Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Keynes understood, as the neoclassicals pretend not to, that unemployment in the short run meant that we would be poorer in the long run.

Neoclassical theology pretends that being poorer in the short run will make us richer in the long run, because (a) short-run unemployment has no long-run costs and (b) short-run unemployment will reduce wage demands, which raises long-run return to capital investment (remember point (a)), thus incentivising capital accumulation, which is the driver of long-run growth.

The central fallacy, of course, is the assumption that capitalists will produce in order to warehouse their goods. That works - sort of - in a barter economy. Not so much in an industrial one.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Nov 3rd, 2011 at 05:00:33 AM EST
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