One of the little-celebrated powers of Presidents (and other high government officials) is to listen to their critics with just enough sympathy to ensure their silence.
John Kenneth GalbraithRead
It had been held that the economic system, any capitalist system, found its equilibrium at full employment. Left to itself, it was thus that it came to rest. Idle men and idle plant were an aberration, a wholly temporary failing. Keynes showed that the modern economy could as well find its equilibrium with continuing, serious unemployment. Its perfectly normal tendency was to what economists have since come to call an underemployment equilibrium.
Interpretation
What this quote means
The quote explains that a capitalist economy can stabilize even with persistent unemployment, contradicting the belief that full employment is its natural state.
John Kenneth Galbraith emphasizes a fundamental principle about capitalist economies; traditionally, it was believed that they achieve balance through full employment. However, he argues that a capitalist system can stabilize at a state of underemployment, where significant numbers of people remain jobless, challenging the assumption that idle resources are merely temporary disruptions. This insight reshapes our understanding of economic equilibrium and highlights the complexities of labor markets.
Themes
EconomyCapitalismEmploymentUnemploymentEquilibrium
In practice
Example use cases
Discussing the implications of economic policies in a classroom setting.
More from John Kenneth Galbraith
All quotes βIf all else fails, immortality can always be assured by spectacular error.
John Kenneth GalbraithRead
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.
John Kenneth GalbraithRead
All successful revolutions are the kicking in of a rotten door.
John Kenneth GalbraithRead
Money differs from an automobile or mistress in being equally important to those who have it and those who do not.
John Kenneth GalbraithRead
People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.
John Kenneth GalbraithRead
Similar quotes
Adam Smith's 'invisible hand' is not above sudden, disturbing, movements. Since its inception, capitalism has known slumps and recessions, bubble and froth; no one has yet dis-invented the business cycle, and probably no one will; and what Schumpeter famously called the 'gales of creative destruction' still roar mightily from time to time. To lament these things is ultimately to lament the bracing blast of freedom itself.
Margaret ThatcherRead
Everyone may have some advise for the RBI. Some may advise, 'Cut your lending rates and raise the deposit rate.' How will a bank function? We take a medium term view. The bank has an 80-year-old history. I don't want to destroy it for a few decisions.
Raghuram RajanRead
Economics is a choice between alternatives all the time. Those are the trade-offs.
Paul SamuelsonRead
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
Friedrich August Von HayekRead
My premise is not to tax to destroy the wealth of the wealthy; it's to increase the wealth of the bottom and the middle class.
Thomas PikettyRead
While it was an experiment to bring them together, nothing has divided Europe as much as the euro.
Joseph StiglitzRead