Thomas Palley has a new paper on global imbalances. It tells the story of how “the economics profession has been a gung-ho supporter of neoliberal globalization, using the rhetoric of free trade.” and how its narrative has changed over the years to keep the rhetoric intact.
From the abstract:
Prior to the 2008 financial crisis there was much debate about global trade imbalances. Prima facie, the imbalances seem a significant problem. However, acknowledging that would question mainstream economics’ celebratory stance toward globalization. That tension prompted an array of explanations which explained the imbalances while retaining the claim that globalization is economically beneficial. This paper surveys those new theories. It contrasts them with the structural Keynesian explanation that views the imbalances as an inevitable consequence of neoliberal globalization. The paper also describes how globalization created a political economy that supported the system despite its proclivity to generate trade imbalances.
The paper is available here.