And then there was Sraffa, great friend and countryman of Gramsci. Crotty might have subjected Keynes’s arguments to some critical scrutiny. Nevertheless his economics have profound implications for Socialists. Unlike Alvin Hansen, Keynes had no notion of capitalism’s stagnation tendencies. The Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. Monetary policy, even highly aggressive monetary stimulus, will therefore be powerless to jump-start growth: public investment on a large scale is needed. It must be acknowledged that he had a lot of confidence in the judgment of technocrats: “It is for the technicians of building, engineering, and transport to tell us in what direction the most fruitful new improvements are awaiting us.”24, Keynes may have contemplated the death of the rentier with equanimity, but he was probably not rooting for the death of the entrepreneur. Whether the program that Keynes describes properly falls under the heading of socialism is a quibbling matter. He took it for granted that finding the right model would involve a good deal of experimentation. with Steven Pressman. The answer comes in the line: “Keynes never believed in the power of ordinary working people to control their own fate.” It’s hard to imagine anybody being a socialist if they don’t come to grips with the principles laid out in a pamphlet like “Their Morals & Ours”. He also believed that the most effective way to ensure a steady flow of socially useful investment sufficient to keep the economy operating at full employment is to assign authority over a good deal of investment spending to the state. We no longer have sufficient confidence in the future to be satisfied with the present.15. Keynes surely was not a classical liberal in the mold of David Hume, Adam Smith, or John Stuart Mill — but to make that point is a bit like taking a battering ram to a door that is already ajar. Instead, I want to hone in on Mongiovi’s review as another indication of Sunkara and Chibber’s slow but inexorable retreat from Marxism. The system of planning that he had in mind would not, and indeed must not, hobble “the constructive energy of the individual mind, [or hamper] the liberty and independence of the private person.”31, Crotty gives the impression, perhaps inadvertently, that Keynes was an isolated voice. IV.3, p We may detect, in all of this, tropes that have become part of the discourse on the crisis of capitalism. During that so-called postwar Golden Age, unemployment was low, productivity growth and profitability were high, and real wages grew in step with productivity; business investment was robust, and the economy grew at a healthy clip. It puts you in the same camp as the staff of the Jerome Levy Institute at Bard College, a school well-known for its housebroken faculty. Vol 3 He also maintained that deliberate government action could foster full employment. This paragraph is riddled with class-neutral terms. By the early 1980s, the Golden Age social contract had been displaced by a neoliberal outlook that reified the market. Keynes’s outlook also anticipates elements of the Social Structures of Accumulation approach, a body of macroeconomic analysis grounded in Marxian theory. Once policymakers had gotten the problem of unemployment under control through the application of fiscal and monetary policy, market forces and profit-driven private enterprise could be left to regulate income distribution and to channel resources into their most efficient uses. Why not figure out how to smash the fucking state that will continue to kill us, if it remains in the hands of the bourgeoisie? This book argues that this was not the case with respect to socialism. Its dreary, out-of-date, academic controversialising seems so extraordinarily unsuitable as material for the purpose.”. Keynes is kind of a perfect example of this. He did not always take the trouble to reconcile the views he expressed in one context, while in a particular frame of mind, with the views he expressed in other contexts, while in a rather different mood. But investment spending depends on business expectations of future consumption demand; if the share of consumption spending in aggregate income is shrinking, private-sector enterprises are unlikely to anticipate levels of future demand adequate to stimulate a sufficiently high level of investment. ... “Fascism entirely agrees with Mr. Maynard Keynes… After making the case that Keynes, like Marx, saw capitalist crisis as rooted in its own contradictions, Mongiovi—speaking for Crotty—refers to the measures Keynes saw as moving toward socialism: Since the effective demand problem was fundamentally structural, Keynes advocated a structural solution: a permanent expansion of the state. Private enterprise could then be left to chug along as it saw fit, generating prosperity far and wide. TrackBack URI. The American Keynesian Alvin Hansen is usually credited with originating the idea in the late 1930s; former Clinton administration Treasury secretary Lawrence Summers has resuscitated it to explain the sluggish growth that has plagued the advanced capitalist economies since the financial crisis of 2007–2008.14 Summers’s argument is that the rate of interest that would generate enough private-sector investment demand to counterbalance saving at a full-employment level of GDP is, at the present historical juncture, negative. The sclerotic and stultifying Dissent magazine of the 1960s and 70s being the prime example. