Friday, December 6, 2013

Out of step

Bill C over at Twenty-Cent Paradigms has a couple great excerpts on Keynes.

I followed the link to one of them, at The Economist. Here's what moves me:

The major contribution that Keynes made to the theory of unemployment—if indeed there was such a thing before—lay in his emphasis on savings and investment. The central idea of the “Treatise” was the absence of any automatic link between these two things: between a change in habits of thrift on the one side and in opportunities of real capital formation on the other. Economic instability, he declared, arose whenever the savings of the mass of individuals who compose the community—that is, the portions of their money incomes that they did not spend—began to get out of step with the real saving of the community—that is, the proportion of its output of physical goods that was not destined for immediate consumption.

That last sentence says it all.

No comments: