Synthesizing of Marx and Keynes
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- Опубликовано: 16 июл 2016
- In 2016 James Crotty (Professor Emeritus, Department of Economics, University of Massachusetts Amherst) sat down with INET for a wide ranging conversation about his life and experiences becoming a professional economist.
Learn more at www.ineteconomics.org/perspec...
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Keynes on radical uncertainty, summarized by Dr Crotty:
"The future is totally unknowable and it is created by decisions made in ignorance now and is path dependent."
Starts about 5:45
And at about 9:40
"When people come to make decisions about what the future looks like, they tend to extrapolate the recent past into the future. And they do this with more or less confidence ."
11:40
"The future is never like we think it's going to be."
If you look at political leaders who were influenced by Keynsian economics, they were more concerned with saving Capitalism, than ending it.
What does that have to do with understanding the debt ceiling? Or the National Debt?
Intelligent analysis of economics is popular, but is instantly targeted by cultists who can feel the threat from popular comprehension of the status quo imbalances. (As pointed out)
Good interview. Thanks
I loved the conclusion at the end. It was honest and accurate
The theoretical assertions of neoclassical economics fail in the most fundamental observation of how markets operate in the real world. Politics dictate economic outcomes. By politics I mean the systems of law and taxation. It was Henry George in the late 19th century who first explained the link between the private appropriation of the rent of land (i.e., of all natural opportunities) and the boom-to-bust cyclical character of economies. Most economists today seem oblivious to the operation of land markets, which because of the low effective rate of taxation on the potential rental value of locations, are driven by speculation to the point of collapse about every 18 years. The depth and duration of the crash of land markets is most serious when the terms of credit are generous and the underwriting of potential default risk are ignored.
That is very true. You should search up Michael Hudson a brilliant economy who speaks about historical/current debt, Modern monetary theory,Marxism, land tax(georgism) and the failure of the neoclassical economists who understand nothing about how money and the real economy works.
Agreed. To that though you have to add the current banking settlement which is de facto counterfeiting. The really bad part is that the banking system is proto nationalised. Resolve land taxation and economic rents through LVT AND reform banking and you will recover 'capitalism'.
@@stevenfarrall3942 No banking or money issuance has been honest, I argue, since the early decades of the Bank of Amsterdam. When the Bank of Amsterdam tried to operate without fully holding the assets of its depositors (de facto fractional reserve banking) it began the long history of fraud that continues today. I am now reading Thomas P. Vartanian's book "200 Years of American Financial Panics." While not a complete picture of how the system evolved and was corrupted, this book demands attention.
@@nthperson Well, yes. Bankers will always tend to push the limits of credit creation. But, I think it's more the fault of us Brits. The first error was a judgement in an English Court in about 1750 which ruled that money deposited into a bank became the banks money. It was a loan to the bank. Whereas the depositor probably thought that the bank was acting as a warehouse (oh and 'money' meant gold). The next error was Peel's 1844 Bank Charter Act which stopped banks issuing their own currency - 'bank notes' but left them the ability to expand credit through chequing accounts. What kept all that rickety structure upright was the gold standard. But when the UK went off that in 1916, all bets were off. And lets not bring in the creation of the Federal Reserve in 1913.
Getting us back to sound money and LVT ( as the primary tax) would cure pretty well all ills. And that's why it won't happen - the vested interests in the government, the large corporations, the banks, the WEF and the small rentier landlord have too much to lose.
ordering new book~
U Mass Amherst sure had some great left economists.
But not unfortunately much of an economics department.
My favorite part is the discussion of "crucial economic decisions when one has to make now" and the example is.........................whether to go to grad school..................
yeah totally out of touch
Yeah... that was the point of this.
Ignorant.
How odd. My Economics lecturer was also a one time head of the Communist Party of Great Britain (I think that was it it has been nearly 30yrs since I was his student). He always taught that Keynes was a modification of Liberal "free-market" and not a Communist or Socialist school. Keynes is Capitalism for those that wanted to grow economies for everyone rather than the free-market winner-takes-all model. I wonder whether people thinking that Keynes is socialism is an indication of just how far right politics has gone than even normal rewards for normal industry looks like a crazy communist plot?
