Epistimology
First knowledge determines the way we understand everything. This is difficult because we sometimes have to try to understand someone with different first premises than our own. Semantical collisions become legion.
Right now I am trying to understand Keynes. Well, at least McElroy's reading of Keynes.
A few questions for anyone out there who might have insight. Please help me.
What is "a limiting point of the possible positions of equilibrium."? This is McElroys quote of Keynes contention with Classical economics.
Is he talking about looking at the long term?
How much did Keynes assume a civil law framework with government deliberately shifting interest rates and money supplies (inflation)? Is this what led him to these conclusions?
In other words, is the special case in which Classical Economics works, according to Keynes, the case where government is restrained to its proper role? All other cases, where government encroaches upon its citizens, being the case which we are actually in, and ought to remain?
Nathan
posted by Nathanael D Snow @ 8:13 PM
1 comments
1 Comments:
From my understanding, the "limiting point of the possible positions of equilibrium" in Keynes' General Theory refers to the immobile vertical AS* curve. The classical model does not incorporate the short run fluctuations our economy actually has. The classical model for the large part holds up in the longer run (and did up to the 1930s), but Keynes would also quipe that in the long run we're all dead as well.
Keynes' extension of the existing analytical framework shows the ability of fiscal and monetary policy to, perhaps, lessen shocks or bring the economy back to equilibrium quicker. (Though, in application there are many complications to this.)
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