Re: demand management (a bit modified)

[Ted Winslow <egwinslow@xxxxxxxxxx>]

Rakesh Bhandari wrote:

> It's not clear to me why with competitive pressures and the reward of
> a greater mass of profits firms would fail to create through trial and
> error appropriate autonomous demand  through use of, say, overdraft
> facilities at a bank. Joan Robinson seems to have thought that Marx
> was a prisoner to Say's Law for having made this assumption. But high
> investment does seem to be sustainable as long as  the mass of profits
> rises along the way.

This assumes that investment decisions can't turn out to be mistaken so
long as all the savings generated at full employment are invested.  The
fact that capitalists as a group get what they spend doesn't imply that
they can know, so long as all the savings generated at full employment
are invested, that the future will validate present investments.

The future results of a current decision to expand production
facilities of a particular kind will still be unknowable for the
reasons Keynes gives.  One essential reason is ontological.  Reality is
a system of internal relations that makes rational prediction more
difficult the farther into the future are the events to be predicted.
This is especially true when we are dealing with social reality.

Keynes assumes that most of the individuals responsible for investment
decisions can't, for psychological reasons, face the fact of this
"uncertainty"; they deny it - they "hide from themselves how little
they foresee."  In particular, they irrationally tend to take present
profits as a good predictor of future ones.  Consequently, that
"disillusion" can be provoked by the fact that "the current yield shows
signs of falling off" is itself an expression of irrational
subjectivity. As Keynes understands it, the type of personality
dominant in capitalism is, in any event, characterized by periodic
manic/depressive swings between irrational optimism and irrational
pessimism.

The ontological premise that social relations are internal is the
starting point of both Keynes and Marx.  In Keynes's case, the premise
is implicit in the treatment of "human nature" I've been elaborating.
Ironically, Marx's long run crisis theory neglects the implications of
this and attempts to deduce long run consequences from fixed axioms
i.e. in that theory Marx himself has fallen victim to the "Ricardian
vice."

Ted