Not that charges of underconsumption couldn't be fought in the courts.
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China's disparity of overproduction compared to underconsumption is destructive to both the U.S. economy and their own.
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The first puts pressure on public provision, the second leads to underconsumption as cash is left under the mattress.
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Even if a retiree can survive on low investment returns, underconsumption could mean they prematurely retract from spending time with friends and family.
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" In JFK's word choices, we can hear the echoes of President Franklin D. Roosevelt's rhetoric during the New Deal in the 1930s, replete as it was with exhortations to put and end to "underconsumption" and "idleness.
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The theory of underconsumption has been criticized by classical economists such as James Mill, by Karl Marx (explicitly in his crisis theory), Frederick Engels, and many subsequent Marxists,Bleaney, Michael Underconsumption Theories: A History and Critical Analysis (1976) and by Austrian economics. Overproduction and Underconsumption Fallacies Underconsumption was criticized by Adam Smith, who wrote "What is prudence in the conduct of every private family can scarce be folly in that of a great Kingdom," and on grounds of Christian morality.As discussed in Keynes, The General Theory, Chapter 23.
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In his book Underconsumption Theories from 1976, Michael Bleaney defined two main elements of classical (pre-Keynesian) underconsumption theory. First, the only source of recessions, stagnation, and other aggregate demand failures was inadequate consumer demand. Second, a capitalist economy tends toward a state of persistent depression because of this. Thus, underconsumption is not seen as part of business cycles as much as (perhaps) the general economic environment in which they occur.
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Underconsumption is a theory in economics that recessions and stagnation arise from an inadequate consumer demand, relative to the amount produced. In other words, there is a problem of overproduction and overinvestment during a demand crisis. The theory formed the basis for the development of Keynesian economics and the theory of aggregate demand after the 1930s. thumb Underconsumption theory narrowly refers to heterodox economists in Britain in the 19th century, particularly from 1815 onwards, advanced the theory of underconsumption and rejected classical economics in the form of Ricardian economics.
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Malthus devoted a chapter of Principles (1836) to underconsumption theory, which was rebutted by David Ricardo, in his Notes on Malthus, and which debate continued in private correspondence.Maclachlan, Fiona C. (Fiona Cameron), The Ricardo-Malthus Debate on Underconsumption: A Case Study in Economic Conversation , History of Political Economy - Volume 31, Number 3, Fall 1999, pp. 563-574. Malthus was credited by Keynes as a predecessor for his views on effective demandKeynes, Essays in Biography, 1933, p. 103. and, other than Malthus, Keynes did not credit the existence of other proponents of underconsumption, stating instead that Ricardo "conquered" English economics.
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John Atkinson Hobson (6 July 1858 – 1 April 1940) was an English economist and social scientist. Hobson is best known for his writing on imperialism, which influenced Vladimir Lenin, and his theory of underconsumption. His principal and earliest contribution to economics was the theory of underconsumption, a scathing criticism of Say's law and classical economics' emphasis on thrift. However, this discredited Hobson among the professional economics community from which he was ultimately excluded.
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Sometime after the peak of the business cycle in 1923, more workers were displaced by productivity improvements than growth in the employment market could meet, causing unemployment to slowly rise after 1925. Also, the work week fell slightly in the decade prior to the depression. Wages did not keep up with productivity growth, which led to the problem of underconsumption. Henry Ford and Edward A. Filene were among prominent businessmen who were concerned with overproduction and underconsumption.
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An underconsumption theory of the economic cycle was given by John A. Hobson in his Industrial System (1910). William Trufant Foster and Waddill Catchings developed a theory of underconsumption in the 1920s that became highly influential among policy makers. The argument was that governmental intervention, especially spending on public works programs, was essential to restore the balance between production and consumption. The theory strongly influenced Herbert Hoover and Franklin D. Roosevelt to engage in massive public works projects.
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Compare to the tendency of the rate of profit to fall, which has a similar belief in stagnation as the natural (stable) state, but which is otherwise distinct and in critical opposition to underconsumption theory.
