question to OI economists

[Zurdito]

how do you explain the fact that bourgeois economics has not developed a "theory of crisis" in its totality. This in spite of the fact that the main task facing anyone managing any capitalist economy is offsetting the tendency of the system to move into recession or inflationary crisis every 6-8 years.

[RedDawn]

In all fairness, the Austrian School of economics does ok at explaining crisis to some extent. They blame central banks for giving out too much money with low interest rates, which eventually causes crap investments to tumble.

[Zurdito]

In all fairness, the Austrian School of economics does ok at explaining crisis to some extent. They blame central banks for giving out too much money with low interest rates, which eventually causes crap investments to tumble.

but this isn't a theory of crisis, it;s an eplanation of some crises. undoubtedly not all recessions or crashes are caused by this, no serious economist would argue that. otherwise there would be clear correlation between governmental policies to boost the money supply, and the scale of each subsequent crisis, which there is not, in fact the move in many countries towards the market having greater power over interest rates and the state less, has not led to any noticeable move away from the tendency to crisis of the system, and in fact in many cases has been followed by more severe, prolonged or frequent crises.

this is no fundamental anlysis of the tendency for periodic crises, to explain the "business cycle" (as bourgeois economics calls it), on this basis is like bringing a butter knife to a gun fight, as they say.

[RedDawn]

Good point.

[Demogorgon]

In all fairness, the Austrian School of economics does ok at explaining crisis to some extent. They blame central banks for giving out too much money with low interest rates, which eventually causes crap investments to tumble.
But, as with all things, they are wrong. Generally speaking the different schools of capitalist economics have different suggestions as to the cause of the problem. The Chicago School tends to suggest that as too much money is poured into the economy to try and stimulate demand, the eonomy will "overheat" and result in high inflation. Businesses will then adapt to this and not increase production.

Keynesians suggest the opposite saying that economic trouble is caused by falling aggregate demand, brought about by insufficient credit, too much saving or indeed people not earning enough.

[Sendo]

Capitalism succeeds because it's capitalism.
Capitalism fails because of individual error.

Naturally occurring and historically proven crises like overproduction of goods and over-depletion of production conditions (manageable infrastructure, natural resources, etc) apparently do not exist. They see a system which must constantly have compounded growth outside of reality. They see it as bubble of numbers and theoretical wonders and predictions. The only possible way for it fail is through humans...but of course the successes (for whom anyway) are b/c of the system of capitalism.