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A comment on The destructive new logic that threatens globalisation. Parent comment

Re:The destructive new logic that threatens globalisation by beezlebroxxxxxx on Thursday January 12, 2023 @11:54AM (#34356588)
An interesting recent book that traces the ideological tinges of neo-liberal, "austerity", politics back to WW1 is The Capital Order by Clara E Mattei [0]. It's a very well written (if also frequently depressing) example of political economy used to make a clear and distinct point about something like "austerity" which we often perceive as a "natural" requirement of the economy.

[0}: https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...

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Re:The destructive new logic that threatens globalisation by imtringued on Thursday January 12, 2023 @03:47PM (#34360022)
In neoclassical models growth is just a function of the productivity of capital and the amount of saved capital. It is that simple and that is why especially Austrian economists insist that saving is the source of wealth or something.

But what Keynes realized is that the bottleneck isn't actually on the saving side, people actually save more than enough to grow the economy very quickly but they don't deploy those savings and hence they don't result in the expected growth. So insisting on austerity just adds a bigger pile of savings onto an already over supplied capital market while at the same time decimating consumer demand for the capital seeking investment opportunities. People don't invest because the economic outlook is bad for the next year or the year after. Faced with uncertainty they would rather just keep liquid money in their bank accounts and wait for the economy to recover but how is the economy supposed to recover if everyone is pessimistic about the future?

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