Comments on: Keynes is the problem, not the solution

By: Matt

Matt — Thu, 27 Sep 2012 00:09:12 +0000

I neglected to conclude by pointing to the irony that Keynsianism, far from “euthanizing” the rentier, has instead multiplied rents in historical novel ways. Once again the progressive hope that rents would be nationalized under capitalism has been dashed, as it was in the late 19th century when the expectations of progressive political economy for the nationalizations of land rent – not only by Marx, but the Ricardian and other utopian socialists of the early half of that century, whose final expression was the Henry George of the 1888 NYC mayoral election – were disappointed once again.

By: Matt

Matt — Wed, 26 Sep 2012 17:18:51 +0000

“…it is less widely recognised that the capital-intensity of fixed investment is also in long-term decline, thus leading to a lower demand for investible funds (including recycled corporate profits – or ‘surplus value’) needed to generate each extra unit of output (GDP).”

Surprised to hear this, references?

Otherwise, agreed that “By thus acting to institutionalise this systemic conflict of interest Keynesian ideology can be said to have laid the foundation of the *massive misallocation of resources* which, progressively since the 1980s, has brought the global market economy to the brink of final collapse. Hence it can be concluded that Keynes’ economic theories, so far from saving capitalism – as he himself asserted they would – have ultimately served to propel it towards corrupt and terminal failure.” (asterisks added)

IOW, Keynesian policy support was withdrawn from wages, and theory morphed into a Friedman-Keynesian hybrid monetarism. Policy support was focused on asset values, capital in its commodity form, always a financial phenomenon, to stand Friedman on his head.

This has had two effects: Generally, it has increased the claim of capital on the social surplus product, meaning under capitalism raising the mass and rate of surplus value, at the relative (or absolute) expense of wages. Thus wages suffered a double whammy: Keynesian props removed, downward pressure increased;

Second, Skewing the distribution of surplus value towards non-productive (“fictitious”) capital, as for example, real estate, etc. This is the “financialization” that tends either to strangle the accumulation of productive capital, and/or to put pressure to increase the mass of surplus value (if not the rate) partially achieved through “privatizations” (which only increases the weight of non-productive capital, exacerbating the problem), generating a truly monstrous waste of social resources.

By: mat

mat — Tue, 28 Aug 2012 20:39:47 +0000

Keynesianism seems ‘out of time’ for two reasons. One is whether society actually needs the infrastructure projects that the Keynesians think of as our economic salve. You can build an airport in the Thames estuary – that would be a Keynesian stimulus, it would create lots of jobs. But society doesn’t need an airport in the Thames estuary. Nor do people who live next to the Thames estuary. Another war, for that matter, would act as a Keynesian stimulus.

Secondly, Keynes I believe always talked about ‘effective demand’ – needs and desires backed up by purchasing power. But purchasing power in the UK and US seems shot, for reasons that have to do with the domination of corporations over organised labour. Nothing the Keynesians or the govt can do will miraculously change that balance of power. So you can give effective demand a blood transfusion, so to speak, but it will soon wear off.

Shutt’s latest book is reviewed here by the way: http://idealoblog.blogspot.co.uk/2011/03/do-i-understand-question-maam-is-it.html

By: duvinrouge

duvinrouge — Tue, 21 Aug 2012 18:32:02 +0000

You fail to mention the fundamental flaw in Keynesian, Monetarist & Austrian school economics: the wrong theory of value.
It may not be an easy subject to tackle & perhaps would make a short article impossible, but the fact is that without acknowledging that what lies behind money & value is labour time, we can never explain the crucial point that all profit comes from labour.
It comes from the workers creating more value than they recieve in wages.
A system of exploitation just like feudalism except excused away by many economists who try to explain that each factor of production gets its just return.
A book published in 1867, subtitled ‘A Critique of Political Economy’ exposed this ideological lie.
Lets not forget it.