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Keynes was wrong | 57 comments (57 topical, 0 editorial, 0 hidden)
Re: Keynes was wrong (4.00 / 3)
Absent WWII Keynes might have been seen similar to Henry George. He would have his small group of die-hard fans claiming that if only we used his ideas everything would be better, but without a plausible story of how to politically getting from here to there. It is the problem with wanting to save the current system, when its leaders are busy destroying it.

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by A swedish kind of death on Sat May 31st, 2014 at 07:25:03 AM EST
Re: Keynes was wrong (4.00 / 5)
I think that there's something to the argument that the war made Keynes.

Without the opportunities for investment created by the destruction of Europe, would the Trente Glorieuses have taken place?

At some level, war automatically generates economic stimulus in its wake, because someone has to clean up and rebuild. Moreover, investment in basic research (so as to create ever more ingenious ways to kill one another) ensures at war's end that there is a standing catalog of new technologies to be commercialized.

Arguably, the same could be had by simply making investment in basic research without the killing, but as a species Is suspect we aren't that clever.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat May 31st, 2014 at 07:37:46 AM EST
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Re: Keynes was wrong (none / 0)
Has Keynesianism ever been tried out on a large scale without war?

I know he didn't invent a economism that takes war to prove its logic.

Keynesianism seems like a macro version of Giving Forward.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat May 31st, 2014 at 09:48:16 AM EST
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Re: Keynes was wrong (4.00 / 4)
Well, Sweden tried it without being in the war, but the war was still there.

I am thinking along the lines of Keynes ideas being there in the 30ies but even governemtns that tried stimulus then switched and got double-dip recession. That is in the capitalist west, fascists and comunists had less scruples about causing national debt in order to mobilise the resources of society.

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by A swedish kind of death on Sat May 31st, 2014 at 10:44:06 AM EST
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Re: Keynes was wrong (4.00 / 7)
...in the capitalist west, fascists and comunists had less scruples about causing national debt in order to mobilise the resources of society.

Michael Kalecki explains that phenomenon rather well. Once the business class bought in to the fascist rule they felt that the state WAS representing their interests and that they would benefit mightily from the bargain. From Kalecki:

                                                                     III

1.  One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism.  The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed.  In a democracy, one does not know what the next government will be like.  Under fascism there is no next government.

The dislike of government spending, whether on public investment or consumption, is overcome by concentrating government expenditure on armaments.  Finally, 'discipline in the factories' and 'political stability' under full employment are maintained by the 'new order', which ranges from suppression of the trade unions to the concentration camp.  Political pressure replaces the economic pressure of unemployment.

2.  The fact that armaments are the backbone of the policy of fascist full employment has a profound influence upon that policy's economic character.  Large-scale armaments are inseparable from the expansion of the armed forces and the preparation of plans for a war of conquest.  They also induce competitive rearmament of other countries.  This causes the main aim of spending to shift gradually from full employment to securing the maximum effect of rearmament.  As a result, employment becomes 'over-full'.  Not only is unemployment abolished, but an acute scarcity of labour prevails.  Bottlenecks arise in every sphere, and these must be dealt with by the creation of a number of controls.  Such an economy has many features of a planned economy, and is sometimes compared, rather ignorantly, with socialism.  However, this type of planning is bound to appear whenever an economy sets itself a certain high target of production in a particular sphere, when it becomes a target economy of which the armament economy is a special case.  An armament economy involves in particular the curtailment of consumption as compared with that which it could have been under full employment.

The fascist system starts from the overcoming of unemployment, develops into an armament economy of scarcity, and ends inevitably in war.



"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 31st, 2014 at 11:38:19 PM EST
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Keynes was wrong | 57 comments (57 topical, 0 editorial, 0 hidden)
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