Keynes was wrong because he failed to consider class conflict

7 15 2 years ago

what i don't understand about liberal/left economists is how they don't talk about control of the money supply in class conflict terms

this seems like an obvious thing to socialize: fiat money is granted value by the assent of all (backed by the monopoly on violence of the government) so why on earth allow a barely-concealed private cartel to manage it via credit expansion?

why is it only libertarians who talk about this, typically in terms of private money? maybe I'm just ignorant and there is a lot of content on this topic someone can point me to?

spindle• 2 years ago

Not enough of them do, I agree, but some of the Modern Monetary Theory people do. E.g. Mark Blyth (some very entertaining talks on youtube), Stephanie Kelton. Also political economists do and always have, I believe. (IANAE, and in fact I'm not certain that Mark Blyth is an MMT person, but I thought I'd get the ball rolling.)

feedforward• 2 years ago

fiat money is granted value by the assent of all (backed by the monopoly on violence of the government)

But most left economists do not think this. I think the modern idea is that "fiat" currency has been implicitly backed by gold since 1971, whereas before the backing was explicitly. Otherwise, why does the Federal Reserve pay to store tons of gold? Why did Germany repatriate its gold in 2013?

Gold makes a good currency, by there's nothing magical about it as some in the right sometimes think. Silver or another precious metal will do too. Or even slightly less currency friendly commodities.

akira25012• 2 years ago

Most live in poverty or close to it.

This presumes that the poverty of 1920 is comparable to the poverty of today, which is obviously false.

What Keynes and this author both ignore is that the technological advancements did happen, and quality of life did improve, but most of the gains were monopolized into the hands of the few. There are no natural pressures to turn these productivity gains back over to the people who created them.

This author toys with the gig economy but entirely fails to notice that it too is being held in the hands of the few rather than the many.

What bothers me about the insights of Marx is a capitulation to monopolies but instead of allowing capital to control them it imagines a central party is the best mechanism to control it. In both cases, the obvious answer is to get of centralization in all it's forms.

onlyrealcuzzo• 2 years ago

but most of the gains were monopolized into the hands of the few.

Virtually everyone I know my age (from the US) has been to Europe multiple times.

Very few people I know my parents age have been to Europe.

This idea that life only got better for Bill Gates is ridiculous.

Sure, the average person's lives probably haven't improved as much as the .1% - but you're still FAR better off today (on average) than you were in the 1920s, and the 1960s, too.

Home ownership rates (by age) have declined - but nowhere near as much as most people in The California Bubble seem to think.

akira25012• 2 years ago

but you're still FAR better off today

That's the point. It is better, just not by the margin Keynes predicted, I'm merely attempting to account for this difference.

silverquiet• 2 years ago

Your experience of which generation travels to Europe is the exact inverse of mine.

pessimizer3• 2 years ago

Virtually everyone I know my age (from the US) has been to Europe multiple times.

I hate to tell you this, but your experiences may not generalize.

rmbyrro• 2 years ago

Keynes did predict great technological advances: http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

readthenotes1• 2 years ago

Tldr: an astrologer attempts to integrate Neptune into the theory.

It's no surprise he needs poverty levels to be worse than in the 1930s to push for Marxism, but the actual reduction in poverty has been ginormous.

"The estimates presented in this chapter show that between 1820 and 2018 the prevalence of extreme poverty across the globe fell from 76% to 10%, the lowest level ever achieved, according to our method... This reduction, however, is not distributed evenly throughout the period.

It took 136 years from 1820 for our global poverty rate to fall under 50%,

then another 45 years to cut this rate in half again by 2001.

In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014. "

https://www.oecd-ilibrary.org/sites/e20f2f1a-en/index.html?i...

pessimizer3• 2 years ago

Keynes wasn't wrong about economics. Keynes didn't have a theory of power, and he didn't know that a Soviet spy* with the full support of US oligarchs was going to sink the Bancor. He thought his vision would prevail just because it was right. Nobody cared what was right, these were people carving up the world and taking whatever they could leverage their power to grab. They weren't interested in his morality, they were interested in his tools.

Rather than simply "class conflict," it's a theory of power in general that he was lacking, other than the abstract spending power of currency. He didn't understand that people who had everything that they could possibly buy would still be unhappy (even be driven by unhappiness) because others weren't suffering sufficiently. Or as Veblen explained, that people would be upset at the existence of less virtuous people who had as much as themselves, or alternatively upset that their lack of comfort advertised a lack of virtue. Or even:

“Keynes also underestimated the competitive drive that fuels the relentless quest for wealth and social status. The wealthy, in particular, are often motivated by a desire to maintain their relative standing, leading to an endless competition for supremacy.”

Bill Mitchell also seems not to have a theory of power that I can recognize. Or he's simply lost all hope; I don't know that declaring that production and ownership should volunteer to shift itself is more reasonable than thinking that power could be morally and logically argued into relinquishing itself. Of course, the dope he's quoting thinks that power already has volunteered to give itself away, but of course the New Yorker would say that.

In the Stalin-Wells talk, Keynes directly confronts soft socialism to hard Bolshevism in Shaw, Stalin and Wells with infinite confidence in his knowledge of how economics should work, but carries that cockiness into a unearned belief that he understood the psychology of the captains of industry and government. His pages are an interesting window, and it tells you all you need to know about capitalism that it is nearly impossible to google, nobody is distributing it, and it may be against the law to share this 1934 pamphlet.**

-----

[*] https://en.wikipedia.org/wiki/Harry_Dexter_White

[**] downloadable at: https://theverbatimrecord.wordpress.com/

pessimizer3• 2 years ago

This is the essential point. Are changes for the better prevented by wicked men who know the changes to be advisable, but resist them out of self-interest? Or are they prevented by the difficulty of knowing for certain where wisdom lies? The class-war faction believe that it is well known what ought to be done; that we are divided between the poor and good who would like to do it, and the rich and wicked who, for reasons of self-interest, wish to prevent it; that the wicked have power; and that a revolution is required to depose them from their seats. I view the matter otherwise. I think it extremely difficult to know what ought to be done, and extremely difficult for those who know (or think they know) to persuade others that they are right; through theories, which are difficult and obscure when they are new and undigested, grow easier by the mere passage of time.

--Keynes, 1934

thrill• 2 years ago

The economic growth that allowed sufficient attention to medical advances didn't bring the average newborn's lifespan from 1930's 30 years to today's 80 years by increasing the lifespan of the top one percent to 10,000 years - it applies generally to everyone except the very poorest.

Keynes was wrong because he failed to consider class conflict

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