Austerity and fraud under different structures of technology and resource abundance

We present the implications of a simple analytical theory in which economic crisis emerges from rising real resource costs in systems with high fixed costs relative to variable costs. We show the integral role played by financial fraud in this process, and explain the effects of austerity and stimulus policies in the face of crisis under differing combinations of fixed and variable costs. Copyright The Author 2012. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.