What Ails Greece? The Two Perspectives in Macroeconomics

Phelps, Edmund S.

Greece’s failed economy is attracting the attention of a great range of economists. Some prominent economists adopt the reductionist theory that the rewards sought from a nation’s economy boil down to employment--and employment is determined by “demand.” They say that a fiscal shift to a newfound “austerity” has decreased demand and thus depressed employment. But the evidence does not verify that austerity is the main cause. We must not be obsessed by a monistic theory of everything. A fuller understanding requires more than one model. It would be useful if economists would draw on the modern idea that a person’s rewards from work in the nation’s economy derive, directly or indirectly, from entrepreneurial and innovative activity. Greece’s problem is that it is sorely lacking in that.

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More About This Work

Academic Units
Center on Capitalism and Society
Center on Capitalism and Society, Columbia University
Center on Capitalism and Society Working Papers, 87
Published Here
September 19, 2017