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La crisi e le responsabilità della teoria economica: la paura della complessità

Sergio Bruno ()
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Sergio Bruno: Dipartimento di Economia, Sapienza University of Rome Italy

No 4, Working Papers - Dipartimento di Economia from Dipartimento di Economia, Sapienza University of Rome

Abstract: The debate on the financial crisis risks to hide the black holes which are nested in accepted theories and policy guidelines. Among such black holes there are important issues: how money is created in a growing economy, which is the role of wealth assets not linked with current production, which are the relations between such phenomena and monetary savings, how chronological time affects production and in its changes, how the emergence of sophisticated contracts and the explosion of discretionary behaviours have complicated the problem of coordination. The paper, which aims at reaching an audience of social scientists wider than the economists’ community, shows that the endogenous creation of money for financing the productive activities (Wicksell) is unlikely to be sufficient to feed a moving economy. Additional money is likely to be needed. It can be provided by public deficit or by credit going to finance speculative investments. In the meanwhile monetary savings have a high probability to result, in developed economies, in excess with respect to productive investments. These interrelated elements may imply an inflation concerning the prices of unproductive assets and a possible displacement of real activities. However, while the inflation concerning productive flows is considered as an evil, everybody seems to be happy when the values of assets not directly connected with current production increase, and the central banks end up admitting that they support such tendencies. The paper discusses how we ought to revise policy strategies, favouring a non-Keynesian policy of deficit spending linked to long lasting programs and adopting banking policies for the financing of industrial projects.

Date: 2009
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