From Financial Crisis to Stagnation The Destruction of Shared Prosperity and the Role of Economics

• Published in: Struggle in a Time of Crisis p. 8
• Main Author: Thomas I. Palley
• Format: Book Chapter
• Language: English
• Published: Pluto Press 20-11-2015
• Subjects: Applied economics; Development studies; Econometrics; Economic conditions; Economic crises; Economic disciplines; Economic fluctuations; Economic growth models; Economic liberalism; Economic modeling; Economic models; Economic policy; Economic recessions; Economic stagnation; Economic statistics; Economic theory; Economic trends; Economics; Employment rates; Employment statistics; Full employment; Globalization; International development; Keynesianism; Labor; Labor economics; Labor markets; Saltwater economics; Social sciences
• ISBN: 0745336213; 9780745336213
• DOI: 10.2307/j.ctt183p5st.7

Marshall McLuhan, the famed philosopher of media, wrote: ‘We shape our tools and they in turn shape us.’ His insight also applies to the economy which is shaped significantly by economic policy derived from economic ideas. The critical role of economic policy and ideas is central to understanding the continuing global economic crisis which is the product of flawed policies derived from flawed ideas.
Broadly speaking, there exists three different perspectives on the crisis. Perspective #1 is the hardcore neoliberal position, which can be labelled the ‘government failure hypothesis’. In the US it is identified with the Republican Party and