Lucas, Keynes, and the Crisis (original) (raw)
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The development of Keynes's economics: From Marshall to millennialism
The Review of Austrian Economics, 1992
0 ne long-standing interpretation of the General Theory, which has been growing in influence recently, emphasizes that Keynes's sociopolitical vision was formulated long before and, in fact, inspired the heterodox economic analysis and policy prescriptions that were served up in his most influential work. One of the earliest proponents of this interpretation, Joseph Schumpeter ([19511 1965, p. 268) writes that "In those pages of the Economic Consequences of the Peace [published in 19191 we find nothing of the theoretical apparatus of the General Theory. But we find the whole of the vision of things social and economic of which that apparatus is the technical complement. The General Theory is the final result of a long struggle to make the vision of our age analytically operative." More recently this interpretive thread has been taken up by scholars who can be classified mainly, though not exclusively, as opponents of textbook Keynesian economics. For example, in a recent article on "The Sociopolitical Vision of Keynes," the late Karl Brunner reaches a conclusion similar to Schumpeter's. According to Brunner (1987, p. 321, "The general direction of Keynes's sociopolitical thoughts had. . .already emerged many years before he wrote the General Theory. .. .P' he latter work] provided the underlying vision of the socioeconomic process in an extensive analytic context. The sociopoliticaI program outlined over the prior decade naturally fitted with the General Theory into a coherent story of modem Western society." In another recent contribution, Allan Meltzer (1988, p. 5)declares that "[ilt is nearer the truth to say that the Geneml Theory provided
The economic origins and sociopolitical impacts of what became known as “Keynesian Economics” have not received substantial attention from economists, political scientists and philosophers about its mode of governance. This study explores the rise and consolidation of Keynesianism as a mode of governance responsible for creating collective forms of power relations in the postwar world, investigating the possible effects of economic ideas once they reach the political arena. Specifically, we apply a “political economy of power” (PEP) framework to understand the emergence of Keynes’s economic theory and its transformation into a policy agenda that had specific consequences in terms of power, governance and regulation of the economy and the population. While Chapters 1 and 2 respectively promote a bibliographical reading of Michel Foucault’s genealogy of power and John Maynard Keynes’s economic, philosophical and political foundations, Chapter 3 introduces a historical investigation based on primary sources and official documents about the absorption and acceptance of the Keynesian economic theory in Postwar’s economic policies. Our Political Economy of Power (PEP) framework developed throughout Chapter 4 deploys a dual-historical approach, combining institutional and genealogical aspects to analyze the transformation of Keynesianism into a policy agenda between the end of the 1930s and beginning of 1970s across Western Europe and the United States. Our conclusions are buttressed by the epistemological and political shift caused by Keynesianism as a political paradigm, or a “governmentality”. The Keynesian mode of governance was successful in bringing economistic principles and economic technicality into life, thus affecting the ways populations are governed. Consequently, technical economic instruments and welfare systems were actually a technical-scientific justification of intervention via a discourse of power that defended stability, economic growth and welfare. Once Keynesianism established itself as a mode of governance we see the rise of a security society in which policies involving full employment, demand management, economic stability and social security point out towards new forms of control and regulation in the shape of a security pact between the state and the population. Parallel to that, we also invite the reader to return to our original intellectuals – Foucault and Keynes – to shed light on the issue of economic activity as a teleological end of human life. By exploring their ethical writings we stress how economics should be reviewed and reconsidered as a means to achieve an ethical end: the good life. Such trajectory, in Foucault’s rationale, becomes a form of self-government in which the individual transforms himself/herself within the economy and understands economic activity as a means of action – rather than an end.
