I am telling the world that everything is going to be alright. Full employment will be reached, inflation will be put in check, prices will not rise very much, wages will increase, output will soar, profits are to be expected if deserved, international trade will recover, no one need fear anything.
In theory, should government interfere to manipulate the economy?
The populace are finally questioning the level of taxation. They’re fed up with rising inflation and the growing ‘tide of scroungers’ living off state intervention. Do we offset a budget loss of tax revenue by cutting public expenditures?
Is a little inflation acceptable to maintain full employment? The classical model of economics says NO! We’re back to Adam Smith: a modern economy should be self-stabilizing…markets clear, meaning all prices including labor, adjust in such a way as to equate supply and demand. The economy will then settle at its natural rate of employment thus stabilizing the inflation rate.
But what if full employment is not automatic, are governments obliged to act to bring it about? Does full employment involve a large extension of the traditional functions of the state?
Contrary to the classical view, economic health is too important to be left to a laissez-faire approach – or to ‘market forces’. Economic management must be part of government. There’ll be a much greater role for the state one way or another. We’ve already got the state as lender of last resort, we might well return to the state as employer of last resort.
Should we increase taxes progressively so that those who have the most – give the most? And in doing so make possible government expenditure on what matters most to our society – and to us?
In the private sphere, in the corporate world, capitalists’ investment should be unfettered whenever possible. Their machinery is vital, since this will bring greater production and make the nation richer. And according to monetary policy, let’s reduce interest rates. Let’s relax control on bank advances and hire purchase. More credit to businesses and to the people!
On the upswing of the trade cycle everything grows…
Employment
Production
Prices
Wages
Profits
…But after 4 or 5 years there is a decline, then after everything levels off and begins to rise, the whole cycle is in motion again.
The expectation of the trade cycle depends in part on non-monetary influence, such as peace and war. If the state can effectively mobilize for war…it should be able to create a better peace. Other non-monetary influences are inventions, laws, race, education, population and so forth. But the power to put projects into execution on terms which are deemed most attractive depends on the behavior of the trade cycle, banking, and the monetary system.
I told you that everything is going to be alright. I’ll tell you and the world again…full employment will be reached, inflation will be put in check, prices will not rise very much, wages will increase, output will soar, profits are to be expected if deserved, international trade will recover, no one need fear anything.
When it comes down to it, economics is a self-fulfilling prophecy. Just believe it and it will come true. Just do it and prosperity will come.
Propellers. social 