Re: Why economists do not care about high rates of unemployment w

[Doug Henwood <dhenwood@xxxxxxxxx>]

On Tue, 12 Apr 1994, Paul Davidson wrote:

>        Steve Keen has correctly noted that a precursor to some of Keynes's
> analytical framework was Marx's M-C-M' circulation. In fact, as I note in
> my Post Keynesian Macroeconomic Theory Keynes in his 1930's lectures at
> Cambridge is quoted as stating that in an entrepreneurial economy, the business
> firm has but one objective  -- to end the production cycle with more money than
> it started with, i.e., M-C-M'.
>
> That does not mean we must therefore accept all the ideological baggage that go
> es with Marx's M-C-M'. All it means is that there is an element of truth
> here that can be captured in an analytical model of an entrepreneurial
> economy -- without saying this is bad or good -- just that this is how the
> world that we live in works.

Keynes got this from a second- or third-hand source and proclaimed
himself unable to read Marx. But you don't have to accept the entire
Marxist apparatus to see several fundamental political flaws in Keynes's
apparatus. If the goal of the whole system is to maximize your M', then
any attempt to rein in finance, as Keynes longed for, is doomed to fail:
attacking rentier power, democratizing the central bank, etc., strikes at
the very heart of the system and is certain to be resisted with the
utmost fury. The barbarities of vulgar Keynesianism can thus be explained
not as intellectual misunderstanding but as proceeding from the
fundamental nature of capitalist social organization - as Marx observed,
but Keynes never of course read, "a man [sic] carries his bond with
society in his pocket." Keynes observed - somewhere in the Treatise, I
think - that the mark of a crank is the belief that if you fix "money"
everything else will fall into place, but then he suggested precisely
that in the GT.

Furthermore, in rejecting both Ricardo and Marx, Keynes finessed all
issues of social class - as if the rentiers would consent to their own
murder and yield to the dictates of a National Investment Board staffed
by aristocratic intellectuals like himself (and how many JMK's does any
society produce?) who stand above class. I admire Keynes enormously, let
me make that clear, but his whole project founders as the result of a
profound political naivete. Money, credit, and interest are not mere
aspects of economic hydraulics - they are fundamental social categories.

Doug

Doug Henwood [dhenwood@xxxxxxxxx]
Left Business Observer
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