Friday, February 7, 2020

Kalecki on the Political Aspects of Full Employment — David Andolfatto

Kalecki creeps into the mainstream. First it was Minsky and now Kalecki. Can Marx be far behind?

I have always had pleasant interactions with David Andolfatto and he has been open to argument about MMT. He is a careful thinker and wants to be convinced, which is, of course, a good trait.

While I think Kalecki's political reasons for the chronic lack of full employment in capital and the recurrent economic downturns that are quite convincing, David Andolfatto is skeptical, since as Kalecki admits that profits would be higher with a flatter employment curve. 

This is where I think Marx comes it. According to Marx, capitalist expropriation of surplus value is the driver of capitalism as an economic system based on private ownership of the means of production.

If that is the case, I think there is a good case to made for it, then the question becomes what role does unemployment play in this?

Kalecki alludes to it, without citing in Marx's theory. Marxian analysis is based on social embeddness in contrast to individual agents acting in their own interest independently of other influences. Societies are structured on the basis of class, and according to Kalecki's analysis, the ownership class, under capitalism the capitalists, just as under feudalism the feudal lord, is more interested in maintaining the class structure than individual gain. They exhibit solidarity in this, in contrast to the lack of solidarity among workers. And it is in employers' interests to maintain class cohesion at the top while preventing it from arising or fracturing it at the bottom. Spartacus is their worst fear. 

Kalecki on the Political Aspects of Full Employment
David Andolfatto | Vice President, Federal Reserve Bank of St. Louis


Ralph Musgrave said...

I left a comment.

AXEC / E.K-H said...

Mindfuck or the Eternal Return of dead economic theories
Comment on David Andolfatto on ‘Kalecki on the Political Aspects of Full Employment’

The state of economics is this: theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.

The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong. What we have is the pluralism of provably false theories.

Obviously, economists violate the core principle of science, i.e. to bury refuted theories for good: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941)

The characteristic of science is ‘Conjecture and Refutation’, i.e. to ensure the material and formal consistency of a theory, to bury a theory at the Flat-Earth-Cemetery if refuted, and to replace it by something better. The characteristic of non-science, i.e. religion, politics, and common sense, is to endlessly repeat the same silly stories and the same false claims and only to defend/adapt them by ever more intricate reinterpretations.

Non-science means to keep everything in the swamp between true and false where “nothing is clear and everything is possible” (Keynes), science means to get out of the swamp.

Economics is NOT science. Economists are NOT scientists but political agenda pushers.#1 The very characteristic of agenda-pushing is meta-communication or what the Ancients called sophistry or what the Moderns call mindfuck.

Science tries to figure out whether a given statement that relates to a real-world subject matter is true or false. Scientific truth is well-defined by material/formal consistency. Mindfuck is not about reality but about what others say or think about reality and the motivation behind it.

Kalecki is case in point. He argues
“[1] Absent full employment policy the ‘state of confidence’ will produce business cycles. Under laisser-faire then, industry leaders can credibly use this fact to exert a powerful indirect control over government policy.
[2] Supporting obviously beneficial public sector investments leads to a slippery slope. The government may wish to encroach in other areas in competition with private enterprise.
[3] In a perpetually full employment economy, the threat of unemployment vanishes as a discipline device for employers. As well, the social position of the boss would be undermined and the self assurance and class consciousness of the working class would grow, leading to political instability.”

Obviously, Kalecki speculates about what goes on in the heads of politicians, workers, and the captains of industry. Obviously, Kalecki is NOT concerned about how the economic system works. He is NOT doing science but brain-dead folk-psychology.#2

Thinking hard about how the actual economy works will eventually lead to the true employment theory. Mindfuck, on the other hand, will never get out of the self-referential cycle of second-guessing and motive-imputation.#3

Kalecki, to be sure, is but one incompetent scientist in the history of economics mindfuck which is euphemistically called the history of economic thought. No thought there, merely political blather.

Kalecki, to be sure, is refuted on all counts.#3, #4, #5 High time for Mr. Andolfatto to bury him and to end his mindfuck exercises.

Egmont Kakarot-Handtke