Word: keynesian
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Economics, especially, has failed. The Keynesian theories taught at Harvard are faulty tools, he says. They make the economist a technician, do not provide him with a moral frame of reference do not make him ask questions about society's basic goals. Marx, with his brilliant historical analysis and his sharp social perception, makes you ask those questions. But Marx is not taught at Harvard...
Correspondent William Blaylock's introduction to the once unassailable economic theories of John Maynard Keynes took place eleven years ago in a classroom at U.C.L.A. "The professor lectured convincingly that economics was a 'science,' that the Keynesian consensus had finally ensured a stable and inflation-free America," recalls Blaylock, who now regards such pontificating as painfully naive. "Not only has economics soured into a dubious science, but the consensus that characterized economic policymaking in Washington for two decades has crumbled." Within a single day's reporting for this week's cover story, Blaylock heard...
...Jean-Baptiste Say, who enunciated one of the earliest-and most hotly disputed-laws of economics: supply creates its own demand. John F. Kennedy practiced a form of supply-side economics in the early 1960s with measures like the investment tax credit to stimulate business expansion. No less a Keynesian than John Maynard Keynes himself anticipated the supply-siders' stress on incentives to production by writing: "I believe you have first of all to do something to restore profits and then rely on private enterprise to carry the thing along...
...core problem of capitalist economics is balancing the supply of goods and services with the demand for them. Keynesian economists, who have dominated policy for the past generation, have tried to produce a prosperous balance primarily by pumping up demand, largely through heavy Government spending. They have assumed that supply would more or less automatically rise to meet demand...
...long time after World War II that formula worked, but decades of Keynesian policies have now trapped the economy in a blind alley. The Government taxes away too much of the wealth generated by private business and wastes it in often unproductive expenditures. Though individual industries may overproduce, supply in the economy as a whole no longer grows fast enough either to provide jobs for all the people who want them or to absorb the demand created by Government outlays. The result: the nation suffers from simultaneous unemployment and inflation...