In chapter 23 of the General Theory Keynes presented Mercantilism as a brave heretical school which intuitively had reached a clear and consistent understanding of economic realities not only of the past but also of today. Why Keynes defended Mercantilism must be understood in terms of his own aspiration to formulate a general theory which could master the old laissez-faire orthodoxy. Too little demand in the economy created a downward spiral of recession and depression. The mercantilists’ plea for a favourable balance of trade show that they understood the positive role of plenty of money in circulation, Keynes argued. Moreover, there existed no automatic self-adjusting mechanisms to keep up employment on a “full” level. Hence statesmen’s interventions to achieve a favourable balance of made sense at this time – as other interventions might be useful in more modern times.
Lars Magnusson and Sofia Murhem
This chapter reviews how the Social Dialogue between unions and employers has evolved at the EU level, and asks whether it has a role to play in bridging the growing prosperity gap between the member states. The analysis shows that the Social Dialogue has diminished in importance over the past twenty years. The authors see several reasons to put a stop to this trend. Over the long run, they contend, a strong Social Dialogue can increase citizen support for the Union and strengthen its legitimacy. Through central agreements between the social partners, the European industry and labour market can develop in a way that benefits both sides. Thus the authors conclude that policy-makers ought to promote the Social Dialogue, as an important tool for reducing the prosperity gap between the member states, enhancing the legitimacy of the EU as a whole, encouraging labour mobility, and combatting xenophobia.