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However, none of these groups proved persuasive enough for Hobson; rather it was his collaboration with a friend, the businessman and mountain climber Albert F. Mummery, that would produce Hobson's contribution to economics: the theory of underconsumption. First described by Mummery and Hobson in the book Physiology of Industry (1889), underconsumption was a scathing criticism of Say's law and classical economics' emphasis on thrift. The forwardness of the book's conclusions discredited Hobson among the professional economics community. Ultimately he was excluded from the academic community.
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290, who discusses other examples. They are cited and discussed by John Maynard Keynes in The General Theory, Chapter 23. Notes on Mercantilism, The Usury Laws, Stamped Money and Theories of Under-Consumption, section VII The concept of underconsumption had been used repeatedly as part of the criticism of Say's Law until underconsumption theory was largely replaced by Keynesian economics which points to a more complete explanation of the failure of aggregate demand to attain potential output, i.e., the level of production corresponding to full employment.
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One of the early underconsumption theories says that because workers are paid a wage less than they produce, they cannot buy back as much as they produce. Thus, there will always be inadequate demand for the product.
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The results of the unplanned "anarchy" of the capitalist market system can be seen in the crisis of overproduction, and underconsumption. One such example, according to the Socialist Party of Great Britain, was the 2008 financial crisis.
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Marriott, B.M. Not Eating Enough, Overcoming Underconsumption of Military Operational Rations. National Academy Press. Washington, DC. 1995. p. 100-105. Following these trials, a new military nutrition research division known as the Nutrition Task Force was established at the U.S. Army Research Institute of Environmental Medicine.
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In economics, overproduction, oversupply, excess of supply or glut refers to excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment. The demand side equivalent is underconsumption; some consider supply and demand two sides to the same coin – excess supply is only relative to a given demand, and insufficient demand is only relative to a given supply – and thus consider overproduction and underconsumption equivalent. Overproduction is often attributed as due to previous overinvestment – creation of excess productive capacity, which must then either lie idle (or under capacity), which is unprofitable, or produce an excess supply.
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Barthélemy de Laffemas (1545–1612) In 1598 French mercantilist economist Barthélemy de Laffemas (1545–1612) published Les Trésors et richesses pour mettre l'Estat en splendeur, which blasted those who frowned on French silks because the industry created employment for the poor, the first known mention of underconsumption theory, which was later refined by John Maynard Keynes.
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Underconsumptionists were, like Keynes after them, concerned with failure of aggregate demand to attain potential output, calling this "underconsumption" (focusing on the demand side), rather than "overproduction" (which would focus on the supply side), and advocating economic interventionism. Keynes specifically discussed underconsumption (which he wrote "under-consumption") in the General Theory, in Chapter 22, Section IV and Chapter 23, Section VII. Numerous concepts were developed earlier and independently of Keynes by the Stockholm school during the 1930s; these accomplishments were described in a 1937 article, published in response to the 1936 General Theory, sharing the Swedish discoveries. The paradox of thrift was stated in 1892 by John M. Robertson in his The Fallacy of Saving, in earlier forms by mercantilist economists since the 16th century, and similar sentiments date to antiquity.
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Foster and Catchings rejected traditional laissez-faire economics and called for aggressive federal involvement to balance the economy lest destabilizing forces upset prosperity. The main problem was underconsumption, which could be overcome by strategic government spending in public works. The theory strongly influenced the anti-depression programs of Herbert Hoover, Franklin D. Roosevelt, and Federal Reserve Board Chairman Marriner Eccles.
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Later, he argued that maldistribution of income resulted, through oversaving and underconsumption, in unemployment and that the remedy was in eradicating the "surplus" by the redistribution of income by taxation and the nationalization of monopolies. He opposed the First World War and advocated the formation of a world political body to prevent wars. Following the war, he became a reformist socialist.
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Underconsumption theory dates to the earlier economic theory of mercantilism, and an early history of underconsumptionism is given in Mercantilism by Eli HeckscherVolume II. Cited and discussed by John Maynard Keynes in The General Theory, Chapter 23. Notes on Mercantilism, The Usury Laws, Stamped Money and Theories of Under-Consumption, section VII Underconsumption was a small part of mercantilist theory, in Heckscher's view, but was discussed by a number of authors. The earliest reference given was to Barthélemy de Laffemas, who in 1598 in The Treasures and riches to put the State in Splendor "denounced the objectors to the use of French silks on the ground that all purchasers of French luxury goods created a livelihood for the poor, whereas the miser caused them to die in distress,"Keynes's wording. an early form of the paradox of thrift.
