Mark Blyth’s Incisive Post-Crisis Takedown: “A Brief History of How We Got Here and Why”

Mark Blyth, the Brown political scientist of “The Hamptons are not a defensible position” fame, has a must-watch video of a presentation, A Brief History of How We Got Here and Why, which we’ve embedded below. We’re featuring it despite the lack of a transcript. Even though Blyth presents a fair bit of detail that is familiar to readers, he manages the difficult task of synthesizing it in a way that generates novel observations. It doesn’t hurt that Blyth is also colorful and a high bit rate transmitter. This video is a fantastic way to get people you know who’ve started to develop doubts about orthodox stories about how the economy works to see things in a different light.

Blyth argues that the world has been through three policy regimes, using computers as an analogy and arguing that like computers, capitalist systems all have the same major components and economic ideology is the “software”. The regime first was the gold standard, which allowed for international capital mobility without inflation, favoring capital over workers. That regime worked from roughly 1870 to World War I. As academics like Peter Temin described in detail, after the Great War, European economies tried to restore the gold standard, and Temin argues that those efforts produced the Depression. The Depression ushered in policy changes which eventually produced the next era, which started after World War II. The policy objective of this era was full employment. Cross-border capital flows were restricted, countries were more autarky-like than now, and governments were economic activists. Blyth quips that no one knew who central bankers were back then.

This era broke down with the 1970s inflation. But Blyth argues that the trigger was that the share of GDP going to labor had become intolerably high to businesses and investors. Inflation also favors labor over capital by eroding the real value of debt. The answer to that was the capital-favoring, globalist, inflation-hostile neoliberal era.

Blyth stresses that what happened after the 2008 financial crisis, which resulted from the failings of the neoliberal regime, the effort to restore the old system, is an unnatural response which will only lead to intensification of the underlying stressors, like rising levels of private debt, greater income inequality, and even more financialization.

Only an economist could see climate change as hopeful. Blyth sees climate change as discrediting the populist right, which has no answers for this problem, and libertarians, who are allergic to state action, when that will not only become necessary but desperately sought after.

I don’t want to diminish your appetite for watching this talk by saying more, particularly since a lot of the fun of a Blyth talk is in his asides where he present things as obvious, and even if you kinda-sorta knew that particular factoid, you probably didn’t have as pithy a formulation as he does.

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  1. paul

    F me, only got 13 minutes in and there is about 10 good zingers to reflect on.
    Very nice to hear such things delivered in an east coast accent.
    Will devour the rest after I have removed the raw sewage outside my front door.
    I may be gone for some time………..

        1. paul

          Dundonian / Doric is the way it goes.
          George Galloaway has the same voice.
          Absolutely great stump speaker, rather slippery otherwise from what I’ve been told.

  2. larry

    Unless I misheard, around the half hour mark, Blyth contends that young people have grown up in a system that will not enable them to pay taxes to service the public debt. This is contrary to MMT. I think that there is something askew with Blyth’s narrative, but I am not certain what it is. Perhaps it is the format and its condensation.

    1. PlutoniumKuj

      I think his take is so ‘big picture’ its of necessity a simplification. Of course, even under MMT its a true statement if the foreign debt is not within your own currency (which of course applies to the Eurozone and most small countries). Its arguably also true for very open economies like the UK. But I think he was talking more about general debt – public and private.

      1. larry

        I agree about foreign currency but I don’t think he had that in mind; however, he also states unqualifiedly, like a throw away line, that there was hyperinflation between the wars. The only instance I am aware of in the West is Weimar Germany whose cause is contentious. Hungary hyperinflated after WW2. His discussion of the Bretton Woods period seems to me to be problematic. I am sympathetic to broad canvases being painted, but I still can’t get over the feeling that there is something not quite right about his causal matrices. Maybe he is compressing it for his students. Or maybe I am misconstruing aspects of his paradigm.

        1. bwilli123

          He seems to claim that the beginning of the great unwinding of the Post WWII Liberal State was because workers were getting too much of the pie.
          I heard no mention of the inflationary oil price shock of the early 1970’s as being a contributing factor and this in conjunction with the cost of conducting a major war in Vietnam .

