Lord Skidelsky

Mainstream economics subscribes to the theory that markets \”clear\” continuously. The theory\’s big idea is that if wages and prices are completely flexible, resources will be fully employed, so that any shock to the system will result in instantaneous adjustment of wages and prices to the new situation.

Where in buggery did that straw man argument come from?

Has my Noble Lord been using the pages of the General Theory to roll some waccy baccy or something?

There are entire libraries filled with earnest papers, monologues, pamphlets, discussions, of why adjustment will not be immediate, why there will be lags in the system.

There\’s an entire subset of economics (the Austrian, for those who want to know) which insists that recessions are simply the obvious (and necessary) result of that very period of adjustment.

\”Instantaneous\”? The man\’s \’avin\’ a larff.

3 thoughts on “Lord Skidelsky”

  1. No more deluded than those who think it will all be over by the spring (and that Gordon Brown will be returned to power by an electorate grateful for him having led us to recovery).

  2. Not only the Austrians but also practically everyone else. Monetarists, New Keynesians, Real Business Cycle economists. Only the New Classicals think that adjustments are quick.

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