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Wednesday, September 30, 2015

The End of Normal - Galbraith and a way forward

The book "The End of Normal" expresses part of James Galbraith's efforts to lay out his macroeconomic ideas clearly. He's building on the work of his father and of other Post Keynesians, to lay out a new way forward. The standard review of the book says:

"The years since the Great Crisis of 2008 have seen slow growth, high unemployment, falling home values, chronic deficits, a deepening disaster in Europe—and a stale argument between two false solutions, “austerity” on one side and “stimulus” on the other."[B&N]

What we are learning is that "stimulus" based on borrowed money is indeed, as the cons love to tell us, a short term fix. That doesn't mean that we don't need fiscal policies. What it means is that we need a structural revolution in how our banking and financial system are constituted. This is because:

"Today, four factors impede a return to normal." They are:

  1. the rising costs of real resources,
  2. the now-evident futility of military power,
  3. the labor-saving consequences of the digital revolution,
  4. and the breakdown of law and ethics in the financial sector.


In the 70's when the neo-liberals were militant about their immoral economic policies (but not yet in charge) one of them actually claimed that "ethics doesn't matter" in his defense of conservative arguments about the Great Depression and "deregulation." These folks actually thought that "rational self interest" would lead to perfect markets and that somehow their false God of "The Market" would correct any misbehavior. It was obvious then that that was a lie. Now we have folks telling us that the majority of people have to suffer for the sins of Wall Street fraud-meisters. They get bailed out, and we get evicted. Sadly, or fortunately -- since the only way to stop a criminal enterprise is to arrest it -- these "false choices" also don't work. The cons no longer even want to go along with investing in infrastructure and austerity is threatening to put the rest of us on the street. Galbraith and others are pointing to better ideas:

"The Great Crisis should be seen as a turning point, a barometer of the rise of unstable economic conditions, which should be regarded as the new normal. Policies and institutions going forward should be designed, above all, modestly, to cope with this fact, maintaining conditions for a good life in difficult times."


He and economists like him are arguing a direct link between our reliance on credit and finance, government policies, the corruption of our times, and the degradation of the middle class, inequity in wealth distribution and the collapse of our economy.

List of Galbraith's works:

Further Reading

James Galbraith:
JK Galbraith:
Created Unequal: The Crisis in American Pay:

I'm working on a series of posts, but they involve reading every book on this list, plus a few not on it, so most of them are still in draft form. This post is intended to get the list of his books out. I'll probably add to it and rewrite it at a later date.

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