          1. Peter K

            The 30 yr postwar focus on full emoloyment (while a good thing) led to wages growing across the board and the wage price spiral inflation of the 70s as predicted by M Kalecki in a critique of Keynes in 43. He also predicted the “capital strike’ and market revolution of 1980 which brought in Reagan Thatcher and 30 yrs of neoliberalism. Which finally blew up in 2008 but didnt reset.

    2. paul

      From everything I’ve read/listened to he seems a fairly unrepentant keynesian. MMT has always seemed to me to take a fair amount from keynes, particularly the need for counter cyclical responses.
      I can’t say I fully understood his analysis of the the 2014 scottish referendum when talking with the irritable Doug Henwood , but very few are right, let alone correct, on everything.

      1. larry

        Agree that MMt takes a fair amount from Keynes but it takes more from Kalecki and Lerner. And we should include MMT’s incorporation of the sectoral balances accounting matrix from Godley, even though he didn’t originate the procedure. And Blyth does give Kalecki a favorable mention.

        1. paul

          We are hardly going to argue (to ‘polish the silver’ in ancient greek/ roman…I really do not know) but MMT seems very catholic.

    3. Lord-Admiral of the Pyrenees

      Blyth is not a MMTer. I believe he thinks MMT policies could work for the USA but no one else.

      1. Adam Eran

        Not exactly. He says Republicans have been implementing MMT here (and they would deny it), as the conservatives have in the U.K. He knows what MMT is, but isn’t wedded to swearing allegiance to it, or demanding ideological purity from those following MMT precepts.

        Reminds me of my mother’s request that I name the countries following MMT. I told her it was the same ones following the law of gravity.

        1. Plenue

          He may be aware of it, but he doesn’t seem to actually integrate anything it says into his views. This becomes especially frustrating in his otherwise good Austerity book. He still treats the public ‘debt’ of sovereign countries like it’s something that matters, while also acknowledging that they issue their own money.

    4. diptherio

      I can’t find him saying anything that sounds like that. Can you give a specific time?

      He states explicitly that public debt is not the problem, private debt is. And I think we’re all pretty aware that wages have not increased adequately to allow many young people to repay the personal debt they were forced into to get their education.

      1. False Solace

        At around 35:35 he says he doesn’t worry about public debt because of the “intergenerational capacity to tax”. He then says you need population growth or immigration to keep the economy growing above the rate of inflation, because then public debt pays off itself. This is contrary to MMT, which says public debt is immaterial. The government’s ability to pay off debt in its own currency doesn’t depend on population growth, it’s unlimited — so essentially just a way to give savers and wealthy people a risk-free return. So I don’t quite know why he thinks growth is important to public debt, because this definitely appears to be orthogonal to reality. For private debt it matters, but private debt also has the option of bankruptcy (and govt takeover of failed banks) for the debts that can’t be repaid.

        Elsewhere (not sure of timestamp) he pretty much states that MMT doesn’t really work for any country but the US. His argument seems to be that if you don’t have the global currency, running up a huge public debt would eventually result in devaluing your currency. This seems like an odd objection because a devalued currency is exactly what many countries want. If your currency is low you can export more and keep your factories busy. Of course, there’s a point beyond which you wouldn’t want to go, which the UK is likely to discover if they crash out. Japan is probably the big counterexample though. If you’re highly dependent on imports you don’t want a sudden crash — you need adjustment time to substitute those imports.

        1. paul

          Where do you get the idea of ‘your currency’?
          The hapless users (people,humans etc) are not the producers(the oligarchy and its servants)

    5. Procopius

      He commented, maybe in another clip, that for some reason he did not remember, he had agreed to make three presentations in two days. I’m getting a little more comfortable with his accent, or maybe his accent is becoming more Americanized, but he seems easier to understand than he used to.

