Re: RE: Re: RE: reform and rev

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

> The argument that deficits cause high interest rates is also
> theoretically and empirically questionable.  More often the causation
> goes the other way--high interest rates mean higher interest payments on
> the public debt which cet par mean larger deficits.

Mat, good point indeed.


> The impact on poorer nations is a greater concern, not necessarily from
> deficits, but in general.  The argument can be made that a weak U.S.
> economy also has a negative impact on poorer nations, but the more
> important point I think is to focus on what kinds of policies those
> nations can use themselves to increase the living standards of its
> citizens and also to protect itself from vulnerability to global
> economic changes and econ developments in nations like the U.S.


but wasn't eisner right that if the US is going to finance public and
private debt with inflows of capital, then it has to keep its markets
open?


> > do you support deficit financing by the US govt to create jobs at all
> > times? can it ever be counter productive in effect both on a national
> > and global scale?
>
> I think my answer here is that of course it *can* be counter-productive,
> but that it *needn't* be counter-productive if designed right and
> accompanied by complementary policies.

OK so there are no conditions under which a hypothetical Keynesian
program would not work?

But you say otherwise below.



>   But I think these are certainly
> important issues to be carefully considered.  What would an argument be
> that public job creation would necessarily be counter-productive (in
> other words, no matter how designed, etc) under certain conditions (and
> what are those conditions)?

the program in itself could be effective without the stimulus being
effective in broader macro economic terms, no?



> I think your statement below about short-term band-aids potentially
> exacerbating long term problems is pretty accurate, but it is also the
> case that Shaikh at least believes that fiscal and monetary policies can
> have some effect, but there are limits.

And I'll have to read Shaikh to find out what he thinks they are!



> > >    There will be some
> > > division of labor--some will concentrate only on one or the other.
> Some
> > > will do both.  Both projects are important.
> > >
> > > I can't think of anyone on this list that believes Keynesian demand
> > > management can eliminate the contradictions of capitalism. I don't
> > > believe traditional Keynesian demand management can even achieve true
> > > full employment!
>
> > Again the reasoning behind your conclusion matters.
>
> Because, traditional Keynesian demand management 1) only looks at
> aggregate proportionality and balance and not intersectoral
> disproportionalities and imbalances;

your work on Adolph Lowe and the difficulties of the traverse?
You were very kind to send me a whole set of papers on lowe and
pasinetti, and i did read most of them, and learn quite a bit.



> 2) does not recognize the
> functionality of unemployment (and excess capacity generally) in
> capitalism;

as foley says in understanding capitalism, a Kaleckian wage squeeze
argument as to why full employment policy is not possible under
capitalism does not seem to go far enough because it suggests that
with wage control capitalism could achieve full employment.

For example, I think this is the implication of Doug's and Robt
Pollin's acceptance of only the Kaleckian limit to full employment
capitalism.


it would seem that a so called orthodox Marxian would want to reveal
deeper obstacles to full employment capitalism.


Rakesh