No, you just went far left. In fact you are communist. And there is no differences between far left and far right in this regard, they both centralise power and control.
Free market and decentralised economy is the opposite of far right and far left.
Maybe you should rethink your teachings from your communist teacher
I do have one question though....I thought Keynes' theory on uncertainty came from Frank Knight, ironically a hardcore pro market anti gov guy, so it doesn't seem his views on uncertainty were unique or new?
Few views are fully new. Marx even takes a lot from the Ricardian socialist. But, not many have real effect. Marx and Keynes are influential, even if not everything is new.
Brian, you are right about that issue. But Keynes was more than "the uncertainty disequilibrium" guy. He synthesized a lot, such as Knapp's knowledge of state currency, which gave Keynes the ability to see how full employment is possible and does not cause accelerating inflation. This is vital, it also shows Marx was wrong about currency. However, both Keynes and Marx ignored the role of energy in production, which also shows the Labour Theory of Value is complete nuts. But Marx got it correct spiritually, since labour is the only *_socially exploited_* source of surplus value. It's the social exploitation of labour that must be eliminated, for moral reasons, not financial stability reasons (for which there are none since LTV and FRP are myths).
@@Achrononmaster How does energy's role in production show that the labor theory of value is wrong? Also, what is FRP?
@@peternyc FRP stands for Fall of the Rate of Profit, I believe. Obviously, I can't speak to Bijou's assessment of the LTV. If I had to guess about what the relationship is between labor and energy, I would assume it is because labor becomes productive activity through its ability to do 'work' in the sense in which thermodynamics uses the term. 'work' in this sense is a transfer of energy which makes something move, basically, it 'does something' or 'makes something happen'. But if this is true, then value wouldn't _necessarily_ correspond to abstract human labor, since anything that can perform (thermodynamic) work can generate surplus in a society, in principle, which is why automation is possible. However value-form in Marx is a very difficult subject, so I'm uncertain as to the interpretation I gave above. My feeling is that the energetic story misses out on an essentially normative dimension of value that must be accounted for, and that its relation to the concept of labor seems important in essential ways.
I also disagree with Bijou's claim that the FRP is a myth--I think it broadly explains inflation and outsourcing of labor pretty well.
Interesting, but I don't know....I've heard some say Keynes was some type of hidden socialist (either they loathe or like this) and some say he was absolutely a capitalist and his goal was to save it from itself (again people like or hate this)I've seen both sides point out things to defend their view. Hell no one is 100% sure, it seems, what Keynes really was. Some feel he had a short run mentality to get out of recessions and etc and was basically held some altered views on the general way of thinking, some feel he had a permanent, new theory that makes a radical break with the general way of thinking.
We've seen this since his death. Some (Samuelson, Hicks) who merged his work with classical views and felt he was a diff version of that, and some (like Joan Robinson, Davison and their lineage) felt he was making a whole new theory. Cant help by notice leftists or market fans are pretty split....I think Keynes' ideas were perhaps fairly neutral and factual, and people put their opinions onto it.
He did debate socialists and in my best attempt to be neutral I really don't think Keynes was, or wanted to make some radical break. I do think he wanted to save capitalism, and a capitalism that largely follow his ideas did work great. That era killed any ideas of socialism in the US and Europe (most leftist parties dropped class warfare). So it seems Keynes was a great capitalist to me.
It was the oil shocks of the 70s that lead people to question him but I don't see how this theories or works had anything to do with it....and it was our abandonment of that to go to neoclassical Friedman stuff that lead to all our issues today. I think the Post Keynesians have done the best work in working on his ideas and updating it, but far as I know many of them (L Randall Wray, Steve Keen, others) are not usually anti capitalist, or pro socialist. At least not explicitly. They present ideas, like the job guarantee, acceptance of gov deificts and need to invest and regulate, that would strengthen and stabilize capitalism.
