I was struck by a fascinating piece of video that digests 200 years of economic history through the power of rap music. Now, words like John Maynard Keynes, Schumpeter, fiscal control and the economic theory of the firm are not part of the normal rapper’s lexicon, so I was intrigued. Check the video out:
Lest we forget, here are the main arguments: John Maynard Keynes is the economist responsible for the currently popular belief in the western world that we should intervene to find our way out of economic recessions and depressions. His thinking has been at the centre of banking bail outs and the use of quantitative easing as a mechanism for recovery.
The Austrian, Friedrich August Hayek argued for classical liberalism and free market capitalism. In other words, markets should be freed to find their own level, using the price mechanism as a means of spontaneous organisation. Keynes was not keen on Hayek’s idea that self organisation and a more organic approach could replace an interventionist outlook with strong planning. And so the economics pendulum swings.
Joseph Schumpeter argued that Keynes’s ideas expressed “the attitude of a decaying civilisation”. He saw Keynes’s approach as short-termist and unable to consider the economic problems of other nations. In a global village, it is certainly true that we are at the mercy of other economies’ troubles. Does that however mean we should lay down and pretend to be dead when boom turns to bust? This was predicted as early as 1974 by pop art group 10 CC with their stern warning ‘Wall Street Shuffle':
So, who can we trust to lead us into a new world economy? If seems that, if you laid all the academic economists in the world end to end, they would not reach a conclusion. More of the same is likely to lead us into a debt fuelled prison. Is it time to mix macro-economics with a bit of sociology, courtesy of the rappers and systemic mappers?