More recent models, however, have started to challenge this benign view. Asymmetries between centre and periphery do matter in the network-based models of trade, investment, and finance that have been developed to account for emerging patterns of interaction. This is even truer of data flows and the networks that structure them. Meanwhile, the centrality of the dominant global currency and the asymmetries that it entails in exchange-rate adjustment are being rediscovered. Today’s world is much more asymmetric than we thought. This change of perspectives has significant implications for international economic relations and for global governance.

History Matters

Debates about the “great divergence” within Europe fail to explain the more persistent divergence that resulted in US leadership in industry and technological innovations. Similarly, selective case studies of the post–World War II economy have given rise to claims that dirigiste linkages between the state, universities, and industry, or national innovation systems, are required for technological progress. Empirical analyses of extensive panel data and long-run patterns of innovation across countries suggest otherwise. France and England exhibited an institutional bias toward administered innovation systems, where key economic decisions were made by elites, the state, and other privileged groups. Such policies encouraged rent-seeking and the misallocation of resources and ultimately failed to engender sustained technological progress. By contrast, the US experience highlights the central role of its market-oriented patent system, in concert with flexible open-access adjacent institutions, in promoting economic growth and social welfare.

The Great Divergence

This chapter demonstrates that it was in the hands of Mozi and his followers, the Mohists, as well as the self-professed followers of Confucius, especially Mencius and the Mencians, that the tension between humaneness and justice would receive full treatment in their effort to articulate their respective moral-political projects. As a consequence, the tension between the two norms would become increasingly glaring and could no longer be glossed over. The Mohists would fully embrace justice, whereas the Mencians would tout humaneness. The author calls such a development during the early to mid-Warring States period the “Great Divergence,” referring to the fact that the Mohists and the Mencians would gravitate toward justice and humaneness, respectively, and finding the tension between them hard to reconcile—even irreconcilable under certain circumstances. This pivotal divergence would drastically reshape the subsequent development of the moral-political discourse in the classical period and beyond.

Potential mutagenic effects of the glyphosate herbicide on Gymnotus inaequilabiatus (Valenciennes, 1839)

This study analyzed the occurrence of nuclear damage in the red blood cells of Gymnotus inaequilabiatus (Valenciennes, 1839), exposed in vivo to the herbicide glyphosate. The fish were distributed in four groups, namely: control (without addition of herbicide) and contaminated groups with application of 65 µg/L (concentration allowed by CONAMA Resolution), 1 mg/L (maximum limit recommended by the World Health Organization - WHO and Food and Agriculture Organization - FAO) and 5 mg/L (overdose, five times higher than that by WHO and FAO). For the analysis of cell damage, the method of Nuclear Erythrocytic Abnormalities (NEA) was used, containing 1000 cells for duplicate elimination. An increase in cell damage was observed for 144 hours (6-days) of exposure in all controls. Even under a small concentration, there was a clear effect on segmented, renal, lobed formation and mainly on the formation of micronuclei. The high damage was caused in the first 48 hours and reduced after 144 hours, where the fish can have the herbicidal effect blocked. Studies that analyze the mechanisms of action of glyphosate-based herbicides are essential to determine the risks caused by biota, since there is a great divergence on the maximum tolerable limits in water, which affect quality and integrity of these ecosystems.