The Grand Failure of Conventional Economics

Monday, April 4, 2011
By Paul Martin

By Charles Hugh Smith
FinancialSense.com
04/04/2011

The “fixes” of conventional economics such as Keynesian stimulus will all fail catastrophically within the next 10 years.

The next decade will see the complete failure of conventional economics. Why is this so?

If we take the very long view, we find that all of conventional economics developed in the era of ever-cheaper, ever-more abundant energy and the miraculous “low hanging fruit” productivity gains made possible by cheap energy and the tools of mass production and industrialization. Like a creature that was born in the morning and has only seen daylight, conventional economics has never experienced night and so it has no conception of darkness.

This is true of classical, neo-classical, Marxist, Socialist, Keynesian, Neoliberal, “Capitalism with Chinese characteristics,” etc.

Not one of these ideological strands of conventional economics recognizes the limits on conventional “growth” as measured by GDP, increased production, etc.When the planet’s population stood at 500 million, there were sufficient resources to enable a doubling to 1 billion. Then 1 billion tripled to 3 billion, which doubled to 6 billion. Now, the 600 million high-energy-consumption “middle class” of post-industrial economies is expanding four-fold to 2.4 billion.

The Rest…HERE

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