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

[Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>]

FROM:  Paul Davidson
"      Economics Department
"      523 Stokely Management Center  (615) 974-4221
Dear Doug: I did not say that Keynes said that the "goal of the WHOLE SYSTEM is
 to maximize ... M'". What I  said was Keynes argued that "the FIRM has but one
 objective -- to end the production cycle with more money than it started with"
 Neither Keynes, nor I would claim that "what is good for GM is necessarily
good for the country". Nor did Keynes want, as you put it "to rein in finance".
Keynes was always a "cheap money" man who looked forward to the euthanasia
of the rentier, i.e., to limiting the returns of those who owned capital.
       When you speak of the "barbarities of vulgar Keynesianism", I am not
sure whether you are attacking Keynes's analytical system, or the jackass
hybrid called neoclassical Keynesianism and/or New Keynesianism (including
Barkley's New neoKeynesians). Keynes never argued that all you had to do was
fix the quantity of money -- in fact he argued against the quantity theory
of money.  What Keynes wanted -- if you had read Keynes including his addendum
in the 1937 EJ on the finance motive (or even Davidson's MONEY AND THE REAL WOR
LD) was an accommodating monetary system with policies that specifically
increased aggregate effective demand to a full employment level. That is why
he advocated "the socialisation  of investment .. [as] the only means of securi
ng an approximation to full employment...IT IS NOT THE OWNERSHIP OF THE INST-
RUMENTS OF PRODUCTION WHICH IS IMPORTANT FOR THE STATE TO ASSUME. IF THE STATE
IS ABLE TO DETERMINE THE AGGEGATE AMOUNT OF RESOURCES DEVOTED TO AUGMENTING
THE INSTRUMENTS AND THE BASIC REWARD TO THOSE WHO OWN THEM, IT WILL HAVE ACCOMP
LISHED ALL THAT IS NECESSARY." (The General Theory, p. 378)
         You worry about whether rentiers will consent to their own demise --
I think they may prefer Keynes plan to limiting them to a "basic reward"
determined by the state compared to your altenative of
 death by the hands of Marxist revolutionaries --who will probably
slaughter millions of workers and farmers along with the rentiers, and
reduce the rest of the proletariat to a subsistence level-- if the lessons
of Eastern Europe is any guide.
        For someone who attacks Keynes for getting his Marx from a second
hand and a third hand source, it seems strange that you attack Keynes through
the "vulgar Keynesianism" of second and third hand Jackass-hybrid Keynesians.
     We don't have to man the barricades to improve the existing entreprenerial
system. Prrovided we cure the major faults of the existing system -- its
"failure to provide full employment and its arbitrary and inequitable distribu-
tion of income and wealth" [GT, p. 372], that is all that is necessary. And
Keynes's analysis showed it is possible to cure both flaws without class
warfare -- and with class cooperation instead.

Have a good day!____Paul Davidson
))))_ fax # (615) 974-1686