John Kenneth Galbraith and Marriner Eccles Explained 50 Years Ago that Inequality Causes Crashes → Washingtons Blog
John Kenneth Galbraith and Marriner Eccles Explained 50 Years Ago that Inequality Causes Crashes - Washingtons Blog

Monday, February 14, 2011







Galbraith wrote that in 1954.

Marriner S. Eccles - Federal Reserve chairman from 1934 to 1948 - made a similar point in his 1951 book Beckoning Frontiers:


Numerous prominent economists in government and academia have since agreed that large inequalities can cause - or at least contribute to - financial crises, including:


In addition, a large and healthy middle class has long been understood to lead to political stability. But America's middle class is being decimated.


As Robert Shiller said recently:

I think inequality is a huge emerging problem, and that our society has to think about dealing with it in a constructive and real way – not through ‘Let them eat credit,’ [a reference to the "let them eat cake" statement of the soon-to-be-deposed French aristocracy] not through wishful thinking. We have to understand how we get inequality and what we can do about it.

Shiller said in 2009:






  1. But that is not Galbraith, without doubt an intelligent and sensible man, but Marx' classical overproduction crisis. The Canadian was just borrowing the ideas from the German. This is perfectly legitimate, but let's not forget where do they come from and who is the founding father of objective (and not mere wishful thinking religion-like) economics: Karl Marx.

  2. Great post as always. There was a survey done about equality that has some interesting results. It seems almost no one thinks this inequality is good.

  3. Let me add this- concentrated wealth destroys democracies. To paraphrase JFK: Those who make peaceful equality impossible, make violent equality inevitable. We are fast approaching an "eat the rich" shift in people's thinking.

    I hear that a lot from conservatives that have been affected by the ongoing Gulf of Mexico disaster the media is ignoring. They feel that the US and its corporate overlords have turned their back on them and as loyal conservatives who hate liberal values like safety nets and such, they are now coming to terms with having to ask for handouts from the government. Swallowing ones pride and eating crow doesn't sit well with these people, especially if you have to wash it down with oil-tainted water and seafood.






-- Comments that explicitly call for violence
