Re: demand management

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Rakesh Bhandari <rakeshb@xxxxxxxxxxxx> =====
>Professor Davidson wrote:
>
>>
>>Read GT on the socialization of investment  Bhaduri either never read, or
else
>>forgot the message of the last chapter of the GT and especially pp. 374-383.
>
>
>
>
>
>There is a nice section "Was Keynes a Socialist" in Galbraith and Darity's
>textbook Macroeconomics (Houghton/Mifflin, 1994):
>
>"Keynes immediately added that such a socialization of investment 'need not
>exclude all manner of comporomises and of devices by which public authority
>will cooperate with private initiative.' Moreover, only investment planning
>was involved : 'Beyond this no obvious case is made out for a system of
>State Socialism which would embrace most of the economic life of the
>community.' After all, argued Keynes, 'It is not the ownership of the means
>of production which is important for the State to assume. If the State is
>able to determine the aggregate amount of resources devoted to augmenting
>teh instruments and the basic rate of reward to those own them, it will
>have accomplished all that is necessary.' [same as John Roemer?rb]
>

>
>Keynes' concepts are indeed quite slippery, e.g., the marginal efficiency
>of capital (an objective or subjective concept?)


If you read FINANCIAL MARKETS MONEY AND THE REAL WORLD -- or take Keynes's
"animal spirits" discussion seriously, you will find that the mec is a
subjective concept depending on "non rational expectations (vs. rational
expectations in the Lucas sense).

 and the euthansia of the
>rentier or elimination of the functionless investor. What for example did
>Keynes mean by the abolition of interest through the elimination of the
>functionless investor?


Interest as the reward for giving up liquidity would not be abolished -- but
it could be reduced to a minimum if effective demand was persistently below
full employment.  As many retired people will tell you currently-- with
interest rates as low as they are in the US (bot to mention Japan) currently,
theretired are being slowly euthansized!

>An elimination of the price paid to commercial
>banks for creating media of payment/high power money or the elimination of
>property income as such?



No it is , as Keynes noted, "better that a man should tyrannize over his bank
balance than over his fellow citizens".  As Keynes noted he was not for wiping
out capitalist income -- only that the game need not be played for such high
stakes going to the investor. (p. 374, GT)


Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
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