Peace in Our Time?

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When­ever I fear that my well of inspi­ra­tion for this blog might run dry, my neo­clas­si­cal mates rush to the res­cue with some price­less pearl of wis­dom that sim­ply demands a rejoin­der. They are the Abbotts to my Costello (and I’m not talk­ing Aus­tralian pol­i­tics here – though the Tony and Julia show reached truly great heights with Gillard’s recent bril­liant ora­tory on misog­yny).

Today’s help­ing hand was a com­ment from French econ­o­mist Olivier Blan­chard. He qual­i­fies as a ser­ial offender on the comic state­ments front, since when wear­ing the hat of found­ing edi­tor of the Amer­i­can Eco­nomic Review: Macro­eco­nom­ics, he uttered the now immor­tal line that “the state of macro [eco­nomic the­ory] is good” – one year and six days after the finan­cial cri­sis began.

He was the chief econ­o­mist for the IMF prior to that gig, and he sub­se­quently returned to the IMF, where he now has the curi­ous title of “eco­nomic coun­sel­lor” (now there’s another poten­tial gag, but I digress).
While deliv­er­ing the bale­ful news in the lat­est IMF World Eco­nomic Out­look that the global econ­omy is slow­ing, Olivier noted that:

“In most coun­tries, fis­cal con­sol­i­da­tion is pro­ceed­ing accord­ing to plan.“

“Accord­ing to plan?” Well, yes, if the plan is to inspire the rise of fas­cist dic­ta­tor­ships in south­ern Europe, I sup­pose you could say that.

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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7 Responses to Peace in Our Time?

  1. Steve Hummel says:

    Yes, veloc­ity the­ory both in for­ward and reverse modes…is equally fallacious.

  2. mikeh1980 says:

    Was Lewis Car­roll a neo­clas­si­cal econ­o­mist? If not he should have been. Would have fit­ted in quite well.

  3. Sandra Jackson says:

    I am con­vinced by the char­tal­ists and those call­ing for debt write offs/jubiless.
    Obvi­ously the con­trol of the money sup­ply by pri­vate banks and the debt is caus­ing the reces­sion. But I would like to ask a ques­tion. The graphs in this arti­cle show a cor­re­la­tion between debt money cre­ated by banks and unem­ploy­ment. The ques­tion is, could neo­clas­sic econ­o­mists say that these graphs might show that the money is being hoarded or saved. Tax jus­tice uk claim that the top one per­cent (banks and cor­po­ra­tions) hoard tril­lions off shore. Could this play a part in the reces­sion, as this money is not active in the economy?

  4. Steve Hummel says:


    I’ve been say­ing for years that we have to get back to the streets. We have to awaken the pop­u­lace. Occupy is great except peo­ple can’t just drop their lives for­ever. It’s got to be a mass social move­ment for eco­nomic and finan­cial TRANSFORMATION NOT REFORM that the major­ity can and does par­tic­i­pate in.

    How do you get trans­for­ma­tion? You ACTUALLY THINK ANEW. You change your­self and you change sys­tems by chang­ing THE IDEAS IN YOUR HEAD, AND THAT THE SYSTEMS ARE BASED ON. So how do you ACTUALLY think anew? You ACTUALLY GET INTO PRESENT TIME. It’s dif­fi­cult to actu­ally think anew with­out ACTUALLY get­ting into present time.….at least once. ACTUALLY get­ting into present time is “mind blow­ing expe­ri­ence.” The only way you can do that with­out focus­ing your atten­tion directly onto the present moment like a zen monk (actu­ally an excel­lent per­sonal strat­egy) is to either be habit­u­ally and actu­ally open minded about change, or decide to do daily ses­sions of very strong emo­tional verbalization/visualization of being open minded/open to change/able to ACTUALLY think anew.

    The truth is all we really need to do is awaken about 10% of the pop­u­lace to the idea that change is necessary.…and pos­si­ble. Urgency and Hope. That’s social dynamite.

    Just some nuts and bolts con­scious­ness rais­ing info.…..that may be the key to sav­ing the world from eco­nomic, finan­cial and social ruin as well as war and destruc­tion. Look at your mate, your child or your grand child and ask your­self if they are worth being spared death, depri­va­tion and/or despair and then decide to think ANEW.

    Finally, we need to con­sult human Wis­dom and real­ize that it can be trusted BOTH as a guide for per­sonal devel­op­ment AND for sys­temic pol­icy. You can find a con­cise exe­ge­sis of the actual sys­temic prob­lems and the per­sonal and sys­temic psy­cho­log­i­cal trans­for­ma­tions that are needed if we want to avoid dis­as­ter here:

  5. David Murray says:

    ’Fis­cal con­sol­i­da­tion going accord­ing to plan’ may reflect EU Com­mis­sion papers such as these:

    which allege that fis­cal con­sol­i­da­tion has cre­ated, even accel­er­ated, growth.

    Com­ments please. I can’t bear to think George Osborne could be right or even justified.


    David Mur­ray

  6. Steve Keen says:

    Check the dates on those papers David: pre-crisis. Blanchard’s piece post-crisis trashes this argu­ment now, and it appears to have died com­pletely in the aca­d­e­mic literature.

    That’s not to say it wouldn’t rear its zom­bie head in a post-crisis world some decades after, if there isn’t an alter­na­tive to Neo­clas­si­cal eco­nom­ics by then. But it’s dead for now.

  7. Robert K says:

    The fol­low­ing is not an endorse­ment of the Blan­chard view expressed, so
    much as a per­sonal belief that, when he speaks, he is speak­ing as an
    explicit advo­cate for the orga­ni­za­tion to which he belongs. It is there­fore
    most nec­es­sary to under­stand the his­tory and func­tion of the IMF. It’s
    pri­mary pur­pose is to pre­serve, pro­tect and defend the his­toric post WW2
    role of the US dol­lar as the inter­na­tional reserve cur­rency and medium of
    exchange for trade set­tle­ment, a role which, IMHO, is cur­rently in the
    process of being relin­quished, due to its’ recent 30 year his­tory of
    mis­man­age­ment. But hey, that’s what you do when you have a print­ing
    press whose paper is hon­ored around the world (until it’s not) Cheers.

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