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The economists did not form a unified school, and their theories were rejected by mainstream economics of the time. Underconsumption is an old concept in economics that goes back to the 1598 French mercantilist text Les Trésors et richesses pour mettre l'Estat en Splendeur (The Treasures and riches to put the State in Splendor) by Barthélemy de Laffemas, if not earlier.Cited in Mercantilism, by Eli Heckscher, vol. ii, p.
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Modern Keynesian economics has largely superseded underconsumption theories. Falling consumer demand need not cause a recession, since other parts of aggregate demand may rise to counteract this effect. These other elements are private fixed investment in factories, machines, and housing, government purchases of goods and services, and exports (net of imports). Further, few economists believe that persistent stagnation is the normal state toward which a capitalist economy tends.
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Writing his ideas may have been required to receive support from Henry IV. They acted as a balance to those of Sully, more interested in agriculture. In the same year Laffemas published Les Trésors et richesses pour mettre l'Estat en splendeur, which blasted those who frowned on French silks because the industry created employment for the poor. This is the first known mention of Underconsumption Theory, which is later refined by John Maynard Keynes.
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Imperialism gained Hobson an international reputation, and influenced such notable thinkers as Vladimir Lenin and Leon Trotsky, and Hannah Arendt's The Origins of Totalitarianism (1951). Hobson wrote for several other journals before writing his next major work, The Industrial System (1909). In this tract he argued that maldistribution of income resulted, through oversaving and underconsumption, in unemployment and that the remedy was in eradicating the "surplus" by the redistribution of income by taxation and the nationalization of monopolies.
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In addition to its metabolic roles, succinate serves as an intracellular and extracellular signaling molecule. Extra-mitochondrial succinate alters the epigenetic landscape by inhibiting the family of 2-oxogluterate-dependent dioxygenases. Alternative, succinate can be released into the extracellular milieu and the blood stream where it is recognized by target receptors. In general, leakage from the mitochondria requires succinate overproduction or underconsumption and occurs due to reduced, reverse or completely absent activity of SDH or alternative changes in metabolic state.
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They also asked many fundamental questions, about the source of value, the causes of economic growth and the role of money in the economy. They supported a free-market economy, arguing it was a natural system based upon freedom and property. However, these economists were divided and did not make up a unified current of thought. A notable current within classical economics was underconsumption theory, as advanced by the Birmingham School and Thomas Robert Malthus in the early 19th century.
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The term contradiction means a general controversy in the system, usually concerning some short term vs. long term trade-offs. For example, the problem of underconsumption, wherein the drive-down of wages increases the profit for the capitalists on the short-run, but considering the long run, the decreasing of wages may have a crucially harmful effect by reducing the demand for the product. The last temporal feature is the crisis: a crisis occurs, if a constellation of circumstances brings about the end of the system.
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Eventually, this will cause a fall in the mass of profit, giving way to decline and crisis. Many advocates of Marxian economics reject underconsumptionist stagnation theories. However, Marxian economist James Devine has pointed to two possible roles for underconsumption in the business cycle and the origins of the Great Depression of the 1930s."The Origins of the 1929-33 Great Collapse: A Marxist Interpretation" First, he interprets the dynamics of the U.S. economy in the 1920s as being one of over-investment relative to demand.
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Keynes, General Theory, 1936, p. 32. This is now understood to be false – other British proponents of underconsumption are now well-established, but, as Keynes demonstrated, they were poorly documented, and by the 1930s not well-known. Further, they did not form a unified school, but rather related heterodox ideas. The Birmingham School of economists argued an underconsumptionist theory from 1815, and some of the writings of the school's leading member Thomas Attwood contained formulations of the multiplier effect and an income-expenditure model.
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David Gordon, John Roemer, Herbert Gintis, Jon Elster, and Adam Przeworski have adopted the techniques of neoclassical economics, including game theory and mathematical modeling, to demonstrate Marxian concepts such as exploitation and class conflict.Barry Stewart Clark, Political economy: a comparative approach, ABC-CLIO, 1998, p. 67. The neo- Marxian approach integrated non-Marxist or "bourgeois" economics from the post-Keynesians like Joan Robinson and the neo-Ricardian school of Piero Sraffa. Polish economists Michał Kalecki, Rosa Luxemburg, Henryk Grossman, Adam Przeworski, and Oskar Lange were influential in this school, particularly in developing theories of underconsumption.
