This column presents the well-known IS/LM model, that tries to explain the interaction between the commodity market and the money market. The commodity market is dominated by the investment function. On the money market especially the speculation is relevant. The two markets affect each other by means of the rate of interest. Some believe that the IS/LM model is a synthesis of the neoclassical paradigm and the theory of Keynes .... Read more
22-11-2018: Money, capital and monetarism
Author: E.A. Bakkum
In this column the theory of money is discussed. The functions of money are summarized, and the various types of money and liquidity masses are defined. The operation of the money- and capital-markets is described, and the role of the Central Bank is explained. The exchange rate is explained with a few simple theories, such as the theory of the parity of purchasing power. The meaning of the money quantity is explained with the equation of exchange. Finally the theory of monetarism is succinctly analyzed .... Read more
19-11-2018: Wage policy for employment
Author: E.A. Bakkum
It is sometimes argued that unemployment can be reduced by a targeted wage policy. This column analyzes the relation between the wage level and newly created of jobs. First, the employment in a single enterprise is studied, with the neoclassical paradigm. The scale- and substitution-effects due to a changing wage level are analyzed, in the short and long run. Next the problem is modeled by means of the neoricardian theory. Finally a macro-economic model of Jan Tinbergen is presented .... Read more
15-11-2018: The plan of labour
Author: E.A. Bakkum
This column describes the plan of labour, which in 1935 is propagated by the political party SDAP in order to mitigate the effects of the economic depression, and in order to generate an upturn. Both Het plan van de arbeid and the Handboek voor het plan van de arbeid have been studied. Several criticisms are also discussed. In essence, the crisis-plan is the policy to increase the purchasing power, which later has been underpinned by the theory of Keynes. Furthermore, the plan-report contains a structure-plan, which aims to create an economic order consisting of the PBO .... Read more
06-11-2018: Socialization and branch councils
Author: E.A. Bakkum
This column describes that in the twenties and thirties of the previous century the political party SDAP wants to realize the socialization. For this purpose she invents the intermediate phase of the public branch council (in short PBO). The ideas are presented in two reports, namely Bedrijfs-organisatie en medezeggenschap and Nieuwe organen. The first building-blocks for this reform of the state are furnished by the then party leader P.J. Troelstra. The battle for the PBO is not a hallmark of the social-democracy, but a typically Dutch phenomenon. The public councils are actually publicly controlled cartels .... Read more