[Previous] [Main Index] [Next]

Friday, January 16, 2009

MORE ON THE RELEVANCE OF KEYNESIAN ECONOMICS IN OUR CURRENT RECESSION: AN ONGOING SERIES

Not To Worry

Prof bug promises that he will finish formatting the second installment in the min-series begun yesterday --- January 15, 2009 --- on why the world is divided into rich and half-poor and very-poor countries . . . a theme otherwise know as the interacting causes of long-term economic development.  Among other things, too, that buggy argument sets out in concrete, down-to-earth terms the various developmental theories that exist today:

   * Some economists emphasize efficient capital accumulation and the growth in the quality and quantity of the labor force over long periods of time;

    * Other economists emphasize constant technological progress as the major long-term driving force, above and beyond the roles of capital accumulation and labor force quality and growth;

    * Yet others --- followers of Joseph Schumpeter: a Harvard economist of the 1930s and 1940s of Austrian origins --- stress that that every few decades since the industrial revolution of the late 18th century there  are clusters of revolutionary technological breakthroughs that eruptively disrupt national economies and require radical adjustments across various industrial and service-sectors. 

Schumpetarians, note quickly,  call the latter process of economy-wide dislocation and restructuring "creative destruction."  Conceivably the Great Depression of the 1930s --- like the Long Depression era of the latter two decades of the 19th century and our current troubles today --- reflect this Schumpeterian cycle of abrupt technological shocks of a clustered sort.  The new cutting-edge technological breakthroughs?  In bio-technology, alternative energy-systems, and nano-technology . . . the latter conceivably the most radical technology humans have ever created: the ability to work with all materials at the molecular level.  Plus, of course, new and unforeseen breakthroughs in existing information-and-communications industries, based on the computer chip.

    * Other economists again, a tiny but growing minority, who stress the role of different institutions across countries that are reflected in various organizations --- chief among them, political systems like an executive and legislature, legal systems (courts, attorneys, the police), administrative governmental bureaucracies, business and financial institutions, and the creativity of R&D in private and public institutions. 

    *And finally, a decidedly small group of these economists (among them prof bug himself, also a political scientist), add as a crucial corollary that all these institutions operate not just with concrete rewards and sanctions --- say, a business corporation that promotes its workers or fires them or a legal system that punishes criminals --- but within a wider socio-cultural network of beliefs about human nature, society, how to get ahead in it, and the cultural norms that follow and guide behavior of the flesh-and-blood members of those institutional organizations.

All this is for later though.

Right Now, Return to Today's Buggy Topic ---A New Variant on the Role of Keynesian Economics

It's a lengthy analysis that appears at another economic web-site, Economist's View . . . run by Professor Mark Thoma of the University of Oregon, and with lots of talent to boot.  Click here for the post left by Prof Thoma that started the thread in question, and prof bug's comments (plus some brief replies to those comments by others).