[PEN-L:3870] Re: stock market & investment

[T1EFRANK@xxxxxxxxxxxxx]

  The chapter in the General Theory on long-term expectations is
confusing largely, I believe, due to Keynes' distinction between
entreprenuers (the good guys) and speculators (the bad guys).  Keynes
clings to this distinction, even while noting that the heroic
entreprenuers are capable of botching things quite badly on their own.
Still, he wants to blame the speculators for -- what exactly?  Doug is
right here.  It's not clear what the financial sector is being blamed for.
Driving the investment decisions of "productive" enterprise? Or encouraging
entrepreneurs to seek the safety of liquidity over the risk of long
term investments (by providing an array of liquid investment vehicles)?

	I always felt that Keynes, in chapter 12, was talking about the
latter rather than the former problem.  That the very existence of
speculative financial markets might entice entrepreneurs down the
speculative path.  Isn't that what the statement about "enterprise
becoming a bubble on the whirlpool of speculation" means?  But of course
when enterprise is just one more form of speculation, and entrepreneurs
just one more class of speculators, productive capitalists lose a good
deal of their moral capital.

	The problem, as many have pointed out, is that Keynes was not
a critic of capitalism.  His own political writings make this clear.
His object was to try and rescue capitalism from itself.  Which may be
impossible.

		Ellen Frank