The Contradictions of Keynesian Economic Policy

[michael perelman]

I have been emphasizing the idea for a number of years that Keynesian policies [actually Keynes did not
advocate many specific policies, but people attribute Keynesian policies to Keynes] have a contradictory
effect.  They may relieve the pressure that could lead to a crash, but they create further problems that may
well lead to even more severe pressures in the end.

I hope explained my position most clearly in

The Pathology of the U.S. Economy: The Costs of a Low Wage System (NY and
London: St. Martin's and Macmillan, 1993).

Keynes, Investment Theory and the Economic Slowdown: The Role of Replacemen
Investment and q-Ratios (NY and London: St. Martin's and Macmillan, 1989).

Maybe I have not expressed my case very well, but I have not found a single mainstream economist to be
receptive to my perspective.  Either they insist that Keynesianism is a descructive interference with the
supposedly free market or they think that Keynesianism provides the key to running an economy.  Both sides are
correct in the criticism of the other and each is blind to the defects of his/her own position.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321
E-Mail michael at ecst.csuchico.edu