Thus we are so sensible, have schooled ourselves to so close a semblant of prudent financiers, taking careful thought before we add to the 'financial' burdens of posterity by building them houses to live in, that we have no such easy escape from the sufferings of unemployment. We have to accept them as inevitable results of applying to the conduct of the State the maxims which are best calculated to 'enrich' an individual by enabling him to pile up claims to enjoyment which he does not intend to exercise at any definite time.
From the 1970's we have seen an updated version of the paradigm that reigned before Keynes wrote his tract. Monetarist macroeconomics has failed just as spectacularly as pre-Keynesian economics did.
The question is whether it suffices to relearn Keynesianism or a totally new paradigm is necessary. I don't know the answer. At the risk of repeating myself I'll quote Krugman:
The answer, I think, is that we're living in a Dark Age of macroeconomics. Remember, what defined the Dark Ages wasn't the fact that they were primitive -- the Bronze Age was primitive, too. What made the Dark Ages dark was the fact that so much knowledge had been lost, that so much known to the Greeks and Romans had been forgotten by the barbarian kingdoms that followed. And that's what seems to have happened to macroeconomics in much of the economics profession. The knowledge that S=I doesn't imply the Treasury view -- the general understanding that macroeconomics is more than supply and demand plus the quantity equation -- somehow got lost in much of the profession. I'm tempted to go on and say something about being overrun by barbarians in the grip of an obscurantist faith, but I guess I won't. Oh wait, I guess I just did.
And that's what seems to have happened to macroeconomics in much of the economics profession. The knowledge that S=I doesn't imply the Treasury view -- the general understanding that macroeconomics is more than supply and demand plus the quantity equation -- somehow got lost in much of the profession. I'm tempted to go on and say something about being overrun by barbarians in the grip of an obscurantist faith, but I guess I won't. Oh wait, I guess I just did.
I guess the point is that you can be a bad writer and a great economist. And I really am gravitating toward a Keynes-Fisher-Minsky view of macro, although of the three I'd much rather read Keynes.
If you want a version that sticks fairly close to the current orthodoxy, you can read Making Globalisation Work, by Stiglitz.
Then there's Keynes, Galbraith (both of them) and a couple of other guys.
On the political side, you have Die Linke and those labour unions who haven't sold out.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
