Important for MMT aficionado's.
I was asked during an interview the other day from Paris whether I was a Post Keynesian. I replied not at all and explained that I have never felt that my ideas fit into that category although in a facile sense we are all post keynesian in a temporal sense. Most progressive economists would answer yes if confronted with that question, even most of the economists involved in advancing Modern Monetary Theory (MMT). My point of departure is that while there was a lot of important analytical material in Keynes’ writing that is worth preserving and integrating into, say, MMT, where Keynes went astray was his antipathy to the insights provided by Karl Marx. In particular, I consider that Keynes seriously misunderstood what the dynamics of the class conflict were within a capitalist mode of production. Keynes made major errors in his predictions that one can directly attribute to this blinkered approach to capitalism. I was reminded of this when I read an Op Ed in the Japan Times this week (March 10, 2024) – The economic future of our overworked grandchildren. This blinkered approach, which has fed into the modern Post Keynesian literature – which examines capitalism as if it is an ahistorical, neutral system of production and distribution – is a major reason that I do not associate my work with that school of thought.
Failing to note the economic importance of class and class conflict is a foundational error.
"Class struggle" is foundational for Marx. Keynes knew this, of course. R. H. Tawney's Religion and the Rise of Capitalism was published in 1926. Keynes would have been aware of Weber and Tawney as well as Marx, all of whom viewed economic systems as historically determined socio-economic artifacts rather than natural systems. Keynes acknowledge this in calling economics a "moral science," which was also Adam Smith's view. The big three — Smith, Marx, and Keynes — were on the same page here.
Class is something that Keynes could not have missed being a member of the British upper class in a highly class-ridden society. Not only that the rise of Marxism in Russia and it's challenge to the West by socialists and communists in in the West had a particular salience at the time that Keynes was writing.
Did he miss the importance of class conflict to economics, or was he intentionally countering Marx in the West as the time that socialism was rising as an option to capitalism ("bourgeois liberalism").
In other words, was Keynes at apologist for capitalism that tried to put a better face on a fundamentally flawed socio-economic system by tweaking it.
Where Keynes came down on this is still debated, and there is wide disagreement about what role Keynes played and how he actually viewed it himself.
On the other hand, Keynes also was working in what he terms the "classical" paradigm prevalent at the time, which is now called "neoclassical." As Bill says, Keynes's "blinkered approach ... examines capitalism as if it is an ahistorical, neutral system of production and distribution."
Keynes seems to have had a foot in two boats. Bill claims that this results in major issues.
How does Bill's position affect MMT, as he admits that he difference from some other MMT economists on such issues.
William Mitchell — Modern Monetary TheoryKeynes was wrong because he failed to consider class conflict
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
10 comments:
Keynes and Keynesians are apologists for the status quo.
The problem that heterodox economists face is that admitting the foundational nature of class conflict brings in class power, and class power results in market asymmetry.
Asymmetry undermines the assumption in economic models that so-called free markets are also fair markets, when they are actually rigged by the powerful in their favor through state capture.
This is true not only of conventional approaches to economics but also alternative ones that do not address the underlying issue of market asymmetry, especially the asymmetries that result from unequal power.
The issue is whether this can be addressed from within the system, or something else is required.
This is not an economic problem as much as it is a political one. The problem has to do with the powerful giving up their power in a system they control. The alternative is forcing the powerful to change the system and this requires superior power. This is the problem called "belling the cat."
This is why Marx held that there are only two solutions. One is that capitalism runs its course and is replaced when the material conditions that support it change sufficiently. Marx thought this next stage would be socialism and it would develop as conditions warranted into communism as the final state.
The other option associated with Marx is revolution conducted those disadvantaged — victimized, really — by the system when they get fed up and realize how they are being victimized. Being a political activist, this is the course he and Engles encouraged in The Communist Manifesto.
BTW, there has never been a test of Marx's views, which are in terms of capitalist countries. Neither Russia nor China were at the time of their revolution and neither is "capitalist" now to the degree that the state controls the commanding heights of the economy.
It appears to me that the conditions that Marx specified may be developing now. One one hand, capitalism is pretty much global although not as thoroughgoing as globalists envision, and cracks are appearing—growing inequality, pollution, climate change, and decolonization can all be construed as effects of "late-stage capitalism. This is also resulting a wide-scale political unrest.
“ The problem that heterodox economists face is that admitting the foundational nature of class conflict brings in class power, and class power results in market asymmetry.”
Tom,
You’re clueless…
All these people are morons and think Accounting abstractions are REAL…
Tom,
Don’t think about the fact that these people think abstractions are REAL.,, ANYBODY can do that..,
Think about HOW , let me repeat that, HOW? (second order, THINK about it) they can come to that belief.. HOW does this happen?
It’s irresponsible, immature and childish to simply lament that it’s happening..
ANYBODY can do that…
HOW is this happening?
Tom, we have a mixed economy. Part of it is public and private. The ideal of capitalism and socialism doesn't exist.
Addressing corruption is a political problem. No need for ideological baggage.
And corruption is perennial. What gets addressed at one juncture, always gets undone.
HOW is this happening?
This has been rather exhaustively explored by
1) heterodox economists e.g., Michael Hudson (because Hudson doesn't limit his analysis to economics separate from the rest of life),
2) sociologists like C. Wright Mills (see The Power Elite),
3) anthropolists like David Graeber (see The Dawn of Everything: A New History of Humanity with David Wengrow), and
4) historians like Howard Zinn, author of A People's History of the United States.
See also Criticism of capitalism at Wikipedia.
Those heavily into numbers can look at the work of Peter Turchin. His most recent book is End Times: Elites, Counter-Elites and the Path of Political Disintegration (2023).
As far as addressing this, I think Marx get it basically right in Preface to A Contribution to the Critique of Political Economy
No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society.
Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation.
So where are we as a world now. Is the current world order shifting to the degree that conditions have changed sufficiently to suggest a post-capitalist socio-economic system and political system are either developing or in the offing?
The issue is civilization, which fails to live up to the ideals put forth by some people. But it does meet the expectations of many.
Marx is correct in the sense that purely socialist or capitalist economies don't work under current conditions. Nevertheless there are places in the world where mixed economies give way to informal arrangements. Subsistence agriculture, pastoralism and homesteading are examples of this. In much of the developing world, the role played by public institutions is limited, infrastructure is rudimentary, and people are forced into self-reliance. As with western lifestyles, there are pros and cons to living in materially dire situations.
Material conditions indicate a decline in civilization, if not a collapse. In that scenario, a 'post-capitalist socioeconomic system' will be not be to the liking of most people. Especially for those of us who have experienced the comforts of modernity. For those born into a declining society, the reality of it will be perceived as normal.
Power has to be checked by countervailing power, and individuals have to be held accountable for their actions. Otherwise our so-called "progress" eventually turns to dust. Too much time was spent articulating lofty ideals, and not enough effort was put towards the mundane work of keeping people and institutions honest. So here we are, reaping the consequences.
Post a Comment