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An Aside

December 1, 2011

In relation to my last article, and Keynesian economics in general: an interesting perspective often offered by Paul Krugman and others like Brad DeLong is that many conservative economists and pundits simply cannot handle the notion that the capitalist system is inherently flawed, that it works best when its citizens are mindless consumers, not intelligent savers. It lacks any kinds of morals and frequently rewards immorality.

Such perspectives underpin much of the arguments pertaining to the gold standard, and the evils of inflation, this notion that money can be “produced from nothing”, when really it’s just how this intensely paradoxical system works. My favourite exposition of this comes from Michal Kalecki, in his theory of the business cycle:

The tragedy of investment is that it causes crisis because it is useful. Doubtless many people will consider this paradoxical. But it is not the theory which is paradoxical, but its subject –the capitalist economy.

You don’t have to a Marxist to see that.

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