Re: [OPE-L] Clifford D. Conner _A People's History of Science_

[glevy@xxxxxxxxx]

In December I sent a message about this book
<http://ricardo.ecn.wfu.edu/~cottrell/ope/archive/0612/0147.html>
which said that the author is looking for feedback on the section
on Keynesianism in his text.  Since that time, I've had an
exchange with Cliff (reproduced below).

A short excerpt from Chapter 8 of _The People's History of Science_
is  *attached*.

* Do you have any comments on what he wrote on Keynesianism in the
   attachment?
* Do you agree or disagree with my short comments?
* Would any of you care to reply to his additional questions below?

I'll forward replies to Cliff.

In solidarity, Jerry

----- Original Message -----
From: Cliff Conner
To: Jerry Levy
Sent: Sunday, February 04, 2007 10:15 AM
Subject: Re: Continuation of "Excerpt"


Dear Jerry,


Thanks so much for taking the time to do this. It's a great relief to know
that I didn't make a total ass of myself, and your numbered comments have
given me a lot to think about. I'd like to study economics more
systematically, but whether I actually will is another thing. (There are
lots of things I'd like to study more systematically, like French, but the
sands of time are rapidly running out . . . )  Maybe you could suggest
some good books as a starting point. I saw one advertised recently:
"Railroading Economics: The Creation of the Free Market Mythology" by
Michael Perelman. Are you familiar with that one?


Some reflections on your comments:


On point no. 1, is "underconsumption" an exact synonym for "crisis of
overproduction"? I confess that I thought it was generally agreed among
Marxists that the GD was a result of a crisis of overproduction. But then
again, my knowledge of Marxist economics comes from a relatively narrow
base of sources.


On point no. 2, I was careful not to say that "Keynes said" it would not
suffice to merely 'prime the pump' etc.  But I should have made it
clearer.  The sentence seems to imply that it came from Keynes, but I
meant for the point ("Government deficit spending was destined to become a
*permanent* condition . . . ) to stand or fall on the empirical record
rather than on Keynes's authority, and I assume that would be
noncontroversial except to people who take Eisenhower and Reagan's phony
claims to have "balanced the budget" for good coin.


On point no. 4, I see how that could be confusing, because Reagan's
economic ideologues would probably equate "Keynsianism" with the devil.
But can a case be made for distinguishing between what they said and wrote
and what they actually did in policy terms? The continuity I meant to
suggest was the continuity of ever-increasing deficit spending, whether
that be attributed to Keynes's influence or not.


As to subjecting the excerpt to the critique of OPE-L, your comments have
eased my mind to the point where I can say: sure, why not? And I would
appreciate it if you would add your comments into the package.


Thanks again, Jerry.


Cliff




On Feb 3, 2007, at 7:34 PM, Jerry Levy wrote:


  Hi Cliff:

  Sorry to take so long getting back to you: I've been pretty
  busy with other stuff.

  Re the section on Keynes:

  It's certainly not an "embarrassment" but I think that the section
  would have been written differently by an economist.

  Some basic points:

  1) The claim that "The Great Depression of the 1930s revealed
  that the capitalist system, left to its own devices has become so
  productive that it is no longer capable of generating enough
  purchasing power to absorb all of the products which with which it
  continuously floods the market"  is very debatable.  Whether
  the GD was caused by underconsumption is a topic that Marxians
  do not agree on. Ditto the claim about the reason(s) for the Marshall
  Plan.

  2) Deficit spending was intended by Keynes for a contractionary
  period.  The idea then was that as the economy recovered and
  opened up an expansionary gap (where there was excessive
  aggregate pending and inflation) then the government would cease
  deficit spending.  Indeed, the proposed fiscal policies then called
  for, from a Keynesian perspective,  tax increases and/or decreases
  in government spending.

  3) The "in the long-run we are all dead" comment has a different
  context than you suggested, I believe. I don't recall off-hand but can
  find out more if you like.  He didn't use it, as note #3 suggests, as an
  "all-purpose response".

  4) The text makes it sound as if Reagan's economic policies were
  a continuation of Keynesian ones.  That was not the case.

  If you'd like I'd still be happy to forward the excerpt to OPE-L.  More
  than likely, others would make further comments (and, if I included
  my own, some would probably disagree with me).

  Comradely, Jerry

Title: Excerpt from Chapter 8 of A PEOPLEÕS HISTORY OF SCIENCE

Excerpt from Chapter 8 of A PEOPLEÕS HISTORY OF SCIENCE

[N.B.: Source notes have been omitted. For sources of quotations, see the book.]

 

. . . the Cold War provided the rationale for the U.S. governmentÕs rapidly growing role in science after the war. Federal spending on academic research and development rose from less than $150 million in 1953 to almost $10 billion in 1990.

But the governmental stewardship of science did not diminish with the end of the Cold War; the much-anticipated Òpeace dividendÓ never materialized. [Footnote 1] The stated reason that federal R&D budgets continued to increase year by year was the need to remain economically competitive with rival industrial nations, but the permanent war economy in the United States is difficult to disguise. The portion of the R&D budget allocated to what is euphemistically called ÒdefenseÓ amounted to almost exactly half of the total of $75.4 billion in fiscal 2000. Another $8.4 billion went for space research officially categorized as civilian but ultimately motivated by considerations of its potential military applications. In the same spirit, Òthe Department of Energy, descended from the Manhattan Project, provides over $2 billion annually for physics, the nuclear sciences, and other disciplines in science and engineering.Ó

 

