Paul Krugman has launched a determined ideological campaign for the return of the ideas of John Maynard Keynes as the best and most effective framework, for both economic theory and policy, to address the rapidly spreading global financial and economic crisis. For public policy this campaign implies “very significant” public investments in jobs, income, infrastructure, education. By significant is meant surpassing in size, per year, – if you want to return to something greater than zero growth – the expected contraction in the economy from Dec, 2007, the official start of the current Recession, until it ends. The forecasters with the most accurate record in this crisis expect a 4-6 percent contraction lasting 5-6 additional fiscal quarters. The number of economists predicting double-digit official unemployment rates is swelling. Nonetheless, one should be cautious interpreting any forecasted numbers…economic forecasting is no less difficult or uncertain than weather forecasting.
Paul Krugman’s Ideological Campaign for the Return of “Depression Economics,” John Case, Political Affairs Magazine
It all seems so long ago, but there was a particularly surreal moment in the Presidential campaign when McCain (via his minions) began accusing Obama of being a socialist. Seemingly out of nowhere a friend asked me to define socialism, and it took me a bit before I could come up a more or less standard definition: “democratic ownership of the means of production.”
That’s a very rough definition, and it’s more than a little revisionist in terminology if not in intent. Socialist were certainly more democratic in spirit than, say, Communists, but they did not always put it that way. In any case, it’s got me thinking about how much public economic discourse might change in the post-market era.
Cesear Chavez advocates “Socialism for the 21st Century,” of course, and in England they have never been shy about the need to nationalize banks, given the current crisis. I can’t see the development of a New American Socialist Party, but it would be great if the old Cold War fears didn’t block the debate over the need for investment in infrastructure and national health care.