IDEAS home Printed from https://ideas.repec.org/a/mje/mjejnl/v6y2010i12p43-51.html
   My bibliography  Save this article

On The Business Cycle And The Failure Of The Welfare State (Austrian Explanation)

Author

Listed:
  • Igor Luksic

Abstract

By addressing the consequences of the ongoing crisis as well as the stimulus packages implemented by governments it appears that time is near to start reexamining the whole approach to the economic system. The concept of the welfare state has been profoundly shaken. Fundamental thesis outlaid by the classical economics and the Austrian school are still very much relevant, as the need to face structural misbalances closely related to high public expenditures grows. The issues some EU member states have with the state of their public finances cannot emphasise that challenge enough. Though certain state functions keep their legitimacy it takes a refreshed definition of state. At the same time, there is a need to revisit economics and the relations between micro and macro aspect as well as to reexamine aggregates such as GDP. It is clear one cannot ignore the need of humans to live in community, but also the fact our decisions are motivated by various reasons and therefore could not be predetermined. Knowledge plays role of energy that moves market forces keeping entrepreneurs awake. Extinguishing that energy is a safe way to suffocate market forces. On the other hand, it is in the human nature to give strong legitimacy to the institutions of egalitarianism which causes the need to unify different scientific research in order to identify the long term trends. By reaffirming the Austrian business cycle theory and the need to revisit the boundaries of the state's interference into the economy it seems that economics need new energy of thought to invent a new general economics theory. This paper practices the hypothesis that consistent economic policy cannot but encompass rational nutshell of every economic theory in its mission to address the micro and macro characteristics of a concrete economy.

Suggested Citation

  • Igor Luksic, 2010. "On The Business Cycle And The Failure Of The Welfare State (Austrian Explanation)," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 6(12), pages 43-51.
  • Handle: RePEc:mje:mjejnl:v:6:y:2010:i:12:p:43-51
    as

    Download full text from publisher

    File URL: http://repec.mnje.com/mje/2010/v06-n12/mje_2010_v06-n12-a10.pdf
    Download Restriction: no

    File URL: http://repec.mnje.com/mje/2010/v06-n12/mje_2010_v06-n12-a10.html
    Download Restriction: no

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mje:mjejnl:v:6:y:2010:i:12:p:43-51. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nikola Draskovic Jelcic). General contact details of provider: http://www.mnje.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.