Re: Keynes and socialism

[Sven R Larson <slarson@xxxxxxxxxxxx>]

>From Keynes's perspective, as expressed in End of Laissez Faire, Europe has
made a fatal mistake in socializing consumption rather than investment. This
has, of course, not taken place in the name of Keynes, but in the name of
ideological purity. Logically, therefore, Keynesian policy couldn't hold a
candle to fiscal "responsibility" when the European Union got its present
constitution. Same mistake was made when Europe socialized not only health
insurance, but health provision. The US has resisted both, for better or
worse. Catastrophic health insurance is a good example of what, in compliance
with Keynes, could be the matter of some government-backed agency (given it
doesn't come with the budget caps every health plan proposal since Truman has
suggested) while socialization of health production itself is a matter of
politics rather than economics.

/srl

>===== Original Message From "Barkley Rosser" <rosserjb@xxxxxxx> =====
>     It is widely argued that in _The End of Laissez Faire_
>Keynes was the first to suggest what we now label
>"indicative planning," although he did not pursue this
>topic very much later, and it was not implemented
>particularly in the UK, especially compared with France,
>Japan, and some other countries.
>Barkley Rosser
>----- Original Message -----
>From: "Forstater, Mathew" <ForstaterM@xxxxxxxx>
>To: "Ted Winslow" <egwinslow@xxxxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>
>Cc: "Rakesh Bhandari" <rakeshb@xxxxxxxxxxxx>
>Sent: Wednesday, October 22, 2003 1:23 PM
>Subject: Keynes and socialism
>
>
>> Keynes believed that capitalism required "much more central planning
>> than we have at present" (1982, 494).  This should not be surprising for
>> anyone who has read the final chapter of The General Theory, where he
>> argued that "a somewhat comprehensive socialisation of investment will
>> prove the only means of securing an approximation to full employment"
>> (p. 378).  Keynes fought consistently throughout his life for policies
>> that would address the ills of the free market--what he called
>> "individualistic capitalism"--through some form of State intervention,
>> often referring to 'semi-socialism', 'liberal socialism',
>> 'nationalisation', etc.
>>
>> Keynes believed that State intervention is not only legitimate, but
>> necessary, in some areas, although he thought that in other areas it was
>> less effective.  This points to one of the tasks Keynes recognized faced
>> the modern world:
>>
>> "The true socialism of the future will emerge, I think, from an endless
>> variety of experiments directed toward discovering the respective
>> appropriate spheres of the individual and the social, and the terms of
>> fruitful alliance between these sister instincts." (1981, p. 222)
>>
>> From such experimentation, he hoped, it would become possible to
>> identify those parts of socio-economic life "which are *technically
>> social* from those which are *technically individual*" (1926, pp. 66-67,
>> original emphasis):
>>
>> "Leave individuals to go on doing what they are doing more or less
>> satisfactorily, even though individual action is not perfect--where it
>> exists and is functioning, leave it alone--but do from the centre those
>> things which, if not done from the centre, will not be done at all."
>> (1981, p. 647)
>>
>> Keynes may be sometimes read as arguing that only the volume of
>> investment should be socialized, but it seems pretty clear that if
>> markets cannot ensure the right volume of investment, there is no way
>> they can guarantee that the composition of investment will be in accord
>> with social goals (the British Labour party used to make this argument,
>> in the 'good old days').
>>
>> There are important lessons here, not only for industrialized capitalist
>> economies, but for the 'transition' economies as well: Keynes's work
>> provides a good counter to 'anarcho-capitalism.'
>>
>> Mat
>>
>> 1981, CW Vol. XIX
>> 1982, CW, Vol. XXI
>> 1926, Laissez-faire and Communism
>>
>>

--
Dr. Sven R Larson
Department of Economics
Skidmore College
815, North Broadway
Saratoga Springs, NY 12866
(518) 580 5278