November 10, 2008

This Open Letter appeared in AToL on November 7, 2008 

Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy

Dear World Leaders:

The Winter of 2008-2009 will prove to be the winter of global economic discontent that marks the rejection of the flawed ideology that unregulated global financial markets promote financial innovation, market efficiency, unhampered growth and endless prosperity while mitigating risk by spreading it system wide. For more than three decades mainstream neoliberal economists have preached, and regulators have accepted, the myth of the efficiency of unregulated markets, ignoring the critical lesson provided by John Maynard Keynes’s analysis of interconnection of financial markets and the international payments system.

Those who do not learn the lessons of history are bound to repeat its tragedy. Neoliberal economists in the last three decades have denied the possibility of a replay of the worldwide destructiveness of the Great Depression that followed the collapse of the speculative bubble created by unfettered US financial markets of the “Roaring Twenties”. They fooled themselves into thinking that false prosperity built on debt could be sustainable with monetary indulgence. Now history is repeating itself, this time with a new, more lethal virus that has infested deregulated global financial markets with “innovative” debt securitization, structured finance and maverick banking operations flooded with excess liquidity released by accommodative central banks. A massive structure of phantom wealth was built on the quicksand of debt manipulation. This debt bubble finally imploded in July 2007 and is now threatening to bring down the entire global financial system to cause an economic meltdown unless enlightened political leadership adopts coordinated corrective measures on a global scale.

The US sub-prime mortgage problem that started in 2007 has developed predictably to a morass that has caused the abrupt failure of interconnected financial markets and threatened the viability of financial institutions worldwide as contagion spread at electronic speed via an antiquated, dsyfunctional international payments system.
To arrest the global financial meltdown, much can be learned from Keynes’s vision of how the international payments system should work to permit each country to promote a national full employment policy without having to fear balance of payments problems or to allow financial incidents in other countries to infect the domestic banking and non-bank financial systems.

Another Great Depression can be avoided if world leaders would reconsider John Maynard Keynes’s analytical system that contributed to the golden age of the first quarter century after World War II. The undersigned and others have long advocated a new international financial architecture based on an updated 21st century version of the Keynes Plan originally proposed at Bretton Woods in 1944.

This new international financial architecture will aim to create (1) a new global monetary regime that operates without currency hegemony, (2) global trade relationships that support rather than retard domestic development and (3) a global economic environment that promotes incentives for each nation to promote full employment and rising wages for its labor force.
Paul Davidson
Editor, Journal of Post Keynesian Economics
Visiting Scholar
Schwartz Center for Economic Policy Analysis,
The New School, New York
Henry C.K. Liu
Visiting Professor of Global Development,
Department of Economics,
University of Missouri-Kansas City

Partial List of Supporters:
Irma Adelman
Professor in Graduate School
University of California at Berkeley
Olivier Allain
Associate Professor in Economics
Université Paris Descartes
Philip Arestis
Director of Research
University of Cambridge, UK

Dr. George Argitis
Senior Lecturer
Dept. of Economics
University of Athens

Angel Asensio
University Paris 13
Member of the ADEK and PKSG
H. Sonmez Atesoglu
Professor of Economics
School of Business, Clarkson University
Potsdam, NY

Rainer Bartel
Associate Professor of Economics

Johannes Kepler University
, Austria
Renaud Bellais, Ph.D.
Associate Professor in Economics
French Army Academy (Saint Cyr)
Manager for European Defence and Security Affairs
Institutional Relations, EADS ASTRIUM
Janine Berg
Senior Labour Economist
International Labour Office
Brasilia, Brazil
Dr Dirk Bezemer
University of Groningen
The Netherlands
Dr. Wolfgang Blaas
Associate Professor
Department of Spatial Development, Infrastructure and Environmental Planning
Centre of Public Finance and Infrastructure Policy
Vienna University of Technology
W. Robert Brazelton.
University of Missouri-Kansas City
Luiz Carlos Bresser-Pereira
Professor Emérito da Fundação Getúlio Vargas
Christopher Brown
Professor of Economics
Arkansas State University

