Re: Conference on Saving and Investment

[Allin Cottrell <cottrell@xxxxxxxxxxxxxxxxx>]

Thanks to Paul D for a stimulating broadside.  There can't be too
many vigorously anti-Marxian left-Keynesians out there these days,
and in this respect Paul is certainly a true follower of JMK.

Briefly, on the NAIRU: The effect Keynes mostly talks about in the
GT -- namely, a rise in the price *level* due to physical
diminishing returns to labor as full employment is approached --
is surely quite different from what is at issue with the notion
of a NAIRU.  The Marxish interpretation of the latter is that
given the inherent conflict over the distribution of income under
capitalism, a certain level of unemployment -- admittedly quite
variable by time and place, and subject to hysteresis -- is
required to damp *inflationary tendencies* (not to hold the price
*level* down) to an "acceptable" degree.

Yes, of course, the rational ("civilized") alternative is some
kind of incomes policy.  The point of divergence between Paul D
and those of the Marxian persuasion might be put thus:  What sort
of changes in the existing socio-economic order are required in
order to sustain such an "incomes policy" on a permanent basis?
The Marxian case is that incomes policy, which involves the use
of the criterion of fairness in income distribution, is almost
always quickly rejected as an alien implant in the context of a
capitalist, market economy.

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Allin Cottrell
Department of Economics
Wake Forest University
cottrell@xxxxxxxxxxxxxxxxx
(910) 759-5762
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