Economics
The New School for Social Research is excited to welcome Till van Treeck as the Distinguished Heuss Professor in the Economics department for the 2021–2022 academic year.
A professor of socioeconomics and the head of the Institute for Socioeconomics at the University of Duisberg-Essen in Germany, Till van Treeck is a macroeconomist and political economist with an interdisciplinary orientation. His research agenda focuses on the macroeconomic implications of income distribution, including sectoral imbalances (private households, corporate sector, government sector), external imbalances (export-led versus debt-led growth), personal savings and labor supply decisions (Veblen effects, Relative Income Hypothesis), and ecological issues. He also seeks to bring together macroeconomic and comparative political economy approaches to growth models.
The Heuss Professorship is a distinguished visiting professorship that brings a prominent German academic to NSSR each year to conduct research and teach, maintaining a decades-long bond between The New School and the German academic world. Learn more about the history of the Heuss Professorship in this Research Matters profile of Hubertus Buchstein, the 2018–2019 Heuss Professor.
Professor van Treeck responded to a Research Matters Q&A on what he’s looking forward to this year and what social scientists need to know about income inequality, economics education, differences between the United States and Germany, and more.
RM: How did you learn about the Heuss Professorship opportunity? What interested you in it?
TVT: In the summer of 2019, I received a letter from Harald Hagemann, the chairman of the Heuss selection committee, asking whether I would be interested to be the next Heuss Professor. I was rather surprised, because I had never applied. But I was also immediately interested when I received that letter because I always regarded The New School as a unique academic institution whose tradition I admire and which was, in fact, an important source of inspiration for the establishment of my own, much younger professional home: the Institute for Socioeconomics (IFSO) at the University of Duisburg-Essen, Germany, where I served as a founding managing director since 2017 until the summer of 2021.
RM: What previous contact or relationship had you had with The New School or New School faculty members?
TVT: In a way, I feel that I know The New School quite well because many of its previous or current faculty members are important figures in the academic “bubble” that I am also a part of. I remember that, as a graduate student, there were two books by New School faculty members that made a huge impression on me: Reconstructing Macroeconomics by Lance Taylor [Professor Emeritus] and The Economics of Demand-Led Growth by Mark Setterfield [Professor and Chair of Economics]. At that time, I also read several inspiring articles by Anwar Shaikh [University in Exile Professor of Economics].
In recent years, Mark Setterfield’s research interests have been very close to my own, including economic inequality and varieties of capitalism, or the link between inequality and financial instability. We have discussed these issues at various conferences, including the annual conference of the Forum for Macroeconomics and Macroeconomic Policies (FMM) in Berlin, which I co-organized a few times and where Mark has been a frequent contributor. I have also had fruitful exchanges with Willi Semmler [Arnhold Professor of International Cooperation and Development], who recently gave a talk at our IFSO research seminar in Duisburg. I also know quite a number of younger colleagues from German-speaking countries who did their PhD at the New School. They always report enthusiastically about this experience!
RM: What are you looking forward to in your time at NSSR as our 2021–2022 Heuss Professor?
TVT: Generally speaking, I look forward to learning more about NSSR in terms of both research and teaching activities. There are several New School faculty members whose works I have long found interesting and inspiring but whom I have never met in person. So I am looking forward to getting to know them over the next year. And I am looking forward to engaging with NSSR students. At my home university, we recently created a new master’s program in socioeconomics as well as a PhD program on the political economy of inequality, and I am sure that we can learn a lot from the established programs here at NSSR.
On a personal level, the Heuss Professorship opportunity comes very timely for me. In the past few years, I had many administrative duties surrounding the foundation of the IFSO. This, and entertaining and homeschooling three small children during the pandemic together with my wife, ate into both my research time and my leisure time. The perspective of spending an entire year in the unique intellectual environment which is The New School is something I really look forward to. And, of course, I do hope, not least for my family who is with me in New York City, that the pandemic will be gotten and remain under control throughout the next year and beyond.
RM: One of your research interests is income inequality, and in a recent paper, you write that inequality in Germany has been on the rise since the year 2000. How would you compare that to the levels of inequality seen in the United States?
