Saturday, May 5, 2018

Ramanan — Joan Robinson And Nicholas Kaldor On Antagonism To Keynesian Ideas


Some good quotations.

19 comments:

Matt Franko said...

“it maintains the authority of masters over men.”

This is libertarian.... ie anti-authority... so now when there is a proposal to eliminate unemployment via govt authority (Federal JG), you see the same libertarians are killing the deal...

The basic problem is this paradox of libertarianism....

Bob Roddis said...

What a load of nonsense. Unemployment is ALWAYS caused by violent intervention in the absence of an unforeseen natural disaster. You guys KNOW you are lying because you are afraid to familiarize yourselves with even basic Austrian School concepts.

The classical liberal philosopher John Stuart Mill once explained that, “The greatest orator, save one, of antiquity, has left it on record that he always studied his adversary’s case with as great, if not with still greater, intensity than even his own.” Mill held that unless we carefully study the views of those with whom we disagree, we will never really know what they’re right or wrong about. “He who knows only his own side of the case,” Mill wrote in his 1859 book On Liberty, “knows little of that.” Our opponents could be right for all we know or care, because they may know a fact or offer an argument we’ve never thought to consider. And even if they aren’t right, Mill points out that specks of truth may exist among their falsehoods which can guide our minds in new directions.

http://quillette.com/2018/03/10/psychology-progressive-hostility/

At the same time THE [???] anti-Keynesian school of economists, the ‘new’ monetarists....

Monetarists are just another form of Keynesian. Hayek was the "anti-Keynesian school of economics". Since the market does not fail, lack momentum, require momentum, or tend towards monopoly, there is no justification for violent intervention. And advocates of violent intervention have the burden of proof, much like a prosecutor.

And don't forget that Hayek won the "Nobel Prize", such as it is, for his work on the Austrian Business Cycle Theory which essentially holds that it is Keynesian policy that causes the business cycle. That wouldn't be a reason to actually engage those arguments as opposed to rejecting them without any understanding at all, right? The latter is the sign of the true intellectual.

Konrad said...

The article above [“On Antagonism to Keynesian Ideas”] discusses an item written in 1943 which described two “virtues” of unemployment.

[1] “Unemployment maintains the authority of masters over men.”

This was written during WW II, when the USA had a command economy that was more or less like the military with a clear chain of command. Unemployment was near zero, and America’s rulers feared that workers might start to think they had value. Therefore the 1943 article says we need unemployment to constantly remind workers that they are disposable scum.

[2] “Unemployment preserves the value of money.”

The idea here is that if everyone has a job, there will be upward pressure on wage rates, leading to inflation. The article says, “This phenomenon at present is kept within bound by the appeal of patriotism. In peace-time the vicious spiral of wages and prices might become chronic.”

Again, this was written during World War II, when unemployment was near zero. The U.S. economy did indeed face a potential for inflation, BUT NOT BECAUSE EVERYONE HAD A JOB. The potential for inflation existed because materials were rationed for the war effort. This meant there were shortages of consumer goods for workers to spend their money on. Excess money, combined with material shortages, leads to price inflation.

During WW II the U.S. government controlled inflation by removing excess money from the economy. The government did this by instituting the personal withholding tax (which we still have today) and by urging workers to buy War Bonds. The U.S. government falsely told workers that taxes and War Bonds were necessary to “fund the war.” This was a lie, but the peasants bought it. The peasants still believe it today. They still believe the lie that taxes and Treasury bonds are necessary to “fund the U.S. government.”

The point here is that the inflation bogeyman is a not necessarily a reason to oppose Keynesianism. The crucial issue is not employment, but shortages. Inflation happens when there is excess money in circulation, combined with material shortages. This is the situation in Venezuela, but not in the USA. Americans are not fighting a world war. Americans are not rationing materials. Americans do not face shortages in consumer goods.

Americans do, however, face shortages in housing. These shortages are inflating sales prices. This inflation, combined with Wall Street-style speculation by developers, has created a housing bubble, which in turn has made developers and speculators richer than ever, while creating a vast and ever-widening sea of homeless people in Los Angeles and elsewhere.

The solution is rent controls and price controls. These exist in a few places in the USA, but not in other places, since developers bribe politicians to not impose rent controls or price controls.

CONCLUSION:

Does Keynesianism create a potential for inflation?
Yes.
Can inflation be controlled?
Yes.
Therefore Keynesianism remains valid.

Konrad said...

@ Bob Roddis: I do not attack you, but for the sake of clarification, I note that this is not an Austrian School blog.

It is an MMT blog.

As such, we dismiss Friedrich Hayek as a liar and an obfuscator.

We dismiss the Austrian School (and the Chicago School) as false and malicious bullshyte.

Matt Franko said...

Bob,

Unemployment isnt the same thing as not being adequately provisioned...

For instance, there are people out there who are "employed" but they are still not adequately provisioned...

So maybe from the libertarian pov, you could say 'under libertarianism, no one is technically unemployed!' but that still doesnt mean everyone is adequately provisioned...

From the standpoint of authority, it is only through authority that you can guarantee that EVERYONE is adequately provisioned... as opposed to "employed or unemployed"...

The main goal of authority is 100% adequate/robust PROVISION not necessarily 'employment/unemployment'...

Matt Franko said...

Which is why this is bullshit from Joan Robinson (Art degree) here where she creates this big "neo-liberal conspiracy!" because she doesnt take the time to examine what is actually being taught over in the other departments of the academe...

If she took the time to examine those disciplines and figure out where they are going wrong where the best that they can achieve is about 95% 'employment' so-called at best..

