Leading progressive academic economist Steve Keen gained international recognition after he successfully predicted the 2007 global crisis using an alternative macro-economic model built on the pioneering work of Hyman Minsky and Wynne Godley. His new book, “Can we avoid another financial crisis?” argues that the lessons of the crash have still not been learned by the economic policy mainstream, and that a new crisis looms for some highly indebted countries, including Canada.
The standard view in economics and in policy circles is that wage increases come at a cost that impacts individual firms negatively. According to this view, wage increases also lead to losses in a firm’s competitiveness in foreign markets. Thus, until the advent of the global financial crisis, mainstream authors paid little attention to the fact that wage growth had lagged behind the sum of productivity growth and inflation, in most countries and for several decades, and that as a result wage shares had fallen. There was also little concern with the rise in wage dispersion— the gap between the income share of the top 1% and the rest that became a part of the lexicon during the Occupy Wall street movement.