TVT: Inequality has increased in Germany, especially during the 2000s. But it is interesting to observe, and to try to explain why, different countries have experienced rather different patterns of income distribution, despite superficially similar trends in simple summary indicators such as the Gini coefficient* of household market income, which increased to a similar extent in Germany and the United States over the past decades. Interestingly, the share of household income going to households at the very top—top household income shares—has not increased nearly as much in Germany as it has in the United States over the past decades. By contrast, the share of corporate income in the aggregate national income has increased, and the share of aggregate household income decreased, more strongly in Germany.
*The Gini coefficient is a measure of the distribution of income across a population, often used as a gauge of income inequality.
RM: Another research interest is economics education. What is your general assessment of economics education—in Germany, in the United States, globally—especially when it comes to heterodox perspectives? What work have you done in this area?
TVT: Among the guiding principles of citizenship education that any public school teacher has to abide by are the notions of prohibition of indoctrination and the imperative of controversial debate. It would go completely against the professional ethics of a social sciences teacher to tell their students that there is just one valid theory or paradigm in the social sciences.
When I was a student, the teaching of economics, especially at the university level, was clearly in crisis: Most influential economics textbooks told students that there were certain key concepts and policy conclusions, based on neoclassical economics, that essentially every economist agrees with—for example, more equality leads to less efficiency, or government debt in excess of x per cent of gross domestic products can only be bad for the economy. On top of that, Germany stands out as a country in which the economics discourse, including economics education, traditionally has been shaped by the so-called ordoliberal tradition, which highlights the importance of (easy-to-teach and easy-to-learn) rules for economic policy making and which downplays, for example, Keynesian insights in the domains of fiscal or distribution policies. For a long time, even mainstream new Keynesian thinking, represented in the U.S. by such economists as Paul Krugman or Joseph Stiglitz, was being marginalized in economics education in Germany in the same way as heterodox economics was marginalized in the United States.
Today, it is my impression that controversial debate is gradually returning to lecture halls and class rooms both in Germany, the United States, and globally. I find this highly encouraging and gratifying, as I have tried to contribute to the opening up of economics education. For instance, during my time as managing director of a government-sponsored think tank in Germany, we were able to support the pluralism in economics student movement in Germany; one especially successful result is the Exploring Economics website, which we co-funded. I also co-authored a German-language online textbook on macroeconomic and economic policy issues designed for the high school level.
RM: At NSSR this fall, you’re teaching a course on political economy in the United States and Germany. What differences between the two countries do you think are critical for social scientists to be aware of?
TVT: In my current research, I look at the institutional factors that may explain why the German corporate sector has tended to retain a large fraction of their strongly rising profits, thereby restraining both aggregate household income (retained profits are not part of household income) and measured income inequality (retained profits accrue to mostly well-off owners of corporate wealth, and if they were distributed to these individuals rather than retained by corporations, measured income inequality would be higher). I am also interested in the deeper societal and macroeconomic implications of the “German growth model,” especially in comparison with the “U.S. growth model.”
Put bluntly, the German corporate elite (unlike U.S. superstar managers, or the U.S. top income households more generally) so far have renounced ostentatious individual lifestyles but accumulated financial wealth for their (often family-owned) businesses. But the accumulation of corporate wealth within family firms is a driving force behind the very high wealth inequality in Germany as well as an important factor behind the structural weakness of domestic demand in Germany. This has resulted in an excessive dependence of the German economy on exports for the generation of aggregate demand and employment.
In the United States, by contrast, a much larger chunk of the national income goes to top-income households. Combine this with the fact that such important positional, or status, goods as housing, education, healthcare, etc., are allocated to a much larger extent via private markets in the United States compared to Germany and other “coordinated market economies.” You end up with a “growth model” which depends on (status-oriented and often credit-financed) private consumption as the main demand driver and which produces persistent external deficits and financial instability. Not least, inequality and positional consumption can be an important obstacle to ecological sustainability to the extent that they hinder the transition to a low-growth economy with shorter working hours.