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

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Paul Davidson in reply to Doug Henwod wrote (I excerpt for sake of time):

>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. 37)

>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.

>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.

The day before Paul had made statements about the "ideological baggage of marx"
and thinking it better to go for an understanding of the system rather than
having to say it was good or bad (or words to that effect). I think this sort
of discussion highlights why we (non orhtodox - non Neoclassical - whatever we
are) are such an ineffective heterodox lot and why for example, internicine
struggles like that between Paul and Jim cripple our ability to assume the
status of a viable threatening alternative paradigm. We will never agree on a
basic theoretical framework because some of us are leaning to marx and others
keynes (for example - to mention perhaps two major influences).

I find paul's last comment startling. ........a quote from keynes followed by
"that is all that is necessary."

No that is not all that is necessary because that is not possible without other
elements being present. To say that is all that is necessary is to reflect what
I would say is a very narrow and naive view of political economy. I argue
academically here not personally I should add (WITH EMPHASIS).

I remind everyone of Kalecki's 1945 "Political Aspects of Full Employment"
where the captains of industry (Keynes'investment class) actively dislike full
employment because they haven't a phillips curve to exploit in those
conditions.  The captains prefer a degree of unemployment as a stick against
organised labour. Certainly, their profits are higher when unemployment is
higher thatn I would think is acceptable (acceptibility being defined as the
absence of involuntary unemployment - keynes defined).

I also remind everyone of the events of September 1973 in chile. I was quite
young then just at university but those events really were influential. Here
two big US capitalist firms (which dominated the Chilean economy) found a
government bent on a bit of "post keynesian" redistribution of income at their
expense. In tandem with the CIA (defenders of American freedom all around the
globe I should add - including being implicated in the overthrow of a
democratically elected government in my own land in 1975) - simply usurped
democracy (defined as popular vote), usurped the freedom of the elected
officials to determine how economic outcomes would be influenced by government
policy and took over the bloody place with a bit of murder and mayhem along the
way.

I remind you to re-read (or read) the work of Andre Gunder Frank (about his
days at Chicago and the subsequent event in his land).

After all this it surpises me that people of the non-orthodox persuasion can
say that Keynes  analysis showed it was possible to cure both flaws (less that
full employment and inequitable income distribution) with class warfare. I just
have to say that keynes showed nothing of the sort because he was a part of the
system's own ideology. an apologist. he did not show it because he failed to
understand the importance (at the crunch time) of the power of capital
interests and to the tools they would use to maintain those interests.

I remind everyone of Bowles and Gintis's work on schooling. I remind everyone
of Barry Bluestone's work on the role of government in segmenting the economy
through its contractual relationships with big business.


Second issue:   Emotion charged statements about slaughter or workers etc.

Marx never advocated this. In the same way that Keynes denied he was a
keynesian for obvious reasons, i am sure marx would have disowned stalinism and
the more moderate oppressive instruments of state capitalism that we saw in the
east of europe. but lets look into our own (western capitalist) backyard too
when the insults are flying.

They kill workers who form trade unions in the philiiphines, south korea, taiwan
etc (all states friendly with the US). The USA feels it is its right to go into
sovereign states when its economic interests are threatened (granada, kuwait,
central america, vietnam, slimy deals with iran, marshall islands, and on and
on). i have not seen an unwillingness to slaughter workers in those campaigns.

further, the USA is hardly the centre for treating its own citizens with care
and respect. My god, the health system is rotten, the crime and guns and all of
that is State-sanctioned slaughter.

So lets not have this nonsense that a feeling for marx is tantamount to
oppression and all of that. it is simply not true. Capitalism itself is an
oppresive vehicle it just does it more subtlely than the primitives who parade
around in tanks. But when capitalism is threatened by unacceptable income
distributions or full employment - first it will go on an investment strike and
ultimately it also gets the tanks out and slaughters like the best of them.

I should add that the implied view that keynes must have had an acceptable
ideology also puzzles me expecially when he spent his life making speculative
gains which he used to buttress the super elitist cambridge finances, and also
in the light of recent bibliographical writings, he had extremely dubious
morals in terms of immature males with whom he authority relationships with.

Now i do not seek to be dogmatic, merely to illustrate why we will never really
agree on fundamentals. For me, (agreeing with Doug Henwood for example)
capitalism is not the vehicle for equity or full employment.

I have also avoided discussing the impossibility of a capitalist system
delivering environmentally sustained growth for everyone to benefit from. The
goals of the system are simply not commensurate with these social goals. taxing
can help a bit as can legislation, but ultimately a la chile, if the bosses get
the shits then the tanks and guns come out.

kind regards
bill mitchell  economics department university of newcastle nsw australia
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