Summary |
This book argues that the scientific concept of feedback-the idea that change in some element of a system can cause further change in that element-represents a general concept of economic change. Positive feedback causes runaway change, such as a market bubble, inflation or long-run growth, while negative feedback causes stability and stasis. Emphasizing both kinds of feedback stand in contrast to the equilibrium theories of classical economics which, in effect, emphasise negative feedback only. In practical terms, the feedback perspective implies a need for extensive government involvement in the economy to suppress undesirable feedback effects – such as those causing wild instability or self-perpetuating inequality – while supporting desirable feedback effects – such as those causing economic growth.
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