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114 The productive classes, Gray calculated, only received about one- fifth of the wealth that they created, the other four-fifths being taken from them by rent, interest and capitalist profits. The root cause of this, he argued, was underconsumption. He said that production should only be limited by either the satisfaction of all the wants of society, or the exhaustion of its productive powers. Capitalist competition, however, introduced an artificial barrier to production, limiting it to "demand", which was measured by the amount that could be sold at a profit.
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Karl Marx outlined the inherent tendency of capitalism towards overproduction in his seminal work, Das Kapital. According to Marx, in capitalism, improvements in technology and rising levels of productivity increase the amount of material wealth (or use values) in society while simultaneously diminishing the economic value of this wealth, thereby lowering the rate of profit—a tendency that leads to the paradox, characteristic of crises in capitalism, of "reserve army of labour" and of “poverty in the midst of plenty”, or more precisely, crises of overproduction in the midst of underconsumption.
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Apart from them, Wallerstein defines four temporal features of the world system. Cyclical rhythms represent the short- term fluctuation of economy, and secular trends mean deeper long run tendencies, such as general economic growth or decline. The term contradiction means a general controversy in the system, usually concerning some short term versus long term tradeoffs. For example, the problem of underconsumption, wherein the driving down of wages increases the profit for capitalists in the short term, but in the long term, the decreasing of wages may have a crucially harmful effect by reducing the demand for the product.
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They advocated government intervention and socialism, respectively, as the solution. This work did not generate interest among classical economists, though underconsumption theory developed as a heterodox branch in economics until being systematized in Keynesian economics in the 1930s. Sismondi's theory of periodic crises was developed into a theory of alternating cycles by Charles Dunoyer, and similar theories, showing signs of influence by Sismondi, were developed by Johann Karl Rodbertus. Periodic crises in capitalism formed the basis of the theory of Karl Marx, who further claimed that these crises were increasing in severity and, on the basis of which, he predicted a communist revolution.
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The first are the demand-driven theories, from Keynesian and institutional economists who argue that the depression was caused by a widespread loss of confidence that led to drastically lower investment and persistent underconsumption. The demand-driven theories argue that the financial crisis following the 1929 crash led to a sudden and persistent reduction in consumption and investment spending, causing the depression that followed. Once panic and deflation set in, many people believed they could avoid further losses by keeping clear of the markets. Holding money therefore became profitable as prices dropped lower and a given amount of money bought ever more goods, exacerbating the drop in demand.
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Some authorities define essential hypertension as that which has no known explanation, while others define its cause as being due to overconsumption of sodium and underconsumption of potassium. Secondary hypertension indicates that the hypertension is a result of a specific underlying condition with a well-known mechanism, such as chronic kidney disease, narrowing of the aorta or kidney arteries, or endocrine disorders such as excess aldosterone, cortisol, or catecholamines. Persistent hypertension is a major risk factor for hypertensive heart disease, coronary artery disease, stroke, aortic aneurysm, peripheral artery disease, and chronic kidney disease. Cardiac output and peripheral resistance are the two determinants of arterial pressure.
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" What America instead needed to do: :Is the soberer, less dramatic business of administering resources and plants already in hand, of seeking to reestablish foreign markets for our surplus production, of meeting the problem of underconsumption, of adjusting production to consumption, of distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people. The day of enlightened administration has come. Parts of his speech had a gloomy tone: "A glance at the situation today only too clearly indicates that equality of opportunity as we have known it no longer exists." "We are steering a steady course toward economic oligarchy, if we are not there already.
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In continental Europe, Jean Charles Léonard de Sismondi proposed underconsumption and overproduction as causes of the economic cycle, in his Nouveaux Principes d'économie politique (1819), in one of the earliest systematic treatments of economic cycles. Properly, Sismondi discussed periodic economic crises, while the notion of a cycle was devised by Charles Dunoyer in his reconciliation of Sismondi's work with classical economics. The multiplier dates to work in the 1890s by the Australian economist Alfred De Lissa, the Danish economist Julius Wulff, and the German- American economist Nicholas Johannsen,The origins of the Keynesian revolution, by Robert William Dimand, p. 117Johannsen is cited in a footnote in: Nicholas Johannsen also proposed a theory of effective demand in the 1890s.