  3. Olga

    Only quarter way through, but a funny thought – as Blyth talks about software … and the bitcoin guys, who know that they cannot change the hardware (i.e., the system), so they try to write new software for what is, in effect, a systemic problem. Kind of reminds one of the entire MCAS fix Boeing developed for what was, fundamentally, a hardware problem. It did not work out too well …

  4. PlutoniumKun

    This is great, for those daunted by the length, his actual talk is less than an hour, the rest is questions (I haven’t watched the second half, I don’t know yet how worth it is).

    Its certainly a unique take that climate change could well be our exit from the trap we are caught in. It shows just how important AOC’s take on the Green New Deal is. We desperately need a ‘big picture’ policy that can completely change the paradigm to shift how the world economy works. If the left/green side don’t do it, the far right certainly will.

    1. sporble

      Agreed – first half: outstanding. And: illuminating.

      Then: I got through around 15 min. of the “question” time and gave up – because the “questioners” spent so much time babbling on and on (and on…)

      That said, Blyth’s replies are worth hearing. So if you’re so inclined, fast forward to see when Blyth’s lips are moving – or simply ignore the Q&A, unless you like listening to people who like listening to themselves.

  5. notabanktoadie

    The regime first was the gold standard, which allowed for international capital mobility without inflation, favoring capital over workers. Yves Smith [bold added]

    As does our current banking model, a corrupt* relic of the corrupt** Gold Standard, even though we now have inexpensive fiat.

    * Corrupt in that, due to the government privilege required to give the banks a modicum of stability, what the banks extend is the public’s credit but for private gain.

    ** If for no other reason than needlessly expensive fiat is as corrupt as $700 government hammers.

  6. Telee

    If you haven’t, read the post by Michael Hudson from yesterday. He is pessimistic that much will be don e about climate change because the oil companies and state department view climate change as merely collatoral demage to their policy of controlling oil sources all over the world and thus controlling countries all over the world. It’s the way their power and money is generated. Thus any successful Green New Deal must counteract the geopolitical position of the oil companies and our own government. Not an easy lift. Hudson feels that we are headed to the End Times.

    With regard to Mark Blyth, his solutions to the rise of populism is universal health car, free higher education, mandated worker vacations, free child care etc. but he misses one of the most important conditions expoused by Hudson. That is, debt forgiveness for the masses of people who are struggling without the means to repay the debt. for example, NINJA loans which would eventually result in default. Contrary to this view, Obama administration made the creditors whole but left the peoples debt in place. In my opinion, Hudson has the full picture at his command and is one of the most important voices that should be followed.

    1. False Solace

      Blyth has quite a blindspot on this subject. He says the choices are right-wing populism and left-wing populism, and since the right wing has no actual answers to biosphere destruction, the left wing solutions will win.

      This is quite a blindspot considering he called out WWI and WWII during his retrospective. The solution offered by the right wing is war — stealing resources from others as the biosphere collapses. The right will always reach for war if the alternative is to lose to the left. Maybe he didn’t bother to spell it out because war that involves nuclear exchange would probably end civilization.

      When these wars occur, they might not be sold to us as wars over resources, or wars driven by climate chaos, but that’s what they will be. Our society is steeped in propaganda to a vast extent. Millions of people in multiple countries are steeped in anger at immigrants instead of the lords of capital who actually cause their misery and profit from it.

      1. RWood

        But this is the outlook:

        It is a crisis of Western civilization, not its apex.

        So, not nuthin’ doin’
        stuffin’ popcorn
        wolfwhistles to The Apocalypse
        comin’ along eventually

        1. The Rage

          Western Civilization was a banking ponzi scheme from 1350 onward. The bankers turned aristocrats into capitalists and serfs into workers. Whining about immigrants while supporting pillars of capital is typical house slave thinking. You(as I point at them) only exist because of banking debt. Immigrants only want to come here because their own tribe simply doesn’t have the same allowance of debt to boost development and income. They are simply following capital.

  7. Telee

    My comment was rejected because of required fiels–name and e-mail. I have periodically posted and am using the same name and e-mail as always. Was it aactually rejected because of comtent? I see nno reason why?

