Neoclassical economics borrows its models from a 19th century physics that physicists do not accept any more (as Robert Nadeau points out).
In the real world, there is no such thing as a perfect match of supply
and demand in which the markets are cleared. Indeed, conditions that
are far from any equilibrium, and in which (for instance) large amounts
of productive capacity lie fallow and unutilized, while large numbers
of people remain in a state of deprivation, can in many circumstances
become self-perpetuating: this is something that Keynes understood over
seventy years ago, but that was forgotten in the recent spate of
“irrational exuberance.”


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s