MACROECONOMIC POLICY AND THE FUTURE OF CAPITALISM

'Macroeconomic Policy and the Future of Capitalism' addresses the revolution in macroeconomic policy of the last quarter of the twentieth century and the movement away from concerns with employment and growth in favour of financial variables such as inflation and exchange rates.
John Smithin argues that this 'financial reaction' in macroeconomic policy is the result of a distinct shift in political power in favour of financial or 'rentier' interests, and away from both labor and manufacturing business. The outcome is a regime in which the real rate of return to financial capital is persistently higher than it was in the relatively prosperous years between the end of World War II and the mid-1970s, but economic performance is persistently worse. Professor Smithin recommends drastic changes in attitude, in particular in the conduct of monetary policy, if a more secure prosperity is to be restored in the 21st century.