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.
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