Giuseppe Eusepi and Richard E. Wagner: Public debt: an illusion of democratic political economy
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In Public Debt: An Illusion of Democratic Political Economy¸ Giuseppe Eusepi and Richard Wagner extend the theory of public debt by placing it on novel foundations. Provocative though their title may be, the thesis it suggests is strongly supported by arguments developed in six substantive chapters.
Chapter one focuses on the coherence of two prominent macroeconomic ideas: (1) the Keynesian approach to fiscal policy, and (2) the possibility that taxpayers are subject to ‘debt illusion’ in the context of increased public debt. Eusepi and Wagner show that these approaches to macro phenomena are illegitimate, because they assume that entire economies are teleological entities which are organizationally unified and seek some concrete end. Economies, however, are not organizations, but networksof organizations. Economies may exhibit certain systemic patterns, but they do not have an objective function. This basic error among mainstream theorists, whether on the left or right, causes them...