PKT message, Re: Inflation,Stagflation and Unemployment

Peter, here are my two letters on James' book -The Indigent Rich - from last summer.

Arno

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

From: Arno Mong Daastoel

To: gang8@xxxxxxxxxxxxxxx

Sent: Wednesday, July 23, 2003 12:02 PM

Subject: [gang8] The Indigent Rich

James I recived a copy of your book from Australia today.

(J.W.C.Cumes, The Indigent Rich, Oxford: Pergamon, 1971)

Why did you use the subtitle:

A THEORY OF GENERAL EQUILIBRIUM IN A KEYNESIAN SYSTEM

NB:

Your criticism of Keynesianism and Monetarism in a nutshell, and very well put :

"Instead, stability should be maintained by stimulating demand at the lower level and by stimulating production at the upper level of economic activity."

The cover inside reads:

"How can we beat inflation and still keep our economy brisk and healthy? How can we ease balance of payments problems, cut currency crises and help the rich countries to help the poor? Why are the richest countries so often so indigent? Why have so many of them abandoned or reduced their world role? This book gives new and vital answers to these questions. Dr Cumes suggests that, although Keynesian economic policies have brought great blessings to mankind, they have introduced new problems for today's affluent society.

Keynesian policies, born of depression, seek to maintain stability by controlling demand at both the upper and lower levels of economic activity. This will no longer work. Instead, stability should be maintained by stimulating demand at the lower level and by stimulating production at the upper level of economic activity. If this is done, the advanced economies will grow more rapidly, their growth will be more stable and inflation will be contained. Thus more resources will be available for an improved environment, and for the advanced countries both to help their poorer fellows and to play a world role.

This book should appeal to all those interested in the great economic and political issues of our time. Economists, politicians, government policy-makers, as well as teachers and students of economics, politics and international relations will find a great deal in this work which pushes forward the frontiers of economic understanding and stimulates new lines of thought and public action.

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

From: Arno Mong Daastoel

To: gang8@xxxxxxxxxxxxxxx

Sent: Wednesday, July 23, 2003 8:51 PM

Subject: Re: [gang8] Fw: The Indigent Rich

James and Gunnar,

There are still 2 second hand copies for sale for $ 30.- :

http://www.abebooks.com

I agree that the statement is brilliant in its simplicity, and to make complex things simply is very difficult:

http://www.madwed.com/story/Chat_Room_Wisdom/Opportunities/Simplicity_-_Nature_s_Way/body_simplicity_-_nature_s_way.html
"I have come to the conclusion," said Emerson, "there reason there are so few truly great people in history is most don't understand what it takes to be great. Nothing is more simple than greatness; indeed, to be simple is to be great."

"Right on, Ralph," added Barrow, "Upright simplicity is the deepest wisdom, and perverse craft the merest shallowness. I think the masses believe the more complicated something is, the more it smacks of greatness."

If we combine the statement,

"stability should be maintained by stimulating demand at the lower level and by stimulating production at the upper level of economic activity"

- with qualitative credit control and - creation (which actually is implied in your statement) and enlightened control of capital flows and trade, I think we have the skeleton of something worthwhile.

Regarding the title, I now understand what you were trying to say.

I was a bit worried before opening it, since after my education I am allergic to huge equilibrium models built on rather sandy/clayish foundations. But your book is nothing of that kind I soon found out.

Arno