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taking the wrong turn « Previous | |Next »
December 13, 2008

The impression is forming that money is being thrown around by the Rudd government in the name of stimulating the economy, coupled with precise numbers of jobs resulting from each stimulus package. it would seem that the state, once again, is a problem, that the process of planning is deeply flawed, and that we are dealing with the fictions of abstract econometric models not reality.

We need to remember though that the market is no longer seen as the solution to every problem and that the state has to step in to save capitalism. Everything has changed with the global financial crisis and the recognition of the dangers of financial deregulation. So we can infer that economics, somewhere, somehow took the wrong turn.

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We do have a self-devouring capitalism with the global financial crisis. Economists, until recently, still routinely invoked the imagery of the invisible hand, the notion that economic theory has demonstrated that market outcomes are optimal and that private greed reliably creates social good. These assumptions have been shown to be flawed.

| Posted by Gary Sauer-Thompson at 5:43 AM |