Thursday, May 6, 2010

Austerity Means No Demand

Having bankrupted the American middle class, the designated consumer of last resort, factions of the US ruling class thought they could keep things going in the emerging world. China tightening is showing different. With a billion people and massive overcapacity China still plans on being an exporter. Like Obama, who somehow promises to double exports in five years despite a crumbling Euro.

Keynes was a moderate in the 30's, basically a conservative and protector of the private profit system against a vibrant Left. Without a political impetus to reform - first and foremost by redistributing wealth - capitalism could very well consume itself, as a swarm of cannibalistic piranhas might.

1 comment:

The Arthurian said...

Hey, Purp.

Conservatives think Keynes was a Liberal. Liberals apparently think he was Conservative. Keynes himself said his readers "will fluctuate... between a belief that I am quite wrong and a belief that I am saying nothing new" [preface]. But that's not why I offer this comment.

Keynes has something relevant to your post: "But if nations can learn to provide themselves with full employment by their domestic policy... there need be no important economic forces calculated to set the interest of one country against that of its neighbours" [Chapter 24].

In other words, don't depend on exports, and don't bankrupt the middle class.