Living in the Springtime of Conscious Revolt: Scholarship on the social history of Keynesianism
2023
2. Living in the Springtime of Conscious Revolt: Scholarship on the social history of Keynesianism 'There is a vast gulf between how people who do have incomes lose touch with how people who don't have incomes get through on a daily basis […] One of the consequences of losing touch with class is we've also lost touch with economic analysis.'-Humphrey McQueen, "A Class Balancing Act" (1999) This chapter asks, cui bono? As was shown in Chapter One, the principal beneficiaries of the economic change were the capitalists. Using secondary sources, the enquiry now moves to consider other beneficiaries of Keynesianism. What is offered is a collation of scholarship that establishes the existence of a consensus historical perspective, one that has been hidden until now. Based on the literature amassed, historians and scholars generally see Keynesian economics and the Keynesian reconstruction in particular with ambivalence. While Keynesianism was beneficial to a large section of the population, especially blue-collar and white-collar workers, there were important groups of people who did not benefit as much or at all or were in fact disadvantaged. The significance of this is that the scholarship unwittingly coheres with the view of Keynesianism set out in Chapter One-that Keynesianism arose within capitalism-and reveals the extent to which other views are unsubstantiated, even without the introduction of a social history specifically concerned with Keynesianism. The chapter is arranged thematically. Reconstruction is discussed before the war because of its historiographical significance. Then follows a consideration of certain groups: trade unions, women, Indigenous peoples, the elderly, children and postwar migrants. It ends with a geographical juxtaposition between the experiences of the cities and the countryside, between Australia and those within the Empire who were footing the bill. The chapter is by no means Chapter Two-Living in the Springtime of Conscious Revolt 2 exhaustive, as the amount of scholarship touching on Keynesianism-knowingly or unknowingly-is insurmountable. Reconstruction Keynesianism There are only a small number of scholars who have considered the social history of Keynesianism. John Murphy in his article "Work in the Time of Plenty" (2005) uses oral history of men who experienced full employment in the mid-1950s. 1 Tom Sheridan's extensive work on the labour history of the war and postwar is similarly aimed at the economics. 2 Sheridan's Division of Labour (1989) demonstrates how industrial relations quickly deteriorated at the end of the war; something that occurred in part because of limited involvement of unions in postwar reconstruction planning. This contradicts one of the earliest accounts of reconstruction. 3 Sheridan also provides an example in the experiences of workers in the stevedoring industry, with its largely casual workforce pitted against increasingly bullish and experimental corporations. 4 By rectifying the general employment environment, Keynesianism exposed other hardships. Janet McCalman writes of full employment: Now with full employment, the causes of poverty that would endure for the next four decades were brought out in sharp relief: old age, infirmity, the loss of a male breadwinner and low wages with too many dependents. The rôle of the casual labour economy was quickly fading in working-class life. 5
Conclusion & Bibliography - Keynes from Below
2023
Conclusion '"If it benefits all the people to confiscate your father's money then ought it not to be confiscated?" "But will it really benefit them?" "He's hopeless!' Billy roared. "Read Keynes, read Lenin, read Marx!"'-Gore Vidal, Washington D.C. (1967) Keynesianism was unpopular among the very people it was supposedly designed to benefit the most. Viewed chronologically, it can be seen that the assumption of popular will for the new economics was itself imposed from above but retrospectively. This thesis shows that Keynesianism was divisive, inflammatory and largely unwanted. Keynesianism was adopted in Australia because it reflected an international realignment of capital as well as a desire to assuage the populace. Capital faced no greater threat in Australia than the revolutionary and reformist spirits of the 1940s, both of which took many years to exorcise. Undeniably, amelioration was beneficial to Australian society. By making employment relatively secure, enabling the expectation that one could live in a home with modern conveniences and raise a family, all while accruing wealth, the objective of improving the living standards of the masses was broadly satisfied. The consensus historical view is, rightly, ambivalent because of the hardship of notable groups within and without Australian society. To celebrate Keynesianism is to overlook, dismiss or conceal the price paid by less powerful peoples. A similar argument can be made with neoliberalism, which vastly expanded the wealth of those born before the 1970s and setup a generational division based on economics and Conclusion 2 reinforced with politics and culture that, so we are led to believe, time will resolve but only after it is too late for those born after 1970 or yet to be born. 1 Keynes was writing in a context in which states, economists and powerful vested interests were receptive to his ideas. However, the crisis of war and the fear among the political right wing of society and capital about what the end of the war would bring, meant the new economics was an obvious alternative to the status quo. The lesson of the previous major war, post-bellum period and depression era had finally been learned. If there were to be conflict-remembering that class conflict is absolutely essential-then it had to be redirected to smaller groups within and larger groups without. For capitalism to survive it had to ameliorate to the minimum level at which the threat of revolutionary unrest was quashed while still preserving profitability. For the left and labour, Keynesian economics represented another attempt to ward off either socialism or a non-capitalist (and non-communist) third way. The latter option, popular among moderates, was an important factor in the "Keynesian revolution" as was the capitulation of the far left in favour of maximising amelioration when it became clear that a radical reconstruction was unachievable. E. P. Thompson famously wrote in the preface of the Making of the English Working Class (1963) that he sought to save the forgotten masses in history from the 'enormous condescension of posterity'. 2 It is easy for historians to cast judgment on unremarkable humans when vested with the morality (and complexity) of the present. As Emma Griffin explains, Thompson was demonstrating the importance of apparently insignificant people. 3 That Keynes was élitist and
A Brief History of Economic Thought
A Brief History of Economic Thought
The evolution of economic thought can be traced back from its beginnings in classical antiquity up to the present day. In this book, Professor Alessandro Roncaglia offers a clear, concise and updated version of his award-winning The Wealth of Ideas, studying the development of economic thought through perspectives and debates on the economy and society over time. With chapters on prominent economic theorists, including William Petty, Karl Marx, and John Maynard Keynes, as well as on other important figures and key debates of each period, Roncaglia critically evaluates the foundations of the marginalist-neoclassical (scarcity-utility) approach in comparison to the Classical-Keynes approach. A comprehensive guide to the history of economic thought, this book will be of value not only to undergraduate and postgraduate students studying economic thought but also to any readers desiring to study how economics has evolved up to the present day. alessandro roncaglia is Professor of Economics at Sapienza University of Rome. He is a member of the Accademia Nazionale dei Lincei, Editor of PSL Quarterly Review and Moneta e Credito, and was previously President of the Società Italiana degli Economisti. His numerous publications, translated into various languages, include The Wealth of Ideas, also published by Cambridge University Press (2005).