    1. paul

      I am an infrequent commenter, and I regularly find myself in confinement.
      I think it is better not to think of these things personally

  8. Louis Fyne

    — Blyth sees climate change as discrediting the populist right, which has no answers for this problem, and libertarians,…..—

    So a Panglossian optimist?

    If one is a pessimist/cynic, climate change will be the best thing that happened to populists—-circle the wagons (in an age of scarcity) as “those people” are trying to take away your stuff!

    And yes, do wish there was a transcript…

    1. diptherio

      Transcription is a long and arduous process, even with the best available automation software. I know from experience. There is a lot of content that deserves transcription, but somebody needs to pay for it to happen, otherwise you’re just dependent on people’s volunteer time, which isn’t generally enough to do the work…so if you come up with a good funding model for creating transcriptions of important a/v content, let me know :)

    2. False Solace

      There’s an auto-generated transcript. Not sure how easy it is to copy or search. The channel owner can get this easily, others need a workaround.

      Here’s how to get the transcript of a YouTube video (when available):

      Go to YouTube and open the video of your choice.
      Click on the “More actions” button (3 horizontal dots) located next to the Share button.
      Click “Open transcript”


        1. Jack Parsons

          I use them for watching untranslated anime. It is… an experience.

          Generally, Youtube (and Zoom’s private transcriber for business meetings) does surprisingly well know for everyday vocabulary, but when you veer into any specialty vocab it gets hallucinatory.

          1. Procopius

            Google Translate is slowly getting better, too. It has a feature where you can submit your own translation of a phrase if you know that theirs is wrong, so it’s probably an AI kind of thing. Statistical linguistics.

  9. The Rev Kev

    Came across this video a coupla days and I love how he helps put all the pieces together and shows the context of past and present events. Can you imagine what a talk would be like between Mark Blyth and Michael Hudson? It would be awesome. I think that the key part of this lecture is the first few minutes after the 28 minute mark where he describes how the wheels came off for people back in the 1970s when the neoliberals started taking over. The same ones who a decade ago, when they saw the world economy going into the emergency ward, decided that the best thing that they could do was to bail out all the private dodgy debts of the world’s billionaires and Main Street be damned. He is right to point out that climate change will change all the equations but there is one thing that gives me pause. If climate change progressed in a linear way, that could be planned for and perhaps compensated for. But chaos theory says that it will be otherwise.

    1. Off The Street

      I have long suspected that the neo-liberal transition was a direct answer to the urban and student unrest of the 1960s. Vietnam, guns and butter couldn’t go on forever, people were marching in the streets when not burning buildings and so something had to be done. Those neos took up the call for agency.

      Protests died down, vets returned, people couldn’t find work and America lurched and staggered through the 1970s. The less charitable would say that the societal nadir was the disco era, when those qiana shirts and platform shoes got publicity. Into that cultural void flooded yuppies, morning in America and Wall Street, and you’ve seen the rest. Of course, now I’m just showing my age.

      1. Paul O

        It has always felt this way to me – though only intuitively. Only now I am starting to get any time in life to look at the detail for myself. And I may run out of time before I complete that :-)

        (also showing my age)

        1. Carla

          Thanks for this reminder. “Democracy in Chains” by Nancy MacLean provides tremendous background and context for the growth of the neoliberal project as well.

      2. animalogic

        “I have long suspected that the neo-liberal transition was a direct answer to the urban and student unrest of the 1960s. Vietnam, guns and butter couldn’t go on forever,”
        I believe that all the antics of the 60’s & early 70’s were as much an excuse for neoliberalism as answer.
        It should be axiomatic that neoliberalism was an answer to essentially political questions.
        Basically, elites saw an opportunity to re-jig society to much-much better serve their own narrow interests.
        Sad to say, but, they were, in their own terms, extremely successful.

      3. Plenue

        The 1970s was not a ‘cultural void’. If you don’t like disco, fine, but it was as vibrant as any other genre (I mean, are you just going to shove Earth, Wind & Fire into the abyss?). Plus just identifying the 70s with disco is a reductive stereotype. There was lots of other stuff going on besides afros and bell-bottoms; the 70s puts you right in the middle of things like the New Hollywood era.

