Re: The Long-Term Problem of Full Employment (was German real wages in the Depression)

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

Jim asked if Keynes believed in secular stagnation.  Here are a couple
of quotations that give a flavor of his view that the world [meaning
England] had close to as much capital is it needed.  You can muck
around in the rest of his writings for the keyword Eldorado, where he
expands on this thought.
150: Keynes. 1930. Economic Possibilities for Our Grandchildren, p. 328
"for the first time since his creation man [would] be faced with his
real, her permanent problem -- how to use his freedom from pressing
economic cares, how to occupy [his] leisure ... to live wisely and
agreeably well."
General Theory
 106: "What will you do, when you have built all the houses, roads and
town halls and electric grids and water supplies and so forth which the
stationary population of the future can be expected to require?"
 375: "I feel sure that the demand for capital is strictly limited in
the sense that it would not be difficult to increase the stock of
capital up to a point where its marginal efficiency had fallen to a
very low figure."





On Sat, Jun 11, 2005 at 10:23:42AM -0400, tom walker wrote:
> Jim Devine asked:
>
> > what are the assumptions of Keynes' "model" that he
> > uses to predict an
> > excess of saving and to derive his policy
> > recommendations? is he
> > following Alvin Hansen's version of stagnationism?
>
> I don't really understand your first question. His
> assumptions presumably had to do with experience of
> recent history -- the post WW I transition and the
> depression -- and the idea that he was not engaged in
> some academic exercise. But according to Michel
> Camdessus, Richard Layard, Paul Samuelson, Jennifer
> Hunt, Gilles Saint-Paul, Timothy Taylor etc., etc.,
> Lord Keynes' assumption, at least regarding phase iii,
> was the fallacious one that there is only a fixed
> amount of work to be done.
>
> By the way, I've found a third instance (p. 276, April
> 15, 1942) of Keynes' apparently quite adamant view
> that reducing the hours of work was one of three key
> strategies for taking up the slack of unemployment,
> namely: "(a) doing less work (b) consuming more and
> (c) increasing gross investment."
>
> I'm not saying that Keynes was "right" because he is
> some kind of ultimate authority or something. What I'm
> saying is that this unmentioned (or unmentionable)
> aspect of his thought is intriguing in light of the
> anti-reduced work time ideology that prevails in the
> neoclassical orthodoxy.
>
> Instead of sneering at "a widespread popular belief"
> or "left wing kooks", those who invoke the claim that
> the expectation of employment gains through reduced
> work time is based on a fallacy could perhaps more
> constructively engage the specific recommendations of
> a Keynes (or a Pasinetti or a Commons or a Leacock or
> a J.M. Clark). Otherwise those critics of shorter work
> time just look like cowardly bullies who are afraid to
> pick on someone their own size (or bigger).
>
> The Sandwichman
>
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--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu