Friday, January 20, 2012

"The economy" and "the economics"


It should be recognized that most business-cycle theories – Keynesian, Marxist, Friedmanite, or whatever – and remedies are grounded in the assumption that the cycle stems from some deep flaw in the free-market economy.


If, indeed, it were true that the existing real wage is a minimum below which more labour than is now employed will not be forthcoming in any circumstances, involuntary unemployment, apart from frictional unemployment, would be non-existent. But to suppose that this is invariably the case would be absurd...

Obviously, however, if the classical theory is only applicable to the case of full employment, it is fallacious to apply it to the problems of involuntary unemployment — if there be such a thing (and who will deny it?).

Keynes points out a flaw in the theory. Not a flaw in the economy.

Rothbard is confused.

1 comment:

Jazzbumpa said...

You are too kind.

Rothbard is a liar.