The Great Recession and the Contradictions of Contemporary Capitalism

The Great Recession and the Contradictions of Contemporary Capitalism

New Directions in Modern Economics series

Edited by Riccardo Bellofiore and Giovanna Vertova

The current crisis is one of the great crises punctuating the long history of capitalism, and to be properly understood it is vital to take into account its ongoing structural transformation. This book offers plural perspectives on the Great Recession, placing the analysis of finance, class and gender at the center of the debate. It begins with a comprehensive insight into the crisis, before moving on to focus on debt, asset inflation and financial fragility. Following chapters discuss global imbalances, structural monetary reform and the management of public finance, including a investigation of the Italian experience. The book concludes with novel contributions on the gender dimension of the crisis and the analogies between a nuclear and financial chain reaction.

Chapter 9: The true rules of a good management of public finance. An explanation of the fatal Eurozone crisis

Alain Parguez

Subjects: economics and finance, money and banking, post-keynesian economics


Contrary to the dictatorial ideology of the new European order in which the Euro is enshrined, running a permanent deficit, even a growing one (and thereby piling up debt), can be the proof that the State is well managed. One should raise the question: what is the existence condition of a well-managed State and thereby of a genuine sound public finance? The answer is straightforward: through its fiscal policy the State must be the anchor of a true long-run growth bestowing a rising welfare on society as a whole. Since true increasing welfare requires true full employment, which means the inexistence of income rationing for the majority of the people, the sine qua non of true sound fiscal policy is that it generates permanently that true full employment.

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