what you get here

This is not a blog which expresses instant opinions on current events. It rather uses incidents, books (old and new), links and papers as jumping-off points for some reflections about our social endeavours.
So old posts are as good as new! And lots of useful links!

Tuesday, March 28, 2017

Economics - a rare example of good writing....

We’re so overwhelmed by the mountain of books and blogs available about economic issues that I’ve sought to give readers some tests they can use on material they come across - to help them more easily select the material worth spending time on……
One of the five things I look for is clarity of writing – from the simple argument that confused writing is a sign of a confused mind. Authors who rely on abstract language have allowed the language to take over their thinking.
A second thing I look for are signs that the author is able and willing to classify other specialists according to the different perspectives they bring – and generous in his attributions…      

I’ve just come across an excellent example of what I mean – from the Michael Robert’s blog The Next Recession who starts his latest post with a great name-check on the Keynesian economists who dominate leftist discussions there days - 
Keynes is the economic hero of those wanting to change the world; to end poverty, inequality and continual losses of incomes and jobs in recurrent crises.  And yet anybody who has read the posts on my blog knows that Keynesian economic analysis is faulty, empirically doubtful and its policy prescriptions to right the wrongs of capitalism have proved to be failures.
In the US, the great gurus of opposition to the neoliberal theories of Chicago school of economics and the policies of Republican politicians are Keynesians Paul Krugman, Larry Summers and Joseph Stiglitz or slightly more radical Dean Baker or James Galbraith. In the UK, the leftish leaders of the Labour party around Jeremy Corbyn and John McDonnell, self-proclaimed socialists, look to Keynesian economists like Martin Wolf, Ann Pettifor or Simon Wren Lewis for their policy ideas and analysis.  They bring them onto their advisory councils and seminars.  In Europe, the likes of Thomas Piketty rule.
 Those graduate students and lecturers involved in Rethinking Economics, an international attempt to change the teaching and ideas away from neoclassical theory, are led by Keynesian authors like James Kwak or post-Keynesians like Steve Keen, or Victoria Chick or Frances Coppola.  Kwak, for example, has a new book called Economism, which argues that the economic faultline in capitalism is rising inequality and the failure of mainstream economics is in not recognising this.  Again the idea that inequality is the enemy, not capitalism as such, exudes from the Keynesians and post-Keynesians like Stiglitz, Kwak, Piketty or Stockhammer, and dominates the media and the labour movement.  This is not to deny the ugly importance of rising inequality, but to show that a Marxist view of this does not circulate.
Indeed, when the media wants to be daring and radical, publicity is heaped on new books from Keynesians or post-Keynesian authors, but not Marxists. For example, Ann Pettifor of Prime Economics has written a new book, The Production of Money, in which she tells us that “money is nothing more than a promise to pay” and that as “we’re creating money all the time by making these promises”, money is infinite and not limited in its production, so society can print as much of its as it likes in order to invest in its social choices without any detrimental economic consequences.  And through the Keynesian multiplier effect, incomes and jobs can expand.  And “it makes no difference where the government invests its money, if doing so creates employment”.  The only issue is to keep the cost of money, interest rates as low as possible, to ensure the expansion of money (or is it credit?) to drive the capitalist economy forward.  Thus there is no need for any change in the mode of production for profit, just take control of the money machine to ensure an infinite flow of money and all will be well.
 Ironically, at the same time, leading post-Keynesian Steve Keen gets ready to deliver a new book advocating the control of debt or credit as the way to avoid crises.  Take your pick: more credit money or less credit.  Either way, the Keynesians drive the economic narrative with an analysis that reckons only the finance sector is the causal force in disrupting capitalism.

So why, Roberts asks, do Keynesian ideas continue to dominate? Here he brings in Geoff Mann - director of the Centre for Global Political Economy at Simon Fraser University, Canada and his new book, entitled In the Long Run We are all Dead which argues that Keynes rules .  
…….because he offers a third way between socialist revolution and barbarism, i.e. the end of civilisation as we (actually the bourgeois like Keynes) know it.  In the 1920s and 1930s, Keynes feared that the ‘civilised world’ faced Marxist revolution or fascist dictatorship.  But socialism as an alternative to the capitalism of the Great Depression could well bring down ‘civilisation’, delivering instead ‘barbarism’  – the end of a better world, the collapse of technology and the rule of law, more wars etc.
So he aimed to offer the hope that, through some modest fixing of ‘liberal capitalism’, it would be possible to make capitalism work without the need for socialist revolution.  There would no need to go where the angels of ‘civilisation’ fear to tread.  That was the Keynesian narrative. This appealed (and still appeals) to the leaders of the labour movement and ‘liberals’ wanting change.  Revolution was risky and we could all go down with it.  Mann: “the Left wants democracy without populism, it wants transformational politics without the risks of transformation; it wants revolution without revolutionaries”. (p21).

Those wanting more detail can read this well-written paper (20 pp) by Mann entitled “Keynes Resurrected?” (2013) as well as his critique of Thomas Pikety

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