Just a little discussion topic on something that bothers me: The tendency of capitalists to equate Keynesian policy as leaning or moving towards socialism. For years, the Keynesian branch of economic theory has been embraced as the champion of the progressive. It has been favorably and unfavorably compared to socialist economic theory. Such comparisons must be abandoned. The assertion that Keynes bears any resemblance to true socialist thinking is a falsehood. Keynesian thought preserves and maintains the market despite its inefficiency and asymmetry. In particular, Keynes suggestion that a state make use of fiscal stimuli to increase the purchasing power of average consumers is a purely capitalist idea. Why is this so? For a couple of key reasons which will now be clarified: Keynesian theory suggests that, through the use of economic stimuli, the state can return the market to a state of equilibrium. Such a desire for market equilibrium is simply employing alternative methods to reach neoclassical economic ends. In other words, the ends are capitalist in nature. The difference between Keynesian thinking and neoclassical thinking is a slight disparity in the willingness to make use of the state. However, the theories are in complete harmony as to the chief goal: The preservation of the exploitative capitalist market. Adherence to capitalist principle is not determined by whether or not the state is employed as a tool . Rather the ends , motivation, and overarching structural framework provide the distinction between capitalist and socialist method. In essence, contrary to popular belief, wealth redistribution does not constitute socialist practice. Rather, such redistribution can be used to achieve the capitalist end. Surely the people who cried socialist! need a more nuanced understanding of economic theory.
Not really though. It is a departure from true capitalism into the lefty world of crony capitalism. The government does not make wealth it takes it from people either when it prints and spends or taxes and spends. Stimuli uses the money inefficiently and tends to be handed out to those with government access GM for example. Cronyism is a form of socialist economic philosophy, it is based on the same belief you should/can legislate market outcomes. It is why less people are working after the stimulus then before it.
I agree that Keynesianism doesn't mean socialism. But the part about the state being able to stimulate the economy until it reaches equilibrium is limited. Take for example a small country that doesn't own a reserve currency, like Greece. There is only a limited amount of 'stimulus' they can provide. The rest is borrowed. Once you're borrowing to provide stimulus that's when the ticking time bomb begins. You're at the mercy of some other nation's policies and have no flexibility of your own.
Without Keynesianism we'd certainly seen frequent examples of the destruction of capitalism around the world. We have two important factors: an improvement in economic modelling through the inclusion of behavioural economics; an understanding of crisis theory independent of Marxism. The only debate is whether the political shift would have been left or right (to fascism). In the case of a possible shift to socialism, the anti-Keynesian is actually demanding a result where socialism is more likely. Funny fellows!
More people are employed now than ever before in the US so you must be talking about somewhere else, England perhaps, or maybe Greece. There is no doubt that the stimulus was mostly wasted but that is because republicans demanded that most of it go to useless tax cuts before they would let it pass. If the entire stimulus had gone to fix the decrepit US infrastructure it would still be making jobs but for some reason republicans are adamantly against fixing up our roads and bridges, objecting vehemently to the stimulus's $50Billion in road and bridge repairs or any other attempt by Obama to pry money from Congress to fix up our failing infrastructure. Maybe they are all heavily invested in flying car companies.
What did we get again for the 100s billions already spent on infrastructure? Less people are participating in the labor force: http://data.bls.gov/timeseries/LNS11300000 Yes, you can control for working age population and still get that downward trend. Tax cuts help people. You got your tax hike this year, any difference worth mentioning? ANy great new government programs that couldnt have been done more efficiently with a simple voucher plan? - - - Updated - - - Name a time Keynesian stimulis has improved peoples lot in life? If it works so well, why not up spending to 15 trillion a year, 20 trillion, 5? At best, he understood that contracting the money supply is damaging. He also has many capitalist based formulas that work, but he is remembered politically for his belief in stimulis.
The point is simple: without Keynesianism we'd undoubtedly suffer crisis after crisis. Now the impact on a person's well-being is ambiguous. I wouldn't, for example, ever support the Military Keynesianism offered by the likes of Reaganomics
Capitalism is private ownership of the means of production. Ownership = exclusive use and excludes involuntary taxation. In any case, I'm not a Capitalist. I use "capitalism" to the extent that it's compatible with the non-aggression principle.
