Re: NYTimes on Skidelsky's Keynes

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

      Well, I'll stick my neck out on this one.  I
have not read Skidelsky's bio of Keynes,
any of the volumes, although I have read
some excerpts.  So, I do not feel competent
to comment on the stuff about the UK versus
the US during WW II, although I have certainly
heard these claims that the US "drove a hard
bargain," and think it quite likely to be true and
a contributor to post war UK economic difficulties,
if not probably the prime cause.
     However, I was also rather struck by this
rather careless claim by Nasar that it was because
of "socialism" that the UK grew more slowly.  She
proceeds to identify this socialism with Beveridge
and his "cradle to grave security" system.  I find
this claim to be utterly ridiculous.
     One sign of exactly how ridiculous this is can be
seen by noting that one of the countries she negatively
compares the UK to is (West) Germany.  Certainly for
most of the postwar era the FRG outgrew not only the
UK but the US as well.  Indeed, it was prinicipally the
unwillingness of the FRG to inflate in response to its
chronic and growing trade surpluses that ultimately
triggered the moves by the US to end the Bretton Woods
system.  As Paul Davidson knows, I agree with him
and Keynes that it would be nice if we could get surplus
countries to bear some of the adjustment in fixed exchange
rate regimes.  But it is politically very difficult to get them
to do so.
       But, the relevant point for this discussion is that in
fact the FRG also had an essentially cradle to grave
social security system.  The claim that incentive problems
from such a system lay at the heart of UK problems is thus
very difficult to defend.
     What may be true, is the actually socialist part of the
postwar policy did play a role.  I am speaking of the
classic Marxian definition of socialism, that is, state
ownership of the means of production.  The wave of
nationalizations after the war may well have damaged
long run growth and productivity.  Indeed, that is an area
where the UK and the FRG sharply differed.  The ordo
liberalism of the FRG opposed nationalization of firms,
but supported strong social safety nets (a similar pattern
to what one finds in much of Scandinavia, btw).
     Of course there are other arguments about why the UK
fell behind, with the hysteresis arguments of Mark
Setterfield (of which Paul Davidson has mixed opinions)
about technological change and all that being one way to
go.  Of course, according to that argument (and some
others as well), the real falling behind of the UK occurred
much earlier, around the beginning of the 20th century,
if not even earlier than that, by which time the US and
Germany both surpassed it in real per capita income.
But, the UK was able to rest on its laurels and live off its
past investments for another half century or so before the
game was fully up and the dominance of the US was really
and truly undeniable and clear.
     So, I think it was an inevitable transfer of dominance,
indeed had really already happened before WW II, with
the role of Keynes and the deals in the war playing a
relatively minor role.  The real problem was that the US
had refused to accept its role and the associated responsibility
before the war.  This was arguably a major factor in the
Great Depression, with the US refusing to recognize that it
was the main source of financial capital for the world and
that by playing a hard nosed gold standard game after 1929
it created a horrible global catastrophe.
Barkley Rosser
----- Original Message -----
From: "pdavidso" <pdavidso@xxxxxxx>
To: "Ian Murray" <seamus2001@xxxxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, January 21, 2002 3:52 PM
Subject: Re: NYTimes on Skidelsky's Keynes


> Some may be interested in Robert Skidelsky's response to Sylvia Nassar's
> review of his third volume.  Skidelsky wrote to me that it was curious
that
> Nasar thought that Britain was ruined by socialism, which is exactly what
> Reagan said.
>
>
> Skidelsky also indicated that the point is not that
> Britain had a much smaller economy than the US after WWII (this was
already
> true in 1900) but that the war wrecked its commercial and financial
position.
> In fact, Robert did not think this wrecking could have been completely
avoided
> no matter what avoided, but it was his judgment that the Americans drove a
> hard bargain. Skidelsky felt, however, that he had identified too much
with
> Keynes's own patriotic feelings to make this part of his argument
acceptable
> to an American audience.
>
>
> Any comments?
>
> Paul
>
> Paul Davidson
> Editor, Journal of Post Keynesian Economics
> University of Tennessee
> SMC 523
> Knoxville, Tennessee 37996-0550
> phone # (865)974-4221; fax #(561)737-8262;
> email pdavidson@xxxxxxx
> http://econ.bus.utk.edu/Davidson.html
>
>