Economics for Emancipation

A Course of Economics for All

MODULE 6

Our understanding of how economic policy helps us better envision policies that support our social and labor movements.

In this module, we explore how and why governments manage economic activity, and how tools like government spending and the Federal Reserve shape prices, jobs, and social outcomes. We examine the lived reality of rising costs–why inflation affects people differently, why the Fed’s response often harms workers, and what alternatives could protect real wages while lowering essential costs. Finally, we break down the major ways governments can pay for the programs our communities need, so we can see the political choices behind the question, “How do we pay for it?”

Learning Objectives:

  • Distinguish between sound and functional finance
  • Understand how Congress and the Federal Reserve influence economic policy (i.e. fiscal and monetary policy) 
  • Explain how inflation affects different groups differently and analyze how rising prices intersect with wages, inequality, and political outcomes
  • Evaluate alternative policy tools for managing inflation and funding social programs, beyond raising interest rates

Materials

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Takeaways

  • Gross Domestic Product (GDP) is the most common measure of how the economy is doing, but it ignores unpaid care work and reinforces a limited view of the economy. 
  • The macroeconomic circuit shows us that one person’s spending is another person’s income. 
  • Leakages like taxes, savings and imports, slow down the macroeconomic circuit, while injections like public spending, investment and exports speed it up.  
  • Fiscal policy refers to Congressional decisions on taxes and spending. Higher deficits are expansionary, while lower deficits (or surpluses) are contractionary.. 
  • Monetary policy refers to the way the Federal Reserve influences the money supply through interest rates. Lower interest rates are expansionary, while higher interest rates are contractionary.
  • Proponents of Functional finance argue that governments should use fiscal, monetary and other macroeconomic policies to achieve and maintain full employment, while advocates of sound finance think governments should instead prioritize low inflation.
  • There are three ways to finance government spending on progressive programs: 1) cutting wasterful spending, especially on the military 2) raising taxes the rich, and 3) “monetizing” fiscal deficits or simply “printing the money.” 

NEXT

MODULE 7:

Building Alternatives: Solidarity Economy →

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