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Global crises: Is the Keynesian recipe relevant if applied under a global governance?

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  • Tamás Szentes

    () (Corvinus University of Budapest Department of World Economy, Faculty of Economics, Hungary)

Abstract

Keynesian policy was quite successful in the post-war decades in Western Europe, but by the late 1960s lost its efficiency due to changes in conditions rather than its mistaken logic. The lesson from the first global crisis erupting in early 1970s and also from the subsequent several crises since then is that the increasing crisis propensity of the world economy is rooted in its inherent disequilibria stemming from deep inequalities, asymmetrical interdependencies and disintegrated socio-economic structures. In view of the failure of the prevailing methods of crisis management, particularly those undifferentiated, antisocial austerity measures corresponding to a neo-liberal monetarist concept which neglects this lesson, many economists prefer the Keynesian recipe. However, since global crises need global solution, and the spread of conspicuous consumption modify the demand constraint, its application must be adjusted to reality, and requires some global governance which may pave the way for a global oeco-social market economy.

Suggested Citation

  • Tamás Szentes, 2013. "Global crises: Is the Keynesian recipe relevant if applied under a global governance?," Society and Economy, Akadémiai Kiadó, Hungary, vol. 35(3), pages 273-297, September.
  • Handle: RePEc:aka:soceco:v:35:y:2013:i:3:p:273-297
    Note: This paper is mostly based on some earlier writings of the author, but brings the conclusions further and reflects his rethinking of the revisited topics in the light of new phenomena, and under the spiritual influence of the excellent booklet of Richard Jolly et al. (2012).
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    More about this item

    Keywords

    globalisation; asymmetrical interdependencies; conspicuous consumerism; austerity measures; welfare state; oeco-social market economy; global governance; countervailing power;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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