PKT message, Re: demand management

Last February, I commented on issues relating to the following -

> The policy of demand management is also politically ambiguous, in so
> far as either the state or private business can be relied upon to
> undertake the necessary investment for expanding aggregate demand.
> Since the stimulation of private investment is an alternative route
> to managing demand, measures aimed at achieving this, for example
> reduced taxes on corporate profits or restraint on wages, become
> justifiable in the Keynesian framework. These measures constitute the
> case for a politically conservative style of demand management based
> on profit, and private investment driven economic expansion within
> the Keynesian intellectual tradition. -

in a message to Gang8:

In "History of Economic Analysis", Schumpeter commented to the effect suggested that "Treatise on Money" and "The General Theory" represented attempts by Keynes to put into structured form a "vision" of the economic mechanism which he had intuited in the 1920s.

In responding to reviews of the General Theory in 1937, as I recall it, Keynes emphasized that he was anxious that the specific form in which his ideas had been presented in the General Theory would NOT be viewed as their FINAL form.

Instead, Keynes expressed his confidence that through the cooperation of many minds some such FINAL form would be arrived at.

In the event, Keynes was not destined to be an active party to that process, spending most of his time on other issues after suffering a heart attack in 1937 and dying of a second heart attack in 1946, just as the academic community was beginning to turn its attention to the task at hand.

In this respect, Geoffrey and Chris report that a draft law on Qualitative Credit Control [The Borrowing (Control and Guarantees) Act 1946, on which Geoffrey Gardiner commented that it was "Beautifully thought out, and badly implemented." - insert] which was prepared in 1946 bears tell-tale signs of Keynes´ personal input, but what came to be known as Keynesian economics modern mainstream style had no place whatsoever for such an approach to the monetary aspects of macroeconomic management.

Hence the perceived "radical" nature of the Gang8 approach, which I regard as responsive to Keynes' call in 1937 for the cooperation of many minds whereby his ideas might be given their FINAL form. [End of Ferbruary message]

In my view, Amit Bhaduri has made a lucid contribution to the translation of Keynes' ideas into a non-ideological approach to world demand management..

Gunnar

----- Original Message -----

From: "Rakesh Bhandari" <rakeshb@xxxxxxxxxxxx>

To: <pkt@xxxxxxxxxxxxxxxx>

Sent: Sunday, October 19, 2003 12:28 AM

Subject: demand management

> In regards to Paul Davidson's recent posting of Larry Elliot's
> Guardian article, I was wondering what people thought of this
> characterization by Amit Bhaduri:
>
>
> The policy of demand management is also politically ambiguous, in so
> far as either the state or private business can be relied upon to
> undertake the necessary investment for expanding aggregate demand.
> Since the stimulation of private investment is an alternative route
> to managing demand, measures aimed at achieving this, for example
> reduced taxes on corporate profits or restraint on wages, become
> justifiable in the Keynesian framework. These measures constitute the
> case for a politically conservative style of demand management based
> on profit, and private investment driven economic expansion within
> the Keynesian intellectual traditionSThe original underconsumptionist
> thesis of wage-led and consumption driven economic expansion, which
> argued essentially that a 'high wage' is beneficial to both classes,
> finds its antithesis in this case of profit and private investment
> driven capitalism. And, both are based on the Keynesian theory which
> assigns centrality to aggregate demand in determining output and
> employmentS Keynesianism in this wider sense also leaves ambiguous
> the economic basis of social democratic politics or the necessity of
> the welfare state, by accommodating different forms of cooperative
> capitalism. Helmut Schmidt, as the social democratic chancellor of
> then West German, articulated this conservative alternative by
> pointing out, 'The profits of the enterprises today are the
> investments of tomorrow, and the investments of tomorrow are the
> employment of the day after' (Le Monde 6 July 1976). It symbolized
> complete reliance on private industry, and its willingness to invest
> to solve the problem of unemployment, rather than creating jobs
> through direct expansion of public investment. The economic role of
> the nation state was thus circumscribed by the need to maintain,
> above all, a favorable climate for private investment. This view was
> an intellectual watershed. It marks the beginning of a new
> conservative era in advanced capitalist countries, when it becomes
> increasingly difficult to distinguish social democratic from
> conservative policies, in so far as the economic role of the state
> become directed towards strengthening the role of private business.
> According to this new conservative view of demand management, if
> cooperation between capital and labour is at all to be attained, it
> is better attained through the agency of private business, but not
> through direct state intervention, as the earlier version of social
> democracy had advocated.
>
> __________
>
> Rakesh
>
>
>
>
>