Home > Economics Curriculum > Economics, trust and the economics curriculum

Economics, trust and the economics curriculum

from Maria Alejandra Madi at the WEA Pedagogy Blog

The recent Great Financial crisis has restated the menace of deep depressions among the current economic challenges while the livelihoods turned out to be subordinated to speculation, financial instability and the bailout of domestic financial systems. Looking backward, in the context of the 1930 Great Depression, John Maynard Keynes pointed out that the evolution of capital markets increases the risk of speculation and instability since these markets are mostly based upon conventions whose precariousness affects the rhythm of investment and increases pressures on the political sphere.

Keynes called attention to the fact that the capitalist system has endogenous mechanisms capable of destabilizing the levels of spending, income and employment.  read more

  1. BC
    March 5, 2014 at 8:40 pm

    Value-added goods production at labor returns plus replacement of, say, 3-4% cannot compete with credit-induced rentier speculation (rent seeking) of 7-10%+, which encourages credit inflation to GDP and wages, driving down labor’s returns to GDP, and leaving the economy with a private debt burden to wages, profits, and gov’t receipts that precludes growth of real GDP per capita indefinitely.

    As long as credit/debt-money growth is not sustained beyond the rate of production (labor returns plus replacement), price inflation is contained and the purchasing power of business income and wages is maintained.

    But states’ elites cannot grow empires and imperial military forces to expand, expropriate resources, and capture markets at 3-4% growth, which is why states encourage debt-money inflation to achieve price inflation to increase the nominal tax base against which taxes are levied to fund the expansion of the state, i.e., the rentier, militarist-imperialist corporate-state today.

    Growth of BIG imperial gov’t has occurred simultaneously with deindustrialization, financialization, feminization, militarization, military overstretch, mass immigration, unprecedented debt to GDP and associated financial bubbles, and Gilded Age-like wealth and income concentration to the top 0.01-1%.

    The Anglo-American empire is making the same mistakes as predecessor empires of the past, and the elites are making up new mistakes for posterity.

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