Antonella Bucci
Terre des Hommes International Federation
Paul D. Bush
Professor Emeritus of Economics
California State University, Fresno
Fernando J. Cardim de Carvalho
Professor of Economics
Institute of Economics,
Federal University of Rio de Janeiro, Brazil

Àngels Martínez i Castells
Former professor of Barcelona University
Massimo Cingolani
Directorate for Operations in the European Union and Candidate Countries
European Investment Bank

Laurent Cordonnier
Assistant Professor
Faculty of economics and social sciences
Lille 1 University
Eugenia Correa
Posgrado de Economía
Universidad Nacional Autónoma de México
Dr. James M. Cypher
Researcher-Professor, Economics
Doctorate in Development Studies
Universidad Autonoma de Zacatecas,
Zacatecas, Mexico
Georgios Daremas
Senior Lecturer
Dept of Communication and Media,
University of Indianapolis, Athens-campus.
Sheila C. Dow
Department of Economics
University of Stirling
Scotland, UK
Miguel Angel Duran.
Lecturer in Economic Theory
University of Malaga, Spain

Amitava Krishna Dutt     
Department of Economics and Policy Studies
University of Notre Dame
Luca Fantacci
Assistant Professor
Department of Institutional Analysis and Public Management
Bocconi University
Milano, Italy
Carmem Feijo
Associated professor
Fluminense Federal University in Rio de Janeiro, and
Executive Secretary
National Association of Postgraduates Programs in Economics.
Marica Frangakis
Member of the Board of the Nicos Poulantzas Institute
Athens, Greece
Associate Professor of Economics
Department of Economics
University of Leon, Spain
Anna Mª Garriga
Barcelona, Spain
Marilena Giannetti
Department of Public Economics
University of Rome "La Sapienza"
Alicia Girón
Instituto de Investigaciones Económicas
Universidad Nacional Autonoma de México
Claude Gnos
Associate Professor
Université de Bourgogne  and Cemf
Ian Gough AcSS
Professor of Social Policy
University of Bath
Eric R. Hake
Assistant Professor
Eastern Washington University

韩德强 (Han Deqiang)
副研究员 (Associate Research Fellow)
北京航空航天大学经济管理学院 (Beijing University of Aeronautics)

Geoff Harcourt
Professor Emeritus
Reader in the history of Economic Theory
Cambridge University
Distinguished Fellow of the History of Economics Society
Visisting Professor Fellow, University of New South Wales.

John T. Harvey
Professor of Economics
Texas Christian University
Baban Hasnat
Dept. of Business Administration & Economics
The College at Brockport
State University of New York
Geoffrey M. Hodgson
Professor of Economics
University of Hertfordshire
Hatfield, UK
Jörg Huffschmid
Professor of economic policy and political economy
University of Bremen, Germany
Edwin le Heron
Sciences Po Bordeaux
Bo Jonsson
Retired economist from the Swedish LO and the ITUC (formerly ICFTU)
Member of the administrative board of the European Institute for Asian Studies
Brussels, Belgium

Tadeusz Kowalik
Professor of Economics and Humanities
Polish Academy of Sciences
Warsaw, Poland
Dany Lang
Maître de Conférences at the University of Paris

Lena Lavinas
Assistant Professor of Welfare Economics
Institute of Economics at the Federal University of Rio de Janeiro

Frederic S. Lee
Department of Economics
University of Missouri-Kansas City
Hoesung Lee
Professor of Economics
College of Environment
Keimyung University
Daegu, Korea
Noemi Levy-Orlik
Economic Department
National Autonomous University of Mexico (UNAM)

李昌平 (Li, Chang-ping)
河北大学中国乡村建设研究中心主任 (Hebei University-China Village Construction Reaserch Center Director)
Henry van Maasakker
The Netherlands
Ricardo Paes Mamede
Professor of Economics at ISCTE
Lisbon University Institute

Wesley Colin Marshall
Professor of Economics
Universidad Nacional Autonoma de Mexico
Brent McClintock
Associate Professor of Economics
Department of Economics
Carthage College
Kenosha, Wisconsin
John McCombie
Director, Cambridge Centre for Economic and Public Policy
Department of Land Economy
University of Cambridge, UK
Sergio Cabrera Morales
Economics Faculty
Universidad Naciona Autónoma de México
Tracy Mott
Associate Professor
Dept. of Economics
University of Denver

