Re: German real wages in the Depression\Classical Views

[Jim Devine <jdevine03@xxxxxxxxx>]

I wrote:
> >FWIW, some Marxists advocate a self-correcting recovery [theory] like this, though
> >it's not just concerning wages. It also involves mass bankruptcies of
> >usually-smaller capitalists.

Paul writes: >  But WHO, in the last half
> century, do you think actually says this? (serious question).  I mean truly
> "advocate a self-correcting recovery", as distinct from saying "this
> downturn won't go on forever but if the recovery is left to its own devices
> we could lose decades, waste hundreds of trillions and spoil hundreds of
> millions of lives - we must turn to alternatives now".  Mentally, I have
> tried to run through the list of "crisis theories" popular in the last 50
> years and I worry that one may be setting up straw men.

The only case I can think of is Hilferding. Mattick (Senior) has a
critique of Keynesianism that sounds like K-ism just doesn't work,
doesn't he?

> But how best should we describe the "business cycle" experience of the last
> 100 years?...
> 
> Now let's look at the direct alternative to 'built in' mechanisms
> accounting for the upturns - i.e. "voluntarism".  The "pure" post-keynesian
> explanation relies on government fiscal/monetary policy as accounting for
> upturns - nothing inherently structural caused the problem or provides the
> solution.  Future crises have a ready remedy - clever, committed government
> using only judicious fiscal/monetary policy *without* a requirement for
> deeper structural change.
> 
> Perhaps neither "pure automaticity" nor "pure voluntarism"  adequately
> covers all post-war experience - nor represents a tenable political
> position?  And in diagnosing causes and solutions, I think we need to make
> clear distinctions between so-called short run fluctuations and the long
> trends and structural problems.  (The short run problems may be more
> susceptible to *either* "built in" or "policy based" corrections than the
> deeper trends.)

I think that there's a plausible story of Keynesian economics of the
following sort:

(1) in the short run (say, 5 years) Keynesian fiscal or monetary
stimulus can work in many or most situtations, whether it's automatic
or discretionary. This may even be class-neutral or pro-working class
(though this is rare in the US).

(2) however in the long run, Keynesian stimulus can lead to an
accumulation of imbalances (e.g., excess fixed capital, excessive
debt) that depresses the long-term growth path, unless the costs are
shoved onto the working class.

JD