Re: new thread: PKT and ecology

[Paul Davidson <pdavidson@xxxxxxx>]

At 01:19 AM 3/22/01 -0800, you wrote:
> On Thu, 22 Mar 2001, Bill Mitchell wrote:
>
> > Stephen Block wrote:
> >
> > >  Some intriguing issues have been raised by environmentally-minded
> students
> > >concerning the long-term viability of the Keynesian growth model given the
> > >(from their point of view) apparently unsustainable nature of the
> planet as
> > >we know it if current levels of consumption are maintained and/or
> increased.
>
> > The goals of PK(macro)T should include:
> >
> > (a) full employment
> > (b) price stability
> > (c) environmental sustainability.
> >
>
>         I'm going to play "The Emporoer has No Clothes" for just a second.
> The problem I have with Keynsianism is that it has nothing to do with
> capital structure and only has to do with consumption.  Capital creates
> wealth above a primitive subsitence level, Why is capital creation and
> structure so ignored?  I asked my macro professor once, if there were to
> be a great war in which 95% of the capital infrastructure of the earth
> were destroyed -- along with all the good engineers -- but government
> spending increased and the central bank lowered interest why would a
> Keynsian theorist's model then predict that we would enjoy a great economy
> compared with previous years when this would obviously not be the case?


the answer your Prof should have given you was that an entrepreneurial
system at full employment would be "better" in some sense than the same
economy where there was not full employment -- but both would be worse off
then before the war.  Moreover, the entrepreneurial economy had a better
chance of rebuilding  a socially useful capital structure faster than a
nonmonetary economy (even if the latter was at full employment-- or
probably even a planned economy-- although , depending on the planner, the
latter might do better than the nonmonetary nonentreprenurial economy.

Paul