Without a sound foundation in the roots of 21st century capitalism, I can't help make things better. We all know the failure of unregulated capitalism and I want my voice, small though it may be, to rise above the conservative mendacity with facts, data and a sound theoretical understanding of how the economy of a modern nation-state functions.
Karl Marx understood well how mid-19th century capitalism functioned. He disassembled the machinery of laissez-faire capitalism in his monumental Das Kapital. Although wrong in some of the details (labor theory of value, for instance), his overall assessment of labor alienation as a key function of the capitalist system was correct. But that will only get you so far.
Following World War II, there was a shift in economic thinking, precipitated by the work of John Maynard Keynes. His book The General Theory of Employment, Interest and Money (which is on my Kindle and is next in line!) was the single most influential work of modern economics in the 20th century. Keynes overturned long-held beliefs that government which governs least, governs best. Published in 1936, Keynes saw how effective the Roosevelt recovery efforts were at putting Americans back to work. He expanded on this idea that it is demand that generates GDP. This theory would be globally operationalized following WWII in nearly every western nation. The data are clear that this simple concept that, if the masses are able to purchase goods and services, the economy will flourish, created the longest period of sustained growth.
The theory was shelved in 1980 with the election of Ronald Reagan. Reagan introduced a new theory called supply-side economics. A monetarist system based on the Austrian school and Milton Friedman, one George H. W. Bush labeled "Voodoo economics" during the 1980 campaign. This economic model dominates global thinking to this day despite being renounced by David Stockman, the author of Reagan's economic policies and the ongoing failures of austerity programs worldwide.
Stockman: "(Extending the Bush tax cuts is) rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves."More on how America's (and indeed the world's) economic thinking ran off the rails in a future post.
So next fall (Fall, 2011) I'm enrolling in a macroeconomics class at UW Waukesha.