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: Market Economy
November 8, 2012
In our recent book, Markets, Planning and the Moral Economy: Business Cycles in the Progressive Era and New Deal, we explore the Progressive Era from the perspective of defenders of the Market Economy and advocates for a gentler, kinder Moral Economy. Throughout the book, but in particular, the chapter on Fiscal Policy, we present the debate between the two camps in terms of the effectiveness of fiscal policy. A recap of this debate seems appropriate given the current concern over the role of government and the perceived failure of President Obama’s almost trillion dollar stimulus plan and even greater annual deficits. Where did all the stimulus money go? Why didn’t it work to reduce unemployment and increase GDP more rapidly? Ideas developed in the Progressive Era may help us understand the answer to these questions.