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… 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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