Antonio Carlos Macedo e Silva
Instituto de Economia - UNICAMP
Campinas (SP)

Alcino Ferreira Camara Neto
Dean of Law and Economics
Federal University of Rio de Janeiro
Paulette Olson
Department of Economics
Wright State University
Dayton, Ohio
Ozlem Onaran
Associate Professor
Vienna University of Economics

Walter O. Ötsch
Head of the Centre for Social and Cross-cultural Competency
Johannes Kepler Universität
Linz, Austria
Athanasios G. Papaioannou
University of Thessaly
Jørgen Lindgaard Pedersen
Associate Professor
Technical University of Denmark

Maria Cristina Penido de Freitas
Brazilian Economist,
Ph. D. on Economics by University Paris

Wolfgang Polt
Head of Vienna Office of Joanneum Research
Institute for Technology and Regional Policy
Daniela Magalhães Prates
Professor of the Economy Institutr of University of Campinas
Alcino F. Camara Neto
Professor and Dean
Federal University of Rio de Janeiro
Clyde Prestowitz
The Economic Strategy Institute
Washington D.C.
Dr. Werner Raza
Austrian Chamber of Labor and
Vienna University of Economics and Business Administration
Colin L. Richardson
Internet Economist
William Penney Laboratory
Imperial College, London
Louis-Philippe Rochon
Associate Professor
Laurentian University
Jacqueline Runje
PRESOM  Coordination Assistant
University of Dortmund
Faculty of Spatial Planning
IRPUD Institute of Spatial Planning
Zdzislaw L. Sadowski
Professor of Development Economics
University of Warsaw
Irma Erendira Sandoval
Social Science Research Institute
Universidad Nacional Autónoma de México

Prof. Dr. Thomas Sauer
Professor für Volkswirtschaftslehre - of Economics
FB Betriebswirtschaft  - Dep. of Business Administration
Fachhochschule Jena - University of Applied Sciences
Jena, Germany

Ingo Schmidt
Labour Studies
Athabasca University

Prof. Dr. herbert Schui
Former professor of economics
University for Economics and Policy
Hamburg, Germany
M.P. at the Deutscher Bundestag
Parliamentary Group DIE LINKE Economic Spokesman

Mario Seccareccia
Professor of Economics, University of Ottawa, Canada
Editor, International Journal of Political Economy
Mark Setterfield
Professor of Economics
Trinity College, CT USA
Anwar Shaikh
Professor of Economics
Department of Economics, Graduate Faculty
New School for Social Research
Catherine SIFAKIS,
assistant professor of Economics
University P. Mendès France of Grenoble

Jeffrey Sommers
Visiting Professor
Stockholm School of Economics in Riga

Dr. Engelbert Stockhammer
Dept of Economics
Vienna University of Economics and Business
Vienna, Austria
Dr. Servaas Storm
Dept of Economics,
faculty TPM, Delft University of Technology
The Netherlands
James I. Sturgeon
Professor of Economics & Economics Department Chair
University of Missouri-Kansas City

Senator Eduardo Matarazzo Suplicy (PT-SP)
Prof. Dr. Claus Thomasberger
Faculty of Economics
University of Applied Sciences
Berlin, Germany
Éric Tymoigne
Assistant Professor
Department of Economics
California State University, Fresno

Cathleen Whiting
Associate Professor of Economics
Willamette University
Gregorio Vidal
Department of Economics, Posgraduate Programme
Universidad Autónoma Metropolitana
Roderich Wahsner
Professor Emeritus of Labor Law
University of Bremen
L. Randall Wray
Research Director
Center for Full Employment and Price Stability
Department of Economics
University of Missouri-Kansas City
Senior Scholar
Levy Economics Institute

dr.Emiel F.M. Wubben
Wageningen University & Researchcenter
Business Administration/ Management Studies Group/ Bedrijfskunde
Social Sciences Group
Wageningen, The Netherlands
Haibo Yan
Associate professor
Postdoctoral Mobile Research Station
Institute of Economics
Chinese Academy of Social Sciences

Bin Yang
Associate Research Fellow
Institute of Industrial Economy
Chinese Academy of Social Sciences