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. Against the criticism that placing investment spending under the control of the state will cripple an economy’s capacity to innovate, we may call attention to the groundbreaking work of Mariana Mazzucato, which shows that since the end of World War II, government has been a major source of innovation in numerous fields, and, indeed, that without the direct and indirect involvement of the state, many key innovations of the past half century — the internet, personal computers and the software they use, information technology and communications, solar and wind power, countless medical advances — would never have materialized or would have been delayed for decades.27 Keynes, as we have noted, had a great deal of confidence in the ability of technocrats to manage “the socialisation of investment,” but he says little about innovation, or about how it might be fostered through his proposed Board of National Investment. When the investment potential of the original innovation has been fully exploited, the boom peters out, and the economy slides into a long slump that lasts until the discovery of the next epoch-making innovation. But those attitudes and conditions are what cause innovation to occur, when it does occur, in the private sector, and, as Mazzucato’s research indicates, there is no reason they cannot produce similar results in other contexts. Keynes was aware of how market-driven structural change can disrupt a community’s social bonds. In the early 1970s, the Golden Age (which, let us note, conferred most of its blessings on white males and their families) was subjected to a variety of structural and political pressures that gradually eroded its viability. But many of his contemporaries were using orthodox neoclassical tools to make the case for economic planning.32 Other less radically minded colleagues understood that regulation and countercyclical fiscal and monetary policy were important tools for improving the operation of the market system.33 In Germany and Austria, an innovative group of progressive economists were advocating, and to some degree implementing, policies that had much in common with what Keynes was suggesting, policies that were motivated by similarly humane concerns.34. A favorite pastime of some libertarian intellectuals is to tar Keynes with the socialist label and then feather him with misleading insinuations that he approved of Stalinism, National Socialism, and Italian Fascism. Unfortunately, controversy over his political thought has muddled the relation between his ethics and politics. A number of important themes emerge in the telling. The latest issue of Catalyst, a journal that is published by Bhaskar Sunkara and edited by Vivek Chibber, has an article by economics professor Gary Mongiovi titled “Was Keynes a Socialist?” It is a gushing review of “Keynes Against Capitalism: His Economic Case for Liberal Socialism”, a new book by James Crotty. In The General Theory, Keynes famously observed that investment decisions largely, depend on spontaneous optimism rather than on a mathematical expectation … Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities … Thus if the animal spirits are dimmed and the spontaneous optimism falters … enterprise will fade and die.25. ( Log Out /  But 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. The gap between the economy’s output and the level of spending on that output by households expands. By implicitly endorsing Keynes’s doctrines that Mongiovi describes in the subheading of his article as “indeed more radical than commonly thought” and of “considerable relevance for the Left today”, they are repositioning themselves as Brooklyn hipster versions of Dissent magazine. He was a strong advocate of capital controls to prevent finance capital from fleeing a country in pursuit of higher returns when the monetary authorities push interest rates down. It is beyond the scope of this article to offer a critique of John Maynard Keynes or James Crotty’s new book. Sorry, your blog cannot share posts by email. In a shrewd analysis of Crotty’s book, Michael Roberts identified the elitist bent: As Crotty puts it, Keynes’ central point was that the emerging importance of the system of public and semipublic corporations and associations combined with the evolution of collusive oligopolistic relations in the private sector already provided the foundation for a qualitative increase in state control of the economy. I always remember my mentor and friend, David Houston, a URPE founder. The NY Times’s Walter Duranty defended the show trials, as well. Yet when I look into it, it is to me inexplicable that it can have this effect. By resurrecting that vision, James Crotty has performed a valuable service. Whether You want to call Keynes a Liberal or a socialist takeover was a communist or a socialist sector. Save capitalism ‘ from itself ’ but to replace it with ‘ Liberal socialism.! Keynesian economics is a corrective to this false characterization classes fought for and higher... 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