Steve Keen’s Debunking Economics blames debt, not automation.
Essentially, many people currently feel that they are deep in debt, and work to get out of debt. Keen has a ODE model of the macroeconomy that shows various behaviors, including debt-driven crashes.
Felix Martin’s Money goes further and argues that strong anti-inflation stances by central bank regulators strengthen the hold of creditors over debtors, which has made these recent crashes bigger and more painful.
Having read Debunking Economics, I second this. The ODE model is pretty interesting actually.
Among other things the thesis is that the second derivative of debt has a strong impact on aggregate demand. You can enhance aggregate demand (intrinsically without a central authority, as people like having stuff) with an accelerating rate of debt accumulation, which both eventually causes problems on its own in terms of instability and distribution of money within the population and pulls aggregate demand backwards from the future when the debt must be repaid.
Such accelerating debt also lets you maintain exponentiation for longer if you are faced with external limits on the rate of expansion on the real economy because more and more of the money is in the form of financial instruments (which can effectively be wished out of existence) rather than tied to physical capital. Keeps an illusory boom going long after its physical basis is gone.
Steve Keen’s Debunking Economics blames debt, not automation.
Essentially, many people currently feel that they are deep in debt, and work to get out of debt. Keen has a ODE model of the macroeconomy that shows various behaviors, including debt-driven crashes.
Felix Martin’s Money goes further and argues that strong anti-inflation stances by central bank regulators strengthen the hold of creditors over debtors, which has made these recent crashes bigger and more painful.
Having read Debunking Economics, I second this. The ODE model is pretty interesting actually.
Among other things the thesis is that the second derivative of debt has a strong impact on aggregate demand. You can enhance aggregate demand (intrinsically without a central authority, as people like having stuff) with an accelerating rate of debt accumulation, which both eventually causes problems on its own in terms of instability and distribution of money within the population and pulls aggregate demand backwards from the future when the debt must be repaid.
Such accelerating debt also lets you maintain exponentiation for longer if you are faced with external limits on the rate of expansion on the real economy because more and more of the money is in the form of financial instruments (which can effectively be wished out of existence) rather than tied to physical capital. Keeps an illusory boom going long after its physical basis is gone.