From Critiques Of Libertarianism
Recession, depression, inflation and deflation are important aspects of business cycles that governments can and should manage with Keynesian policies. Libertarian economists in the Austrian and Chicago schools get it wrong.
- Austrian Business Cycle Theory (4 links)
- Also known as ABCT. A series of sham theories supporting conservative ideological positions.
- Keynesian and Post-Keynesian Economics (11 links)
- Most libertarians oppose Keynesian arguments (such as insufficient demand causing recessions) because they conflict with their ideology (see Austerity.)
- Real Business Cycle Theory (1 link)
- A freshwater, Chicago School theory that had one major success in the '70s predicting/explaining stagflation. No successes since then, left behind by the resurgence of various Keynesian schools.
- The "Depression" of 1920–1921: The Libertarian Myth that Won’t Die [More...]
- "Yes, there was a recession from 1920–1921, but its history and significance are badly misrepresented by libertarians and Austrian economists"
- The Hangover Theory: Are recessions the inevitable payback for good times? [More...]
- Call it the overinvestment theory of recessions, or "liquidationism," or just call it the "hangover theory." It is the idea that slumps are the price we pay for booms, that the suffering the economy experiences during a recession is a necessary punishment for the excesses of the previous expansion... hangover theory is disastrously wrongheaded.
- The Inflation Obsession [More...]
- Paul Krugman about the Great Recession: "What’s really striking is the extent to which they were obsessed with the wrong thing. The economy was plunging, yet all many people at the Fed wanted to talk about was inflation."
- The takeaway from six years of economic troubles? Keynes was right. [More...]
- "The six years since 2008 have provided strong empirical support for the supposedly outmoded Keynesian view that government borrowing is more powerful than monetary policy in stimulating severely depressed economies and pulling them out of recession."
[...] lacking the experimental method, economists are not strictly enough compelled to reduce metaphysical concepts to falsifiable terms and cannot compel each other to agree as to what has been falsified. So economics limps along with one foot in untested hypotheses and the other in untestable slogans.
Joan Robinson, "Economic Philosophy" , 1962, pp. 26-28.
"Austrian theory" of the business cycle -- a theory that I regard as being about as worthy of serious study as the phlogiston theory of fire.
Paul Krugman, "The Hangover Theory: Are recessions the inevitable payback for good times?"