The EU and the Eurozone are in deep crisis. So are orthodox and heterodox economics. While orthodox neoclassical economics have “no room for money” and nothing to say about financial crises and deflationary depressions, heterodox Post Keynesians do better in that regard but lack a shared paradigm. They also lack a systematic and precise legal foundation, without which the numerous institutional flaws of the Eurozone and the EU cannot be detected. Some Post Keynesians, notably Modern Monetary Theorists, notice the lack of sovereign taxing power at the Eurozone level. The lack of private (property and contract) law and a weak, patrimonial state infrastructure in general in parts of the southern periphery, Post Keynesians typically overlook. Only some neoclassical institutional economists perceive this, but they in turn typically overlook the lack of federal taxing power at the Eurozone level.
Some people admonish that a “political union” would have had to precede the monetary union, but what specifically a “political union” would entail – a federal european state holding the legitimate monopoly of force on european territory – is left in the dark. A precise comparative look at how such loose confederations of states historically arrived at federal unions is missing entirely, since both neoclassical and post keynesian economists work with abstract universalist models and show deliberate disinterest in history and the historical specificity of capitalism.
We need to build coherent, systematic legal foundations for post keynesian monetary macroeconomics if we want to not only challenge the neoclassical paradigm, but address the crisis of Europe in a comprehensive way. This can be achieved by systematically linking Legal Institutionalism and the Legal Theory of Finance to post keynesian monetary macroeconomics by way of simple, but precise accounting concepts. On April 4, we presented our ideas at the 2016 Symposium on Property Rights, set up by WINIR, the World Interdisciplinary Network for Institutional Research. Our presentations can be found here:
Systematic Legal Foundations for Monetary Economics – An Essential Step Towards a New Paradigm for Political Economy
Why Assets Are Not Things, Why Buying is Not Paying, And Why a New Macroeconomic Paradigm Needs to Add Both Microeconomic Insights