Debt deflation processes in today’s institutional environment

Abstract

In the observations of the economy as it moved towards the great collapse of the winter of 1932-33, the elements of what happens when the market system breaks down are revealed. The work looks at the successful interventions of the 1960s and 70s, detailing how incoherence can be constrained and a semblance of coherence imposed. The author argues that although the processes that make for debt deflations and over-indebtedness are persistent characteristics of capitalist economies, the actual result of these processes in observable behaviour depends upon the institutional context and the force of policy interventions. Moreover, economic administration cannot be reduced to a simple routine.

JEL: F34, E61