How to Beware and Deal with Economic Crisis: Two Examinations of the Austrian School’s Policy
- Available Online: 2020-01-01
Abstract: The economic crisis is rooted in the fact that a lot of wealth is consumed which results in insufficient savings and investment. Therefore, the policy to prevent and deal with the economic crisis should also be around it. (1) In order to beware of the economic crisis caused by the depletion of resources and the shortage of savings, a country needs to guide its products and industrial structure carefully according to the demand market of its products, especially needs to consciously restrict the production and investment of high-ranking products oriented on the domestic market, and the expropriation of luxury tax is an important means. (2) In order to get rid of the long-term economic depression because of the over-adjustment of the economic crisis, a country needs to adopt positive reverse policies but not simply resort to pure market mechanism, especially needs to expand consumption by Keynesian policies rather than increase savings according to Austrian School, and credit system and credit system are the important tools. Obviously, the economic cycle theory of tournament pricing system will help us to understand the trend of economic change more clearly; especially, it fully identifies and assimilates the reasonable elements of Keynesianism and Austrian School so as to put forward a more comprehensive strategy to guard against and deal with economic crisis.
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