    2. Jeff W

      Came across this video a coupla days [ago]…

      efschumacher—credit where credit is due—mentioned the video in the very first comment in the Links a little over a week ago. It’s good that Yves featured it in its own post.

      1. The Rev Kev

        Bingo. I knew that it was from a commentator in the past several days but could not remember exactly when. So hat tip for efschumacher and one for you Jeff W for going digging for that reference. Thanks.

  10. Anthony K Wikrent

    I also highly recommend Blyth, but he commits one serious error of omission. As larry notes “there is something askew with Blyth’s narrative.” Which is: Blythe accepts the “common wisdom” that the stagflation of the 1970s was caused by wage-push inflation. In fact, the far more important factor was the tripling and quadrupling of energy prices initiated by the Arab oil embargoes. Blythe thus misses the crucial underlying dynamic of our industrial economies having been designed and built — for over a century — to run on cheap energy supplies.

    Thus Blythe also misses — as does almost everyone else — the USA response of Kissinger’s negotiated agreement with the Saudis and others to recycle their dollars into purchases of US paper, thus creating the petrodollar market. If I recall correctly, this agreement is discussed by John Perkins in his bombshell book, Confessions of an Economic Hit Man.

    Which reminds that what Blythe and almost everyone else also miss is the creation in the 1960s of Eurodollar markets and the new depths the City of London plunged into handling and laundering dirty money, and opening wide the door to organized crime using its fortunes to “go legit” by fueling LBOs and mergers and acquisitions. Also, the role the City of London played in forcing Nixon’s hand to end the Bretton Woods systems. The British ambassador at the time actually began asking about taking physical possession of Britain’s gold reserves. The story is in plain sight on the front pages of the New York Times and Wall Street Journal if you look at the microfiche. Only one book I know of discusses this: The Money Bazaar: Inside the Trillion-Dollar World of Currency Trading, by Andrew Krieger (Crown, 1992).

    More generally, then, Blythe does not address the crucial importance of scientific and technological advances in creating the basis of economic progress and growth. But to be fair, no other economists do, either, even the progressive ones.

    Still, Blythe is extremely useful in debunking conservative/ libertarian / neoliberal economic ideology in a very entertaining and engaging way.

    1. Yves Smith Post author

      He does say pretty clearly that the share of GDP going to wages v. capital had flipped since the mid 1940s and that was a disaster for capitalists and I thought he clearly attributed that as the impetus for the concerted push for a restoration of “liberal” policies. I don’t know how he comes up with that number since even now the profit share of GDP is over 11%,, nearly double the level that Warren Buffett deemed unsustainable, He must be including investment, and investment did fall in the 1970s (we didn’t and still don’t have good inflation accounting, so no one trusted reported financials, and suspected that profits were overstated and therefore overtaxed too due to depreciation being based on historical investments and therefore too low).

      I agree he is remiss in not mentioning the oil shock but formal and informal COLAs had the effect of reinforcing inflation. Normally something like the oil shock and high unemployment would be expected to produce weak wage growth, which didn’t happen among those who had jobs.

    2. adam1

      I think you’re misunderstanding. Mark isn’t referring to wage-push inflation. He’s referring to the power of labor. Inflation is a monetary means of adjusting for some imbalance in the system. The energy crises of the 1970’s was an output shock and the energy imbalance showed up as a bumped in inflation. If capital had the power than the inflation would have showed up in significant falling real worker incomes. For the most part labors share of income remained fairly unchanged, but most long term financial assets were yielding negative real returns. Since these are assets held mostly by rich people their incomes were falling in real terms and hence their eventual revolt which welcomed in the Neo-Liberal era.

    1. eg

      Having seen both videos, I prefer this one, though they are both excellent.

      I’m mildly irritated that I didn’t know this event was happening back in June, given that it took place just a half hour down the road from me and I’m a big Blyth fan.