NOBODY in the academe of business is teaching that there should remain an unemployed cohort for whatever systemic reason from Joan Robinson here... she appears paranoid to me...

Matt Franko said...

Konrad,

Bob always creates good segues though...

Bob Roddis said...

As such, we dismiss Friedrich Hayek as a liar and an obfuscator.

We dismiss the Austrian School (and the Chicago School) as false and malicious bullshyte.


Of course you do. The issue is how you do that without ANY understanding whatsoever of his analysis. I guess that is what makes you such a supreme intellectual.

Bob Roddis said...

Higher and higher employment would mean a growing number of people demanding a limited amount of money. Which would make the money more valuable. Which would reduce prices across the board. We can't have that, can we?

Bob Roddis said...

CONCLUSION:

Does Keynesianism create a potential for inflation?
Yes.
Can inflation be controlled?
Yes.
Therefore Keynesianism remains valid.


Keynesians must demonstrate that there is a problem and that their violent intervention will solve the problem. It turns out that there is no problem and that their violence-based solution is the cause of the problem. Of course, they are too afraid of the truth to analyze that.

Matt Franko said...

Trump (MBA, Masters of SCIENCE in Business Administration, Wharton):

https://twitter.com/realDonaldTrump/status/926484660946862085

"jobs, jobs, jobs..."

Manifestly Joan Robinson is full of shit as are any other purveyors of the vast "neo-liberal conspiracy!"

Tom Hickey said...

Konrad, you do not speak for this site. It belongs to Mike Norman.

Everyone is welcome to share their views here, other than trolling and commerce.

Bob Roddis has taken the trouble to read and understand MMT and he is welcome to assert his views.

BTW, there are proponents of Austrian economics that agree with the MMT description of institutional arrangement but not so much with the policy proposals of some MMT advocates. That's fine.

The claim that the existing monetary system leads to broad fiscal space based on the larger role it provides for policy.

That fiscal space can be by government used to fund expenditure in a more expansive way than under a more restrictive monetary system is some that MMT not only admits but many MMT advocates support.

At the same time, this relaxed fiscal space can also be used to fund military expenditure, as is not the case.

The question is how to address this. One view is to restrict the fiscal space, and another is shape policy based on it to advance progressive policy goals.

Interestingly, Austrians are not the only one that advocate restricting fiscal space. They advocate change the monetary system to do so. However, fiscal conservatives advocate doing so through "fiscal discipline," e.g., either a permanent balanced budget policy (deficit hawks) or balancing the budget over a cycle (deficit doves).

Discussion that takes different points of view and perspectives is a key element in the open inquiry that is needed for informed deliberation on policy choices.

Konrad said...

@ Tom Hickey: You are correct. The blog header, and most of the blog posts, mention MMT so often, and so prominently, that I had absolutely no right to call an MMT blog an “MMT blog.” My apologies. It won’t happen again.

Matt Franko said...

"Bob Roddis has taken the trouble to read and understand MMT"

Tom, I would agree with that and 2nd it... yes Bob does understand it... he has evidenced this over the years... its a fair statement...

Tom Hickey said...

Higher and higher employment would mean a growing number of people demanding a limited amount of money. Which would make the money more valuable. Which would reduce prices across the board. We can't have that, can we?

But they need labor power to have the demand met, since with a lump of money if workers get more proportionally, then owners get less, that is, labor share increases relative to capital share, i.e., falling profit rate.

The case of perfect markets there would be no rent, since it would be competed away, and arguably everyone would receive their just deserts.

However....

Tom Hickey said...

Konrad, you haven't been here long enough to realize that this site provides open discussion as long as it is within the bounds of reason-based discussion.

Many of us sometime exceed that but it is ignored if it is only tangential to their overall contribution.

People that exceed the bounds actually undermine their own position.

Footsoldier said...

The problem with the Austrians as far as I can see it is


How do you rein in Capital if Capital gets out of control ? It is quite clear Capital is out of control and had been for a while now.

In the 1970's it was easy to rein in Labour they sent the police in and the army.

So how do Austrians propose to rein in capital when they encourage it to go out of control ?

Konrad said...

@ Bob Roddis…

I am amused by your repeated claims that Keynesianism is a “violent intervention.” You sound like militant feminists who claim that all men are violent rapists, and are guilty of violent and toxic masculinity.

For an example of extreme violence, I point to the Chicago School (which is an outgrowth of your beloved Austrian School) as it was applied to Chile after the U.S.-backed dictator Pinochet suicided Allende, and began a blood-soaked reign of terror. Over 40,000 people were tortured to death.

Using Austrian precepts, the dictator Pinochet “made the economy scream,” just as Nixon and Kissinger had ordered. Perhaps you would like to see the same thing in the USA.

Bob Roddis said...

Konrad:

1. The Chicago School has nothing whatsoever to do with the Austrian School and it not an "outgrowth" of it. It is a quasi Keynesian outlook for which Austrians have little respect, certainly as to monetary or antitrust policy.

https://mises.org/library/milton-friedman-keynesian

2. Austrian theory does not propose any specific course of action. Libertarian theory strictly forbids and proscribes murder in which the Chilean regime engaged and it was condemned by most libertarians. Nevertheless, Chile has done economically better than all the other Latin American societies.

3. MMTers freely admit that the government must use violence and threat of violence to force people to use its fiat funny money. What's so amusing about that? Especially if the Keynesian system is the cause of and not the solution to economic problems.

4. You have no understanding of nor familiarity with even basic Austrian concepts or analysis.