Wednesday, December 15, 2010

Getting Leftists Aboard Against Keynesianism

"One of the most pernicious and widespread economic fallacies is the belief that consumption is the key to a healthy economy," begins Steven Horwitz — Consumerism Is Keynesianism. "Free-marketeers focus on production," the author reminds us. Of particular interest, the author notes the following:
    The great irony is that leftists frequently argue that capitalism equals “consumerism.” They think defenders of free markets believe that more consumption promotes economic growth; thus we are charged with providing the ideological cover that justifies the consumerism they see as deadening lives and wasting resources. What the leftist critics miss is that economists never saw consumption as the driving force of economic growth and prosperity until the Keynesian criticisms of free markets became ascendant.
"If leftist critics want to decry the focus of modern economics on consumption," the author concludes, "they should turn their sights on the Keynesian interventionists."

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Blogger Tiago said...

I fail to see how a focus on either production or consumption divorced from the other can yield decent results. After all, the famous crash of '29 resulted from the mistaken assumption that people would buy whatever was produced for the simple fact that it was available for purchase, allied with an American and European craze for savings and investment in the stock exchange rather than interest in the "real economy" of material objects and services.

7:06 AM  

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