“The problem of policies aimed to return the economy to what it was before the virus hit is this: Global capitalism, by 2019, was itself a major cause of the collapse in 2020. Capitalism's scars from the crashes of 2000 and 2008-2009 had not healed. Years of low interest rates had enabled corporations and governments to "solve" all their problems by borrowing limitlessly at almost zero interest rate cost. All the new money pumped into economies by central banks had indeed caused the feared inflation, but chiefly in stock markets whose prices consequently spiraled dangerously far away from underlying economic values and realities. Inequalities of income and wealth reached historic highs. In short, capitalism had built up vulnerabilities to another crash that any number of possible triggers could unleash. The trigger this time was not the dot.com meltdown of 2000 or the sub-prime meltdown of 2008/9; it was a virus. And of course, mainstream ideology requires focusing on the trigger, not the vulnerability. Thus mainstream policies aim to reestablish pre-virus capitalism. Even if they succeed, that will return us to a capitalist system whose accumulated vulnerabilities will soon again collapse from yet another trigger.”

COVID-19 and the Failures of Capitalism (2020)

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Richard D. Wolff18

American economist 1942

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“The desperate policies of panic-driven governments involve throwing huge amounts of money at the economies collapsed in response to the coronavirus threat. Monetary authorities create money and lend it at extremely low interest rates to the major corporations and especially big banks "to get them through the crisis." Government treasuries borrow vast sums to get the collapsed economy back into what they imagine is "the normal, pre-virus economy."”

Richard D. Wolff (1942) American economist

Capitalism's leaders are rushing into policy failures because of their ideological blinders.
COVID-19 and the Failures of Capitalism (2020)

“Capitalism should not be condemned, since we haven’t had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!”

Ron Paul (1935) American politician and physician

Has Capitalism Failed? http://www.house.gov/paul/congrec/congrec2002/cr070902.htm (July 9, 2002). <br class="br">2000s, 2001-2005

“we often observe that there is abundance of capital to be had at low rates of interest, while there are also large numbers of artisans starving for want of employment.”

William Stanley Jevons The Theory of Political Economy

Source: The Theory of Political Economy (1871), Chapter VIII, Concluding Remarks, p. 215.

“Central banks have moved to stimulate spending in the face of this attempt to increase savings by lowering interest rates. They lowered them to the zero lower bound without having much effect; the fall in desired savings was too large. We are in a Keynesian liquidity trap. Central banks have tried to stimulate spending by actively increasing the money supply, raising fears of inflation in many circles. But no inflation has resulted as the cash sits idle in corporate coffers. Even at zero interest rates, business firms are reluctant to spend!
What to do? Many pundits say we must simply endure what they call secular stagnation. This is an unhappy prediction. Much better is the Keynesian insight that this is the perfect time for fiscal policy. In the U. S. again, there are immediate needs to repair roads and bridges, rebuild the energy grid, and modernize other means of travel. Keynesian fiscal policy expansion will benefit the economy in both the short and long run.”

Peter Temin (1937) American economist

Why Keynes is Important Today (2014)

“If nature has offered to produce the maximum effect with minimum causes, it is in all of its laws that it had to solve this major problem.”

Augustin-Jean Fresnel (1788–1827) French engineer and physicist

in
Context: If one was sometimes led astray by trying to simplify the elements of a science, it is because one has established systems before putting together a fairly large number of facts. Some assumption, which would be very simple when one considers only a class of phenomena, requires many other assumptions if one wants to leave the narrow circle in which we had initially withdrawn. If nature has offered to produce the maximum effect with minimum causes, it is in all of its laws that it had to solve this major problem. It is without doubt difficult to discover the foundations of this wonderful economy, i. e. the simplest causes of phenomena considered from such a wide point of view. But if this general principle of the philosophy of physics does not lead immediately to the knowledge of truth, it can direct the efforts of the human spirit, by leading it away from theories which relate the phenomena to too many different causes, and by adopting preferably those based on the smallest number of assumptions, which show to be more fruitful in consequences.

“It is worth recalling that during the 1960s, and again in the 1970s, Britain's growth rate was the lowest of all the major European economies. By contrast, during the 1980s, our growth rate has been the highest of all the major European economies. This greatly improved growth performance has been accompanied by falling inflation, which at 3½ per cent. in 1986 reached the lowest figure for almost 20 years.”

Nigel Lawson (1932) British Conservative politician and journalist

Speech http://hansard.millbanksystems.com/commons/1987/mar/17/the-economic-background in the House of Commons (17 March 1987)

“We assume…that the banking system must be prepared to expand (or contract) the total supply of money to the extent necessary to prevent any scarcity (or plenty) of funds in the capital market which may be induced by any other disturbing factor, from causing a rise (or fall) in interest rates”

James Meade (1907–1995) British economist

James Meade (1951), The theory of international economic policy, Vol. 1, p. 48; as cited in: Jacques Jacobus Polak (2001) The Two Monetary Approaches to the Balance of Payments, p. 13

“So: if the chronic inflation undergone by Americans, and in almost every other country, is caused by the continuing creation of new money, and if in each country its governmental "Central Bank" (in the United States, the Federal Reserve) is the sole monopoly source and creator of all money, who then is responsible for the blight of inflation? Who except the very institution that is solely empowered to create money, that is, the Fed (and the Bank of England, and the Bank of Italy, and other central banks) itself?”

Murray N. Rothbard (1926–1995) American economist of the Austrian School, libertarian political theorist, and historian

The Case against the Fed.

“Indeed, it is sometimes almost as if the problem had to be forgotten to be solved.”

Julian Jaynes book The Origin of Consciousness in the Breakdown of the Bicameral Mind

Book I, Chapter 1, p. 44
The Origin of Consciousness in the Breakdown of the Bicameral Mind (1976)

“In most Western economies, the general relationship is not in fact between the rate of inflation and the level of unemployment, but between the rate of change of inflation and the rate of change of unemployment.”

Paul Ormerod book The Death of Economics

Part II, Chapter 6, Unemployment and Inflation, p. 130
The Death of Economics (1994)

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Richard D. Wolff18

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