Keynes' Advice for the 21st Century

["John Gelles" <jjgelles@xxxxxxxx>]

    Imagining Keynes' Advice for the 21st Century --
                   and Adding Something to It



    If Keynes were alive, Paul Davidson imagines he
    would offer advice for today:

    1. Key goals of civilized political economy not yet
        achieved are full employment and a fair distribution
        of income and wealth.

        The test of what is "fair" implies that higher income
        and wealth for some results in greater income and
        wealth for all -- and an end to poverty for those
        in need.

    2. Full employment requires more than free markets
        to establish wages, prices and exchange rates --
        in competitive races for capital, customers and profit.

    3. Where inadequate effective demand by customers
        leaves people unemployed, government capital
        budgets must take up the slack.

    4. People with money may prefer speculation to
        investment;  and, when prices are falling, they may
        so prefer money to things for sale that private
        producers cannot respond to individual need.

        The individuals in need will lack the money to
        raise price to the level producers require to meet
        costs and expenses.

        Thus speculation and/or refusal to spend or
        invest in the private sector may keep forced
        unemployment around when civilized values
        would demand an end to it.

    5. Moneyed people's preferences will allow
        investment, as well as motivational luxury
        consumption, if speculative fever does not infect
        the moneyed community;  government must be
        aware of the fever and how to reduce it.

        Investment will also occur if deflation is not
        feared.  Government must invest and spend
        enough to prevent deflation -- but not so much
        as to bring on speculative fever or hyper-inflation.

        ------------------------------------------------

    No doubt the above imagined advice implies all
    the environmental imperatives that have developed
    in the years since Keynes died. These could be the
    foundation for government's capital spending --
    when needed for full employment -- and also when
    needed to save the environment (in which case,
    private spending would be curtailed as necessary).

    Although utopia is not coming at the call of national
    planners or private entrepreneurs, (as Paul Davidson
    observes), automation and robotics are coming --
    and they change the need for wage labor radically
    from what it was when Keynes lived.

            Earlier retirement and a shorter work week
            can only be lost to war or collective insanity.

    So resurrecting Keynes, as imagined by Paul
    Davidson, may leave us with Keynes' dictum
    -- when in the grip of deflation, let government
    spend until price recovery brings the profit
    system back to life.

    But, such spending is never enough. If it were,
    every country that suffered hyper-inflation would
    have quit government spending just in time to
    turn it, alone, into a recipe for success.

    Anti-trust remains a pillar of a civilized economy.

    The pursuit of science and technology with both
    government and independent research and
    financial support is key to solving the immensely
    complex problems that nature presents without fail.

    From aids to overcrowding to global climate
    change, there is never a time civilization is allowed
    to nap. It would be nice to bring back Ben Franklin
    -- Keynes, too, if he's your choice. But there is
    no shortage of great thinkers.

            Rather, there is the profound problem
            of knowing what are the great thoughts --
            and knowing how to share them with the
            critical mass of people who can turn
            thought into action.

    Reform of all things to combat the relentless rust
    that covers all human effort cannot be forgot.
    We say of others, "they have succumbed to the
    triumph of form over substance" -- in the law and
    custom that constrains their development.
    We must say it of ourselves -- every day.

    Which leaves unanswered the question of
    revolution. Is it called for? Is each of us really as
    dumb or selfish as others say? Are our leaders as
    wrong as we claim? If so, what point revolution?
    Who will it throw up to a position of power and
    influence?

          John Gelles
         email    1944@xxxxxxxx
             url    http://www.1944.org
                     http://www.1944.org/whatsnew.htm