KEYNES AND THE PERMANENT CRISIS OF OVERPRODUCTION

Because the form, content, and direction of science have been so strongly influenced by immense expenditures on war-related research, knowing why those expenditures are made is essential to understanding the place of science in contemporary America. It certainly has nothing to do with preparedness to combat a genuine military threat. When the bugaboo of Òinternational communismÓ evaporated with the collapse of the Soviet Union, a new specious justification for maintaining the several-hundred-billion-dollar war budgetÑÒinternational terrorismÓÑwas quickly conjured up. Random acts of terrorism pose a real (if statistically miniscule) threat to some urban populations, but to think that the architects of American imperialism really fear raggedy groups of Islamic radicals is equivalent to belief in the bogeyman. An observation by Dr. Helen Caldicott renders the deceit apparent: the U.S. Department of Energy is currently engaged in Òa massive scientific undertaking costing 5 to 6 billion dollars annually for the next ten to fifteen years, to design, test, and develop new nuclear weapons,Ó but Òthe largest nuclear stockpile in the world can accomplish little in the face of terrorists armed with box cutters.Ó

Nor is the war spending primarily motivated by a desire for weapons for offensive purposes. Most of all, it is necessary to keep the wheels of the American economy from rapidly grinding to a halt. The Great Depression of the 1930s revealed that the capitalist system, left to its own devices, has become so productive that it is no longer capable of generating enough purchasing power to absorb all the products with which it continuously floods the market. John Maynard Keynes explained to Franklin Roosevelt that to create enough Òaggregate demandÓ to keep the economy from freezing up, governments would henceforth have to create new purchasing power (i.e., new jobs) by engaging in massive deficit spending. [Footnote 2]

It would not suffice to merely Òprime the pumpÓ and then step back to allow the invisible hand of supply and demand to reestablish economic equilibrium. Government deficit spending was destined to become a permanent condition, with deficits continuously increasing. When questioned as to what would happen Òin the long runÓ as governments continued endlessly piling up mountains of debt, KeynesÕs famous riposte was, ÒIn the long run we are all dead.Ó [Footnote 3]

Not all deficit spending, it was discovered, is equally effective in preventing economic gridlock. Using government money to produce useful things such as schools or housing or highways does not help because it competes with private capital, which puts downward pressure on the number of jobs in the private sector and on the purchasing power they represent. The most effective of RooseveltÕs public works programs were those that produced nothing, most notoriously exemplified by legions of workers with shovels digging holes and then filling them back in again. [Footnote 4] As useless as such activity would seem to be, it gave workers paychecks that allowed them to buy some of the surplus production without having them create more surplus products. But the apparent wastefulness was an insult to reason, and it was impossible in the American political context to explain that the paradox was an inescapable feature of the capitalist economic system.

In any event, the deficit spending represented by RooseveltÕs public works programs was far from adequate to lift the American economy out of the mire. What ended the Great Depression was the truly massive military expenditure in the run-up to World War II.

After the war the rebuilding of Europe through the Marshall Plan eased the problem of insufficient aggregate demand, but that was a temporary fix. To prevent the world economy from once again lapsing into a terminal crisis of overproduction, governments would have to continuously spend enormous amounts on utterly useless productionÑindustrial output that would not house, feed, clothe, or otherwise benefit anybody in any way. But how could that be justified? The answer was found in weapons systems deemed necessary (wink, wink) for national security. Thus was born the ever-increasing ÒdefenseÓ budget, which has been the primary source of science funding ever since. It is sad to have to conclude that the major portion of Big ScienceÕs attention has been and is still being directed toward a vast exercise in deliberate waste.

The most egregious example of Big ScienceÕs planned wastefulness is SDI, the Strategic Defense Initiative, popularly known as ÒStar Wars.Ó The Reagan administrationÕs 1983 announcement of the intention to create a ÒshieldÓ in outer space that could protect the United States from incoming missiles raised the prospect of massive federal investment in scientific research. The immense contracts at stake were a powerful inducement to corporate and university laboratories, but the rise of significant opposition to the program on the part of scientists was an unexpected development.

The Union of Concerned Scientists produced a detailed report entitled The Fallacy of Star Wars. ÒNationwide, some 2,300 university researchers were doing the unthinkable, pledging they would not apply for or accept the bountiful funds that the Strategic Defense Initiative Organization wished to infuse into academic research.Ó But the negative findings of independent scientists were no match for the power of government money. SDI officials Òreported over 3,000 applications for funds from university scientists willing to do business with the missile-defense program.Ó

And so SDI flourished and a great deal of junk science was paid for and produced over many years in the effort to provide it with credibility. After Reagan and the first President Bush, the Clinton administration changed the programÕs name to the Ballistic Missile Defense Organization, but continued to fund it. ÒFrom the birth of Star Wars, in 1984, to the end of the century, missile defense consumed over $60 billion. The enormous expenditures,Ó however, Òhave produced negligible results.Ó Bush the Younger has continued down the path toward the militarization of space; his administrationÕs National Missile Defense program has been aptly nicknamed ÒSon of Star Wars.Ó

 

FOOTNOTES:

 

 

1. Between 1990 and 2000 the total R&D budget rose steadily from $63.8 billion to $75.4 billion.

 

2. For an early example of KeynesÕ advice to Roosevelt, see his ÒOpen Letter to President RooseveltÓ (1933).

 

3. KeynesÕ first use of this phrase actually preceded the Great Depression (in his 1923 Tract on Monetary Reform), but he utilized it as an all-purpose response to deflect any and all questions concerning the Òlong run.Ó

 

4. Keynes, in his most important work, alluded to the benefits of this kind of apparently absurd economic activity: ÒIf the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise . . . to dig the notes up again . . . the real income of the community, and its capital wealth also, would probably become a good deal larger than it is.Ó Keynes, The General Theory of Employment, Interest and Money, chapter 10, section 6.