Democracy Into Oligarchy

Keynes had this idea that when there is unemployment, somehow the government spending has to come in and revive employment. That’s called Keynesianism. There are a lot of simple Keynesians – even Paul Krugman is that kind of Keynesian. Post Keynesians go beyond that – basically, if there is anyone we look to be beyond Keynes it’s Hyman Minsky, but also Randall Wray and myself. And we say that government normally has to not only run a deficit in order to revive the economy, it has to aim at raising living standards and wage levels, not increasing the economy just by printing money and giving it to the banks, which is what the Federal Reserve in America does and what the European Central Bank does. So, we put the real economy first, not the financial sector and the banks.

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Plato explained this many years ago. He said that there is an eternal triangle law: democracies turn into oligarchies and within the oligarchies, the oligarchy makes itself hereditary and turns into an aristocracy, and then the aristocrats fight amongst themselves and some of them try to take the people into their camp and become democrats and the whole thing begins all over again. So we’re in a stage of western civilization where we’re turning from democracy into oligarchy.

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