I’ve been doing some reading and it seems that the source of our present economic woes can be narrowed down to one or more of the following explanations:
Explanation School of Thought Workers overpaid neoclassical Jobless don't want work chicago school Falling rate of profit orthodox marxist Falling real wage share marxian Government choking business right-libertarian Rent seeking classical Excessive growth ecological Liquidity trap orthodox keynesian Demand deficiency post keynesian Net saving desire > NFA MMT Ineffective regulation institutionalist Wrong target (NGDP) market monetarism Wrong target (FP) MMR Hyperinflation austrian Imperialism trotskyist Moral malaise religious right Socialists in government gun lobby Government's run out of money official government position
Support for these competing theoretical explanations appears to vary across segments of the community. As best as I can tell …
Rentiers mostly prefer the argument that workers are overpaid (neoclassicism), but those who suspect interest and rent come out of surplus value might flirt with orthodox marxism. The claim that the government has run out of money (official government position) remains popular as a defence of austerity. Classical ideas on financial parasitism are not well received.
Workers are divided between those who think they are overpaid (neoclassical), those who think they don’t want to work (chicago school), those who think they should be paid more (marxian), those who blame big government (right-libertarian), those who fear hyperinflation (austrian), those who think God is punishing them (religious right), and those who believe the government is doing the best it can with scarce money (official government position).
Capitalists and business people tend to regard the competing theories as mostly insightful or instrumental, which is why work on them continues to attract funding, but there are a few ideas they consider unhelpful. They like the insight that workers are overpaid (neoclassical), that their profits are too low (orthodox marxist) and that the government chokes them (right-libertarian). Beliefs such as the government is running out of money (official government position) due to its socialism (gun lobby) and bringing down God’s vengeance (religious right) are regarded as instrumental, if not insightful. Suggestions that growth could be harmful (ecological), imperialism destructive (trotskyist), workers underpaid (marxian), or business under-regulated (institutionalist) are considered unhelpful. Buzz terms such as liquidity trap (orthodox keynesian), demand deficiency (post keynesian), net financial assets (modern monetary theory), NGDP-targeting (market monetarism) or Full Productivity (modern monetary realism) tend to fall into the WTF category as far as most business people are concerned, but in the spirit of “the more the merrier” these concepts are tolerated as long as they add to the general confusion.
Politicians prefer theories that excuse their own corruption and incompetence. Among their favorite explanations of our economic woes are moral malaise (religious right), workers don’t want to work (chicago school) and the central bank is out of money (official government position).
Finally, economists themselves are somewhat divided, as the large number of competing theories indicates. There are those who would like to see a synthesis of existing explanations into a single coherent framework. But many others feel that if funding levels for theoretical research are to be maintained, especially in the universities, it is perhaps best that the product differentiation into competing approaches continues at about the present rate. The above list of theories numbers eighteen, yet remains incomplete. With the right blend of diligence, careerism and self-promotion it seems conceivable that by the end of the decade the number of distinct theoretical explanations for our ongoing economic woes could triple.