As Larry Elliott notes http://www.guardian.co.uk/business/economics-blog/2011/dec/12/debt-crisis-recovery-recedesin the Guardian this morning, the Bank of England published a working paper this morning that says that the post war Bretton Woods agreements of fixed exchange rates and capital controls provided an environment for stable growth, the efficient allocation of capital and no economic shocks.
Of course the 1973 and onwards oil price changes threatened that but as they rightly note the system worked for 25 years whilst the Wahington Concensus era of free movement of capital has delivered none of those things, ever.
All right, there are caveats. Causality has to be assumed - but Courageous politicians always have to do that.
But as I argue in The Courageous State, the real need is to ensure capital is accountable and allocated to the real economy and not to speculation. Only then can real, sustainable, prosperity be restored. We are a long way from there and capital controls are an essential part of making global capitalism work again - by holding it to account for where it is, what it is used for and what tax it pays. Country by country reporting would help that, which is one reason why I am argung for it in Copenhagen today.
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I think that Stiglitz has also advocated capital controls, using his experience from the World Bank.
We badly need capital controls. How should they be implementeed though? Taxes? A straightforward limil on how much you can take out of the country or a return to gold?
I discuss some of the ways in The Courageous State
This site is behaving strangely again. My messages I put on here a couple of hours ago seem to have completely disappeared.
Stevo
Not at all I suspect
Sometimes i have to devote all the time to the day job
So things take a long time….
Richard
The messages have re-appeared….hooray!! 🙂
As I said – I eventually got to the computer
This is all down to the fact I’m simply a finite human being and I was out at dinner in Copenhagen
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