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- Title
Systemic Viability and Credit Crunches: An Examination of Recent Canadian Cyclical Fluctuations.
- Authors
Seccareccia, Mario
- Abstract
The purpose of this article is to show that Canada's recent financial woes were the symptom of a wider liquidity problem, which, although it recurred cyclically during the postwar period, was heavily accentuated by a misguided policy of monetarist restraint from 1975 to 1982. It is the period leading to these 1985 financial difficulties that will be analyzed within the framework of a debt theory of capital formation along the lines set out by economists Thorstein Veblen, J.M. Keynes, J. Fagg Foster and economists of the modem French "Circuit" Schools. In accordance with the above-mentioned authors, who linked endogenous money creation primarily to firms' investment spending, and in opposition to the savings-centered theories of capital formation that make, as economist Clarence Ayres emphasized, "the aggregate of savings funds a limiting factor in the process of industrial growth," the analysis of cyclical fluctuations will be carried out within the framework of an explicit modem theory of debt formation that places emphasis on the ability of the banking institutions to finance by means of credit creation the accumulation of physical and financial capital. The article concludes with a brief discussion on the necessity for institutional adjustment so as to remove some of the constraining influences of present-day rentier capitalism.
- Subjects
CANADA; BUSINESS cycles; FINANCE; CANADIAN economy; LIQUIDITY (Economics); CENTRAL economic planning; ECONOMICS; CAPITALISM; CREDIT; CAPITAL
- Publication
Journal of Economic Issues (Association for Evolutionary Economics), 1988, Vol 22, Issue 1, p49
- ISSN
0021-3624
- Publication type
Article
- DOI
10.1080/00213624.1988.11504733