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| 01 Dec 2012 10:25 PM |
Before Labor had any real power, the market had indubitable control over wages. Recessions were met with steep cuts in pay almost immediately. However, these cuts were accompanied by deep slashes in the aggregate price level. Workers were (or at least claimed to be) burdened by a volatile nominal wage, but enjoyed relatively little change in purchasing power. Recessions were brief; the market could move back to equilibrium quickly.
When Labor gained power, they understandably lobbied for minimum wages, unionization, etc. Lobbying efforts were met with appreciable success. Little did they know that they were shooting themselves in the foot; wages and prices became "sticky" (as Keynes would put it). Labor was no longer endangered by wage cuts, but the market was not allowed to immediately correct itself. Recessions were extended as the invisible hand was tied.
Ultimately we had the Great Depression and Lord Keynes found that the only way out of troughs in the business cycle was to stimulate aggregate demand. Yay. |
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| 01 Dec 2012 10:29 PM |
>Lord Keynes
One of the few people who deserve a royal title. |
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| 02 Dec 2012 08:32 AM |
| Yeah, he was pretty brilliant. |
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Twigs180
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| Joined: 10 Mar 2008 |
| Total Posts: 18664 |
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| 02 Dec 2012 11:36 AM |
| Of course, recessions wouldn't be so severe if we just keep to the Austrian business model, increase free trade, and tell government to stop playing the markets in their favor. |
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| 02 Dec 2012 12:23 PM |
| The market doesn't really contain any mechanism to moderate the severity of recessions, it just keeps them short if left alone. |
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| 02 Dec 2012 12:34 PM |
^
If you want Capitalism alive and well, you better save it from it collapsing, or great depressions will do it on marx style. |
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| 02 Dec 2012 12:58 PM |
| Erm, I guess. I'm very skeptical about Marx's theory of collapse, since so much of it appears to hinge on surplus value. |
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| 02 Dec 2012 01:02 PM |
I don't think we'll ever know what a real communist country would be, and we may never know if Marx's ideas were good.
If only Brittain had done a revolution an dnot Russia, we would've beenn able to see teh best candidate for Communsim |
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| 02 Dec 2012 01:04 PM |
| According the Marx, Usa would have been the best candidate, and still is. |
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| 02 Dec 2012 01:09 PM |
| Yes, mostly because we have a representative democracy. |
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| 02 Dec 2012 01:10 PM |
Brittain had done a revolution an dnot Russia
____
Are you simply not familiar with Britain prior to 1914? |
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| 02 Dec 2012 01:12 PM |
| mostly because Usa is technically the most advanced country, or at least the mot advanced with a large enough population to have an effective economy and war machine. |
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| 02 Dec 2012 01:13 PM |
| Malta is a war machine and effective economy with little population. |
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| 02 Dec 2012 01:41 PM |
| I was talking about why capitalism could fail, haha. I guess if Marx focused on the US for other reasons that's okay too. |
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Ryplayer
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| 03 Dec 2012 04:24 PM |
Lots of cities in the UK in the early 20th century had massive communist movements largely made up of industrial workers. There were tanks on Glasgow at one point because the civil unrest and support for communism was such that the government feared a bolshevik-style revolution.
Red Clydeside movement. |
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