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In the present decade, the U.S. economy has undergone its first major depression since the 1930’s, to the accompaniment of inflation rates in excess of 10 percent per annum. These events have been transmitted to other advanced countries and in many cases have been amplified. These events did not arise from a reactionary reversion to outmoded, 'classical' principles of tight money and balanced budgets. On the contrary, they were accompanied by massive government budget deficits and high rates of monetary expansion, policies which, although bearing an admitted risk of inflation, promised according to modern Keynesian doctrine rapid real growth and low rates of unemployment. That these predictions were wildly incorrect and that the doctrine on which they were fundamentally flawed are now simple matters of fact, involving no novelties of economic theory. The task now is to sort through the wreckage, determining which features of that remarkable intellectual event called the Keynesian Revolution can be salvaged and put to use and which others must be discarded. (en) |
