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View Diary: Austerity doesn't work: New IMF report details the damage (167 comments)

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  •  ? (0+ / 0-)

    Are wage/price controls Keynesian?

    •  He was more about government stimulus (1+ / 0-)
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      and deficit spending; I'm using it here as a kind of shorthand for "government intervention in the economy," which is how our Hayek-following adversaries would see it.  Keynes was writing at a time when there were actual Communist (in name only) states, so his ideas about wage and price controls would have been colored by contemporaneous views of Stalin, but given the broad outline of his theories, I'm not certain he'd be opposed to these sorts of controls under a democratic regime - at least, nothing on the front page of seemed to outright preclude them:

          Keynes argued that full employment could not always be reached by making wages sufficiently low. Economies are made up of aggregate quantities of output resulting from aggregate streams of expenditure - unemployment is caused if people don't spend enough money.

          In recessions the aggregate demand of economies falls. In other words, businesses and people tighten their belts and spend less money. Lower spending results in demand falling further and a vicious circle ensues of job losses and further falls in spending. Keynes's solution to the problem was that governments should borrow money and boost demand by pushing the money into the economy. Once the economy recovered, and was expanding again, governments should pay back the loans.

          Economically and socially successful economies have significant contributions from both the government and the private sectors.

          Keynes's view that governments should play a major role in economic management marked a break with the laissez-faire economics of Adam Smith, which held that economies function best when markets are left free of state intervention.

      •  he would probably be so incensed (1+ / 0-)
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        Unitary Moonbat

        at the idiocies of the American republican party, including the ever-popular sport of Debt Ceiling Crashing, that he'd be happy to smack them with something like wage controls.

        (I don't really know that. It's just a pleasant, cathartic image. Keynes himself would probably be bemused that he's being held up as a left-wing icon.)

        if necessary for years; if necessary, alone

        by SouthernLiberalinMD on Sat Jan 05, 2013 at 12:56:22 AM PST

        [ Parent ]

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