Module 2, Lesson 2.2: The Bad: Aggregate Demand, Liquidity, and Financial Behavior

Written By SCEPA

In this second lesson of Module 2, Associate Professor Paulo dos Santos discusses the bad in the functioning of capitalist economies. He considers instability and crises in market functioning, and argues that a decentralised capitalist economy has persistent difficulties coordinating individual decisions in ways that sustain high measures of economic activity, incomes, and employment.

By the end of this video (3/5), learners will be able to:

  • Explain the paradox of thrift

  • Identify Keynes’ arguments about liquidity preferences and the level of aggregate demand

  • Describe how Kalecki’s understanding of the relationship between investment and profits creates potential problems of coordination in investment decisions.

SCEPA
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Module 2, Lesson 2.2: The Bad: Production Disruptions
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Module 2, Lesson 2.2: The Bad: Destabilizing Financial Behavior and Markets