The contemporary economic crisis is an extraordinary opportunity to test the relevance of economic theory. The first lesson to be learnt from this crisis is that economic theories are not abstract constructions, extraneous to the real world, but they produce significant consequences for the welfare of a society. In other words, economic theories can cause crises. Giancarlo Bertocco explains.
Tag Archives: macroeconomics
September 21, 2016
Steven Kates presents his new book What’s Wrong with Keynesian Economic Theory?
January 10, 2013
It is widely recognized that economic crises can sometimes trigger enormous change, both with regard to economic theory and the politics of governance. Today, the global economy is struggling with the fall-out from the financial crash of 2008 and the Great Recession of 2007-09. The economic crisis that these events have generated, combined with the failure of the mainstream economics profession, has again put the question of change on the table.
November 28, 2012
How can we return the economy from the midst of recession to rapid rates of growth? Steven Kates explains why adopting Kenynesian policy is doomed to failure, and instead advocates classical theory based on a proper understanding of Say’s Law.
November 13, 2012
As the Austrian economist Stephan Schulmeister recently noted, the politics of austerity in the Eurozone are dominated by what the Germans call ‘Swabian housewife logic’. If any individual Swabian husband is spending more on drink than his pay-packet permits, it makes sense for his wife to rein in his expenditure and keep the family out of debt. If, however, such austerity is imposed on ALL Swabian husbands at the same time there will be unforeseen macroeconomic consequences along the lines that Keynes set out in the General Theory. Total consumption spending will fall, and with it the demand for labour. Many Swabian housewives will find their husbands out of a job and the family finances in ruins. To deny this entails a (very damaging) fallacy of composition.