  11. Watt4Bob

    In the broadest sense optimism, because big oil will eventually be forced to come clean and admit they’ve wrecked the climate, then we can all benefit from some sort of GND, but in the short term people in the ME must endure the violent spasms of a dying empire?

    I had to start running to stand still relatively late in life, and now it seems my standard of living will slowly wind down, (hopefully more slowly than not) but it seems my kids are going to run to stand still for the rest of their lives, and be thankful they don’t live in Iran?

  12. Susan the other`

    I didn’t realize that D.C., NY state and California had joined in a lawsuit against Exxon. And other tidbits: that China is actually very decentralized financially and produces more innovation thereby; that Blythe thinks globalization is basically useless – at this point there is nowhere to run; that he is a sort of localist, a statist, as opposed to a nationalist; he believes there is a threshold of population above which things don’t get done as efficiently. Interesting point about China having no civil code whereby to manage fraud and stuff. What code do they go by? His take on India is depressing. But Africa was nice. His green focus on the collapse of species and habitat and ocean rise is sensible. His premise that capital is losing its power is poetic justice. I liked the bit about just which governmental system is most democratic – neoliberal (he thinks not) or socialist which he seems to favor. But not on a big “federated” scale, only on a small manageable scale. Thank you for this fast moving and interesting presentation. I thought it was very optimistic. And I liked his take on Boris and Brexit.

  13. john buell

    Blyth’s take on doable reforms–

    I love his discussion of tax reform and the barriers to such reforms are often more political than technical or economic. If golf courses limit capitalists’ mobility perhaps we should subsidize them.

    Blyth’s book on austerity has a detailed discussion of Weimar hyperinflation. In general overspending is not the cause of hyperinflation.

  14. nothing but the truth

    Inflation also favors labor over capital by eroding the real value of debt.


    inflation favors debtors and holders of real assets. Basically it encourages binging on debt and leveraging real assets.

    1. Yves Smith Post author

      That is false. Go look at debt issuance in the late 1970s and early 1980s in the US and get back to me. I was there, both as a borrower and helping companies borrow then. Lenders and investors didn’t want to lend because among other reasons financial statements become unreliable when inflation goes >6%, and generally speaking, profits are overstated and companies pay too much in tax relative to real economic profits. Those high inflation conditions lead to weak investment, which makes employment less stable, making it riskier to lend to individuals. If you think companies were eager to issue bonds with 15% coupons, you need your head examined.

      1. nothing but the truth

        your whole argument is based on interest rates, not on inflation.

        interest rates can be clamped at any value by the govt.

        real assets (collateral) soared after fiat money in 1971. Prove to me that is wrong.

        1. Yves Smith Post author

          Do you regularly put your foot in mouth and chew? That’s what you did here.

          Your initial claim was that inflation encouraged “binging on debt”. It didn’t. Debt was hard to obtain and costly.

          The fact that commodity prices soared didn’t make it easy to obtain financing for them. Borrowers were still subject to high interest rates. For starters, no one gets to borrow at lower than Treasury bond rates (save unless there is tax gimmickry involved, and there are not tax gimmicks particular to commodities; the Code favors productive investment and things it has weirdly been persuaded to treat as productive, like real estate and farmland and oil and gas development). 20 year Treasuries hit 15.78% in 1981.

          And the only time in history that “government” has attempted to manage anything other than policy rates (overnight) was QE, and that was for the purpose of goosing the prices of financial assets. And even then, QE did not allow any central bank to control long-term interest rates. As Marshall Auerbach and others pointed out, you can’t control quantity and control price. Had the Fed and ECB and BoJ wanted to control longer-term interest rates, they could have set targets at certain maturities and intervened to meet them. They did nothing of the kind.

  15. Maff

    Can’t believe everyone is swooning over this guy’s presentational style. Its shoddy and subjective. I’d be embarrassed to give an academic talk like that.

  16. alan2102

    “We’re featuring it despite the lack of a transcript.”

    For the record, transcripts are available of everything on youtube. Go to the like/dislike (thumbs up/down) bar below the vid box, look far right, see three dots. Click on the three dots, up pops option to open transcript. Voila!

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