By John Nicolarsen
Recent events surrounding the bill passed for the funding of the United States Government for most of 2015, especially viewed in light of the bailouts throughout the financial crisis, prompt this piece, a brief reminder of the prescience with which the contributions of Thorstein Veblen stand up to vividly contouring the “credit system” of his day and, I argue, of our times presently. In addition to Veblen we benefit in seeing the past and future rescue measures from the work of János Kornai, in re-affirming and slightly filling out the “social process” of the extents taken as a result of the “soft budget constraint” syndrome. [1]
For Veblen, the “effectual control of the economic situation, in business, industry, and civic life, rests on the control of credit.” [2] The extension and control of the “fabric of credit” in determining production and output and “what the market will bear” is undertaken by a “conscientious withdrawal of efficiency, as dictated by the law of balanced return,”[3] and “Balanced Return involves Balanced Unemployment.” [4]
