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The Great Slump of 1930

Thanks to the heads up from Paul Krugman, Keynes’ very topical “The Great Slump of 1930” is available on Gutenberg Canada:

The parallels are frightening (and since they point to more pain, depressing).

Krugman is always worth the read, particularly his very enlightening blog:

I highly suggest adding it to your bookmarks.

Back to Keynes:

The quote I find most painful here is:

Yet, all the time, the resources of nature and men’s devices would be just as fertile and productive as they were.

The point being, even though we have a financial “disaster”, nothing has really changed – it’s all illusitory. There is just as much land, labor, and really resources (yes, I know oil, but we haven’t run out yet) as there was before the “The Great Slump of 2008”. Just our financial mechanisms, our “rules of the game”, are gummed up and subsiquently a lot of people are going to suffer over it.

So the question is, is there a way we can stop playing this game?

It’s the same question I ask myself in better times – there is more than enough food to feed everyone on the planet, and yet people starve. There is plenty of wood, concrete, whatever for every man, woman, and child to have a roof over their heads and yet people sleep out in the cold. What is missing is the will and the system to get this to people.

I know many claim “Capitalism” is the system that has the best hope of doing it, but not only hasn’t it worked in that regards (maybe yes, better than any alternative), it’s predication on “growth” threatens the our future by way of the planet on which we live.

What is the answer? I don’t know. But I do know the answer is not simply the mantra of “Capitalism” and “Free Trade”. We’ve tried that and it’s not getting us there. We have to stop believing that there are no other answers and start thinking again. Maybe “Capitalism” is the answer, but in a modified form, but we can’t just leave the status quo, because it’s killing us.

1 comment to The Great Slump of 1930

  • Albert Singh

    Two aspects of this essay by Keynes seem highly relevant today.

    I. Keynes stressed the threat which the slump posed to ‘the social stability of every country alike’.

    ‘… a series of bankruptcies, defaults, and repudiations which would shake the capitalist order to its foundations … would be a fertile soil for agitation, seditions, and revolution. It is so already in many quarters of the world.’

    The only place where I know this aspect of this essay of Keynes and his other writings has been discussed is in Donald Markwell’s book called ‘Economic Paths to War and Peace – John Maynard Keynes and International Relations’ (around pages 172-173).

    II. Keynes ended by stressing the necessity of the monetary authorities of the big economic powers acting together.

    ‘…nor can any one central bank do enough acting in isolation. … the most effectibe remedy would be that the central banks of these three great creditor nations [the United States, France, and England] should join together in a bold scheme to restore confidence to the international long-term loan market; which would serve to revive enterprise and activity everywhere, and to restore prices and profits, so that in due course the wheels of the world’s commerce would go round again.’

    As Markwell’s book also shows, this necessity of international economic action is one of the key lessons from Keynes’s thinking, at least from the aftermath of the First World War on.

    Does anybody else think these two points from Keynes are of the utmost importance to our current global meltdown?

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