The Political Economy of John Maynard Keynes - a beginners guide (2023)
2023
John Maynard Keynes was certainly the most famous and arguably the greatest political economist of the twentieth century. His seminal publication, The General Theory of Employment Interest and Money, published in 1936, changed economics irrevocably. Unfortunately, Keynes was not well-served by his followers, and much of his bold vision is missing from standard textbook treatments of his work. This essay sets the record straight by having four key objectives. First, as context, it provides a biographical sketch of Keynes achievements and the ‘interesting’ times which he experienced, the single most important event being the Great Inter-War Depression. Second, as further context, it introduces the essentials of the classical orthodoxy, the pre-Keynesian macro-economic theory of how economic society worked, and its conservative policy agenda, from which Keynes departed. Third, the core of the essay, it faithfully explains the key concepts and ideas of his new workable classification in which effective demand was the driving force, and the many-layered policy programme known as the Middle-Way, which he fashioned over time to meet the challenges posed by the Great Depression, World War 2 and the post-war world. Lastly, it sets-out the reasons why Keynes can be described as one of the greats of political economy.
Editor’s Introduction: The Growing Failure of the Neoclassical Paradigm in Economics
American Journal of Economics and Sociology, 2019
As López-Castellano (2012) explains, in the last third of the 19 th century, a new approach to economic analysis arose in several European countries that focused on the notion of equilibrium and the problems of optimal allocation of scarce resources while avoiding historical and institutional aspects. Instead of focusing on social relations, which originate in the production process, the behavior of the individual was analyzed with respect to the goods and services that satisfy his or her needs. Thereby, the "objective" conception of value, built on costs of production, was abandoned in favor of an explanation that started from individual psychology, and, in particular, from the "subjective" perception of consumers. Prices, reflecting the relative difficulty of production in the classical approach, became indicators of scarcity in the new orientation. Income distribution, an issue that in classical thought referred to the social relations of production, the role of different social classes, and their power relations, was reduced to a specific case of the theory of prices. In short, political economy ceased to be a social science and became a science of individual behavior. This new approach, which was known as marginalism, offered an alternative to Marx's extension of classical political economy. It contributed effectively to the interested forgetfulness regarding the conflict of social classes. This was very visible when economic analysis transformed social classes into factors of production associated with a price, presumably in terms of their productivity. "Getting rid of the classical theory of value and of the classical explanation of
History of Economic Thought Economics 970
Mailbox: 2nd floor of Littauer Office Hours: By appointment Course Description This sophomore tutorial is an intensive course in the intellectual history of political economy. It will focus on exposing students to the great figures in the development of our discipline through a careful reading of their major works. Through this experience, students will not only improve their understanding of economic reasoning and analysis, but also gain a unique appreciation of how modern economics evolved into its present form. The first third of the course is devoted to classical economics. To set the scene for the rise of modern political economy, we will briefly discuss political debates on foreign trade and the national economy and early efforts at economic analysis in the 17th and 18th centuries, covering Mun, Petty, Hume, and Quesnay. We will then spend four weeks reading major works by Smith, Ricardo, Malthus, Say, Mill, and Marx. This section of the course will pay particular attention to classical ideas of price and value, distribution and social classes, population growth, economic growth and long-run trends, gluts and economic crises, the economic role of the state, and international trade. The second third of the course covers the rise of neoclassicism. We will read works by Jevons, Menger, Marshall, Edgeworth, Cournot, Walras, Pareto, Pigou, and others. In the process, we will seek to understand the new vision, tools of analysis, and assumptions that defined neoclassical economics, and we will relate this material both to the first part of the course and to what students have learned in their intermediate theory classes. Among other topics, we will discuss marginalism, general equilibrium, and welfare economics.