Volume 7 (2012)
Most Downloaded Articles
- Excessive Ambitions by Elster, Jon
- Comment on "Implementing a Macroprudential Framework: Blending Boldness and Realism" (by Claudio Borio) by Calomiris, Charles W
- Animal Spirits Revisited by Dow, Alexander and Dow, Sheila C.
- Obliquity by Kay, John
- Capital Markets and Financial Politics: Preferences and Institutions by Roe, Mark J.
PSST: Patterns of Sustainable Specialization and Trade
Citation Information: Capitalism and Society. Volume 6, Issue 2, Pages –, ISSN (Online) 1932-0213, DOI: 10.2202/1932-0213.1086, December 2011
- Published Online:
This essay offers an alternative way to look at macroeconomics. The current standard approach uses aggregate supply and aggregate demand (AS-AD). I call the alternative approach "patterns of sustainable specialization and trade" (PSST). The PSST approach combines many old and new strands in economics. It suggests that the economy is a highly complex system that is constantly adapting to new circumstances, especially opportunities created by technological innovation. We can view employment fluctuations as a reflection of the difficulty that markets sometimes have in making the necessary adjustments, so that for a period of time some workers have extremely low marginal revenue product and as a result become unemployed.