An interesting comment on this: Like with every capitalist theory of economics, Keynesianism is based on the assumption of limitless growth. The idea is supposed to be that there always exists somewhere in the economy a place where profitable growth can be achieved by an investor who is daring enough. From a Keynesian perspective, the only thing which holds back economic growth is that investors are reluctant to be daring. But if the managers of the monetary system can somehow inject loose cash or credit into the economy then this should lead to a greater willingness by investors to explore the previously untouched possibilities and thereby result in new consumer goods and services appearing on an expanding market.
Unfortunately, the world economy is reaching its limits rather quickly right now. Before the 1970s economists had maintained that high inflation and high unemployment could not occur simultaneously because a rise in unemployment would undercut consumer purchasing power and thereby force a drop in prices. The 1970s proved this wrong with stagflation, and Keynesianism was at the root of that. Businesses over 25 years had grown used to assuming that the federal government would always attempt to pump money into the economy to offset unemployment. As long as the economy was really growing this was an all right assumption. But when economic saturation hit and businesses began to cut back on jobs they also now began to anticipate an expected increase in the money supply for which they were not prepared to respond by restoring jobs. Consequently, high inflation occurred alongside of high unemployment. That stagflation in the 1970s was the decisive failure of Keynesianism, a failure that was centered precisely in the most advanced industrial countries. The subsequent promotion of Milton Friedman's neoliberal theories of economics came about in response to this recognition by the upper classes that Keynesianism no longer worked. We've had attempts to dust off Keynesianism in some intellectual circles since the disaster of the Bush II years. But no politician with real authority is actually attempting to advocate Keynesian solutions. They know that this has already failed. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
