clarification re Larsson's points

["Gregoire de Nowell (ci-devant)" <GN842@xxxxxxxxxxxxxxxxx>]

I did not mean to imply that Keynes thought investment
should be brought down to the level of "need"; nor did
I wish to suggest that Keynes had some view about
the predictability of future needs.  Indeed, he
suggested that if the chronic tendency towards insuffienient
demand were remedied (for example, through deficit
spending) and sufficient investment guaranteed (perhaps
through "socialization of investment" the state daring
to tread where investors might be too timorous) one could
have an "indefinite boom" rather than a stagnationist
indefinite slump.  So it is a misinterpretation to say
that I think K's argument is for a curtailment for
demand, though you are right to suggest that this is
one implication of environmental "consume less-ism."

But, of course, environmental consume less-ism could
be compatible with a Keynesian expansion: for example,
give up your gas guzzler for a fuel-cell powered car,
which might be made by using recycled steel and plastics.
This could lead to economic expansion and yet still be
less resource intensive than the previous consumption
mode (gasoline vehicles).

The more interesting argument is whether "infinite
wants" are at the core of Keynes or "finite wants"
are.  In one sense, I think Keynes' argument,
insofar as it aims at expanding economic production
and employment, can be interepreted as based on
an "infinite wants" assumption.  So you just
don't go from food to spaghetti westerns, you
might go from Spam to Steak and from cheddar
cheese to fancy Brie.  There is also the question
of the exponential increase in wnats that goes
with each new gadget.  You buy a house, suddenly
you're in the market for a lawnmower, a snowblower,
and god knows what else, none of which you would
have "needed" or "wanted" if you had stayed in
an apartment.

But nonetheless there is a kind of entropy element
in the GT which stresses that rising incomes should
lead to greater aggregate savings and that as a result
C might not increase fast enough to keep the people
responsible for I sufficiently motivated to generate
full employment; and that full employment might
require increasing levels of govt activism with
increasing levels of aggregate income.  This suggests
that even though there might be an "increasing
towards infinity level of wants" it does not increase
faster than the level of non-want as measured by
savings.  So the "decreasing marginal propensity to
consume" is not just important when assessing individuals,
it has an important macro-economic consequence.

I have made errors in my interepretation of the GT before
nad been suitably corrected both publically and off
line; but I really think this "stagnation potential" is
a recurrent and fairly strongly stated theme in the GT.
Whehter or not it is objectively "true" is a more
difficult matter.  Savings rates in the U.S. have
been declining even as aggregate income has increased.
So there may be a hole in the GT or there may be some
other explanation (I suspect foreign investment may
be involved).  But I'm not offering an explanation here
and would even appreciate illumination on this point.

(Doug Henwood has raised it before, but I don't recall
anyone giving him an answer)

Greg Nowell