Nope. Its more than that. You can't understand political economy with vague reference to the economic spectrum. You'd need something like capitalists are "the material subjects of capital accumulation" (Screpanti, 1999, Capitalist forms and the essence of capitalism, Review of International Political Economy).
Thanks for the reply. What does that mean in terms of the discussion we're having? What are its implications? Have only done first year economics
Thought it was obvious. You've given a duff definition of capitalism, making your comment of no value at all
Not everyone is an expert. Perhaps if you explained stuff to others instead of going all elitist we'd have a better community here.
You were given a definition and also informed of your error. Your response only describes to me a closed mind
You were given confirmation and you went off on one. Note also that your contribution really wasn't relevant to the OP.
Neo-liberalism is an interesting one. Deregulation can certainly be used to accentuate economic rents, particularly labour market exploitation. However, this occurs with a rise in overall instability and risk of crises. We therefore have short term profiteering and/or economic stupidity from here[/QUOTE]
[/QUOTE] First of all it is government involvement that is causing the uncertainty and instability as the tamper with things like the interest rates instead of letting the time-prefferances of the people the government steps in and cause malinvestments that there are insufficient resources to fulfill and a depression follows . your artical states that neoliberal economic thought has dominated in the last 25 years is hardly true. I will admit an interest hayek was on the rise in the 70s was. But Much of the deficit spending and central control in the last 20 years points to the opposite. especially after the year 2000. Kaynes dominates today I mean I go and get a 4 year degree in economics and I didnt even know who Hayek or Mises or Menger was and I didnt find out about them till i did independent study after i graduated.
Nope. As you well know, government interventionism is needed with just a little thing like cost-plus pricing. Neo-liberalism delivers greater uncertainty and neo-liberalism is the result of the nonsense spawned by free market economics. Fake libertarianism infiltrated the orthodox with the rise of the likes of Thatcherism. I wouldn't specifically focus on Hayek mind you, though he certainly had a negative influence via encouraging the likes of the IEA
Too bad Keyne's theory can so easily be misused. It's not that the fundamental idea is necessarily bad. It's just that there seems to be a tendency to emphasize it above Adam Smith-type theory. If not used in proper context, it can easily be quite damaging. And that's really the danger of actually applying Keyne's theory in economic policy.
Smith spent most of his time analysing the morality of capitalism. He certainly can be used to support a case of egalitarianism. Keynes is much more focused on understanding, for example, the impact of behavioural analysis on economic uncertainty. Your argument does not therefore pass muster
Its typical that when there is a boom we praise the GOV intervention but when there is a bust its the free markets fault as if the government artificially created boom is not at all responsible for the inevitable recession. Don't tell me the Recent housing Boom and Bust that caused the financial crisis was not caused by government involvement and tampering with the interest rates.
By whom? In a boom the focus is on the success of innovation, on the entrepreneur and the growth of the SME Again, as you well know, market concentration can intensify economic shocks. The long term effects can be very bad, as illustrated by the notion of hysteresis in unemployment. It wasn't. It was the result of neo-liberalism. Folk get confused because laissez faire wasn't delivered. Of course it cannot be. Free market economics is a sham, from the corporate interests that fund your fake libertarian site to the delivery of hegemony to the financial class.
Of course the government was involved. Keeping interest rates lower was one way the government tried to expand home ownership for the less wealthy. Several monetary policies were involved which helped heat up the housing market causing prices to inflate well above the value of the real estate market, starting in 1999. Click on chart It is easy to see when the price line separates from the value line. (Rental value means actual value)
wow I am sorry but you just lost a great deal of credibility with that statement. you have to be blind or bias to not see the effect when the government lowered interest rates to artificially low levels and with adjustable rate mortgages and the intervention of government sponsored enterprises Fannie May and Freddie Mac so even the guy flipping Burgers at burger king can own a house. But savings were down and they were bad investments and as we came to realize there are insufficient funds to fill the malinvestments and the recession followed and we are only setting ourselves up for further trouble with the Bailouts spending and low interest rates. I am calling it right now we will see another recession in the next couple years. You know its funny in the past when I mentioned long run or long term you would scoff at the notion denying the existence of it and repeating over and over again "define long run" and now you are concerned about the long run?
