@HectorPollitt
www.linkedin.com AI could yet lead to large-scale job losses Will AI make us richer or cost us our jobs? There seems to be a massive range of opinions. One curious feature of the debate is that academic economists seem less worried about job losses than the... 
academic.oup.com Here we go again: the misuse of models and the looming climate crisis Abstract. Climate-related financial risks are characterized by path dependence, non-linear feedbacks, regime shifts and the possibility of endogenous insta This is an important limitation of the model. We focus on the supply side of the AI transition (what AI can do, how fast it spreads, how quickly workers change jobs).View quoted post on X
Prices are flexible and aggregate demand is equal to what the economy can produce.
More thoughts in 🧵
"The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a Society where wealth was divided equitably."
-John Maynard Keynes
I love this Keynes quote because if you follow the argument through Keynes and then Kalecki, you end up somewhere very different from where it starts.
Before WWI, wealth was incredibly concentrated. Rich households obviously couldn't consume all of their income, so a huge amount was saved while factories, railways, machinery and other capital were being built.
And from the outside that makes it look pretty simple. The rich had the money, the rich saved it, those savings financed investment, therefore you needed rich people and inequality to get capital accumulation.
But... Investment doesn't have to sit around waiting for somebody to save first. Banks can create the credit to finance investment, firms spend that money, that spending becomes somebody else's income, and out of the higher income comes the saving.
So investment can create the saving needed to account for it. Then Kalecki makes this even more interesting because the same thing happens with profits.
Capitalists aren't just sitting on some pile of previously accumulated profits and deciding how much of it they can afford to invest. When they invest, that spending itself helps generate profits across the capitalist sector.
That's where Kalecki's great line comes from: workers spend what they earn, capitalists earn what they spend.
And once you put those two ideas together, the old argument that we need massive inequality because rich people need to save enough money for society to invest starts falling apart.
We don't need to wait for someone to become incredibly wealthy and graciously stop consuming before we can build a factory.
We need real resources, financing, demand and someone willing to actually make the investment.
The saving shows up as a consequence of the income we create along the way.View quoted post on X
