I don’t pretend to be an expert on economics, either Austrian, Marxist, or Contemporary. Nor am I absolutely aware of every aspect of the current crisis. Other than watching perhaps a higher than average amount of news clips on youtube, and listening to both NPR Economy podcasts regularly, and reading the Globe and Mail, I havn’t done any specific research into current issues. However, it does seem that one problem we are seeing is over production leading to not only low prices but deflation – the continual lowering of prices over time, which discourages consumption and shrinks the amount of money changing hands.
Intuitively, it seems strange that low prices and over supply would be a problem – isn’t it better that we can produce more with less labour? Shouldn’t that mean we’d need to work less?
Maybe in a command economy we could just raise everyone’s hourly wage and ask them to work less. But in a market economy, France’s experiment of a legislated shorter workweek is generally considered a failure.
Two other depressing thoughts. First – Hegel. Hegel predicted that over-production is a problem that would plague industrialized economies, and believed it could only be solved through colonization and the creation of new markets for products. This is bad news because the world is already fully economically integrated.
Second – we don’t actually have a problem of “over production” – we hardly produce anything – Canada’s economy is 75% services. So, when we talk about over-production in our context, we’re talking about mostly over-services. I.e. too many jewlery stores, electronics stores – in other words firms that don’t actually produce anything of value. The fact that almost anything bought in a retail store could be ordered from a warehouse over the internet puts into question whether the retailer as a distributor adds any value whatsoever to the transaction.
One other thing – when we talk about our economy being in the duldrums we talk about the rate of consumption being on the decline. But, couldn’t that simply be because people are saving more? Why is saving rather than consuming bad for the economy?