The Production of Money by Ann Pettifor

Author:Ann Pettifor
Language: eng
Format: epub
Publisher: Verso Books

But the achievement of full employment was disregarded by economists and policymakers then, much as it is disregarded today: as a non-event. They promoted instead an agenda based on ‘growth’ and financial liberalisation.

From the early 1960s with full unemployment at 2 percent, British policymakers echoed the OECD in setting an explicit target for real annual ‘growth’ of 4 percent. These unrealistic targets combined with financial deregulation inevitably led to the inflation of the 1960s and ’70s. Inflation was a consequence of financial liberalization, policies far removed from those promoted by Keynes, but nevertheless blamed on him.15

Finance was freed from so-called ‘repression’ during the 1960s and low interest rates were replaced by high real rates across the world.

Keynes is still wrongly blamed for these policies. Although they are portrayed by economists as reflecting the failure of Keynes, they are in fact arguments deployed to justify the intensification of financial liberalisation and globalisation.

From the point of view of Keynes’s theory, the most significant and dangerous change was the restoration of dear money in 1980. Since then, advanced economies have endured thirty-five years of generally high levels of unemployment, periodic financial crises and severe instability. This finally came to a head with the global financial crisis of 2007–09 after the greatest expansion of private debts could no longer be sustained.

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