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Henry Wise Wood declined to seek re-election as UFA President at its 1931 convention, and was replaced by Robert Gardiner. In contrast to Wood, Gardiner was firmly entrenched on the progressive movement's left-wing. He denounced Brownlee's approach to economic policy, saying that his austerity only exacerbated the problem of underconsumption. Under Gardiner, the UFA moved increasingly to the left, well out of step with the Brownlee government, and passed resolutions calling for the nationalization of land, radio broadcasting, and hydroelectricity, along with the cancellation of interest payments as long as the price of agricultural commodities was less than the cost of their production.Foster (1981) 197–198 In 1932, prominent UFA members—including MP William Irvine—attended the founding convention of the Co-operative Commonwealth Federation in Calgary.
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The first systematic exposition of economic crises, in opposition to the existing theory of economic equilibrium, was the 1819 Nouveaux Principes d'économie politique by Jean Charles Léonard de Sismondi."Over Production and Under Consumption" , ScarLett, History Of Economic Theory and Thought Prior to that point classical economics had either denied the existence of business cycles, blamed them on external factors, notably war, or only studied the long term. Sismondi found vindication in the Panic of 1825, which was the first unarguably international economic crisis, occurring in peacetime. Sismondi and his contemporary Robert Owen, who expressed similar but less systematic thoughts in 1817 Report to the Committee of the Association for the Relief of the Manufacturing Poor, both identified the cause of economic cycles as overproduction and underconsumption, caused in particular by wealth inequality.
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Although Keynes's work was crystallized and given impetus by the advent of the Great Depression, it was part of a long-running debate within economics over the existence and nature of general gluts. A number of the policies Keynes advocated to address the Great Depression (notably government deficit spending at times of low private investment or consumption), and many of the theoretical ideas he proposed (effective demand, the multiplier, the paradox of thrift), had been advanced by various authors in the 19th and early 20th centuries. Keynes's unique contribution was to provide a general theory of these, which proved acceptable to the economic establishment. An intellectual precursor of Keynesian economics was underconsumption theories associated with John Law, Thomas Malthus, the Birmingham School of Thomas Attwood, and the American economists William Trufant Foster and Waddill Catchings, who were influential in the 1920s and 1930s.
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Business cycle is used by Keynesians to explain liquidity traps, by which underconsumption occurs, to argue for government intervention with fiscal policy. David McNally of the University of Houston argues in the Marxist tradition that the logic of the market inherently produces inequitable outcomes and leads to unequal exchanges, arguing that Adam Smith's moral intent and moral philosophy espousing equal exchange was undermined by the practice of the free market he championed. According to McNally, the development of the market economy involved coercion, exploitation and violence that Smith's moral philosophy could not countenance. McNally also criticizes market socialists for believing in the possibility of fair markets based on equal exchanges to be achieved by purging parasitical elements from the market economy such as private ownership of the means of production, arguing that market socialism is an oxymoron when socialism is defined as an end to wage labour.
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Studies in economics, William Smart, 1895, p. 249 Keynes himself notes the appearance of the paradox in The Fable of the Bees: or, Private Vices, Publick Benefits (1714) by Bernard Mandeville, the title itself hinting at the paradox, and Keynes citing the passage: Keynes suggests Adam Smith was referring to this passage when he wrote "What is prudence in the conduct of every private family can scarce be folly in that of a great Kingdom." The problem of underconsumption and oversaving, as they saw it, was developed by underconsumptionist economists of the 19th century, and the paradox of thrift in the strict sense that "collective attempts to save yield lower overall savings" was explicitly stated by John M. Robertson in his 1892 book The Fallacy of Saving, writing: Similar ideas were forwarded by William Trufant Foster and Waddill Catchings in the 1920s in The Dilemma of Thrift. Keynes distinguished between business activity/investment ("Enterprise") and savings ("Thrift") in his Treatise on Money (1930): He stated the paradox of thrift in The General Theory, 1936: The theory is referred to as the "paradox of thrift" in Samuelson's influential Economics of 1948, which popularized the term.
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