24 Aug

«As unemployment soared, it did not seem plausible to believe (as the British Treasury apparently did) that public works would not increase employment at all, because the money spent on them would merely be diverted from the private sector, which would otherwise have generated just as much employment.  Economists who simply advised leaving the economy alone, governments whose first instincts, apart from protecting the gold standard by deflationary policies, was to stick to financial orthodoxy, balance budgets and cut costs, were visibly not making the situation better.  Indeed, as the depression continued, it was argued with considerable force not least by J.M. Keynes who consequently became the most influential economist of the next forty years—that they were making the depression worse.  Those of us who lived through the years of the Great Slump still find it almost impossible to understand how the orthodoxies of the pure free market, then so obviously discredited, once again came to preside over a global period of depression in the late 1980s and 1990s, which, once again, they were equally unable to understand or to deal with. 
In any case, what was a “free market economy” when an economy increasingly dominated by huge corporations made nonsense of the term “perfect competition” and economists critical of Karl Marx could observe that he had been proved right, not least in his prediction of the growing concentration of capital (Leontiev, 1977, p.78)?»

–Eric Hobsbawm, The Age of Extremes: A History of the World, 1914-1991 (1992)

«…history teaches us that we rarely learn from history…»

–John Quiggin, Zombie Economics: How Dead Ideas Still Walk Among Us (2010)


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