Alternative Theories of Money and Finance
New Directions in Modern Economics series
Just as Clemenceau once said that war is much too serious a thing to be left to the generals, I think the economy is far too serious a thing to be left to the economists. Robert Triffin (1985) The entire history of capitalism has been punctuated by the instability generated by business cycles. Crises are an inherent mechanism by which the system temporarily restores equilibrium, once it has been momentarily ruptured. But this new equilibrium might not necessarily correspond with full employment. Under the mature stages of financemonopoly capitalism, however, these crises become more pervasive both in magnitude, duration and frequency. They appear to acquire a destructive logic of their own. Financialization, in the absence of a better term, carries with it the destructive cataclysm that one normally associates with a nuclear chain reaction or with the devastating force of a tsunami. These analogies are quite apt if the current crisis is any testament to the enormous scale of human misery and the collateral damage inflicted by these economic disasters. Unfortunately, economic theory has become disconnected from history. Much of the present malaise has been the result of historical amnesia and myopia. As the historical memories of the Great Depression have receded, so too have the lessons of that era been erased from historical memory. Yet history can only solve those problems for which there are some precedents. It seems that the bitter lessons of the 1930s depression will need to be revisited. This implies that the prevailing economic orthodoxies...
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