The Oil shock of the 70's in America was really cause by Nixon removing the dollar from the Brenton Woods agreement where it was backed by gold to finance his expanded war in Vietnam. Which in turn caused those oil producing countries to wonder were the dollar's real value would end up. Their answer was to get more dollars for oil, as a hedge. Now being a fossil fuel generated economy that shock would ripple through the whole economy. Starting one of the worse inflationary spirals, that engulfed the 70's. Gerald Ford would then throw the rich a lifeline to bet against the dollar by allowing Gold to once again owned as an investment something FDR banned. I would say both FDR and Keynes both understood that unregulated capitalism was only a temporary state as it will always get cannibalize by the rich into an Oligarchy. It is amazing how Keynes gets perverted by the Supply Siders as they always leave off the fact that Keynes say you replace what you deficit spent to jumpstart the economy once it starts growing again. Even given the shock of the 70's, America's Middle Class which peak at 61% held at 58% before Supply Side. We are now 40 year into Supply Side, Deficit have been much higher, Middle Class has shrunk to around 50%, while the suppression of labor has left that Middle Class far less wealth and more vulnerable. About the only strength to be seen from Supply Side is a Wealth Gap that is greater then the one we had in the Gilded Age. So much for progress!
What does Keynes have to do with the National Debt or the Debt Ceiling?
@@RealProgressInAction Though Keynes himself said government should deficit spend to stimulate the economy, he also said that Government must replace that money to the coffers when the economy moves again. Yet in the 1980's Supply Siders and Neo Liberals villainized Keynes economics for the build up of deficits and debt. People like Friedman said with confidence that deficits and debt would go down once the move to Supply Side was complete. Yet now 40 years after that move to Supply Side deficits got worse. I will also point out that Gorbachev brilliance was understanding that a new arms race with America in the 80's would bankrupt the communist system. Unfortunately where we used the Marshall plan in Europe, we did nothing like that with Russia. If we invested in Gorbachev's vision we could have had a far more balanced and safer world then we have today.
Questioner sounds as though he is shouting from the balcony.
Can't use a mic?
“THE only function of economic forecasting is to make astrology look respectable,” John Kenneth Galbraith
I dont appreciate Galbraith much as an economist, but he sure knew how to make good one liners
@@selahanany5645 Why not? Because of his lack of empirical evidence ?
@@gamingwithslacker Pretty much, he is just a bit too bombastic for me, didn't go much into the details.
@@selahanany5645 yes. I did find a quite critical review of Galbraith effectively saying "I agree with this guy's sentiments, and he's a great writer but he needs evidence for his sweeping claims."
How do you talk about Synthesizing Marx and Keynes without mentioning Kalecki?
Keynes assumed the capital structure is static and is utilized to the extent of the velocity of money.
It is artificially cheap credit which distorts price signals leading to a cluster of entrepreneurial errors.
ABCT is empirically wrong
@@teddyj.3198 We'll see about that.
@@hamsterg0d Friedman’s Plucking model
@@teddyj.3198 Milton Friedman is a monetarist, not Austrian.
@@hamsterg0d Irrelevant. The purpose of Friedman’s mathematical plucking model was to prove that large-scale economic expansions do not correlate with corresponding contractions. Since the Austrian business cycle theory necessarily assumes that the Federal Reserve, in lowering interest rates below the natural rate of interest, creates a large, unsustainable boom filled with unprofitable investments, the corresponding bust is proportional to the expansion. Or in other words - ABCT depends on the assumption that large booms correlate with large busts. Friedman’s analysis disproves this. Therefore ABCT is empirically false.
Please t'he subtítles!
Unbridled, minimal regulation capitalism is a total friggin disaster. How many times do we need to re-learn the flaws.
Keynes concept of aggregate demand was shown to be wrong during the 2008 crash. The employees that lost the most, were the home building trades. Stimulus was applied to infrastructure, performed by unions. No benefit to the building trades.
But, had the stimulus been applied to building more homes, that would have put even more downward pressure on home prices (supply exceeds demand). The same applies to our current housing fiasco (did we learn nothing?).
The only solution was to avoid the housing boom, by letting interest rates rise as banks ran short of capital reserves. Forcing low interest rates created a need for mortgage backed securities to meet reserve requirements. That isn't to say the financial market was (and still is) were without fault. Nor were the rating agencies, the over and under regulators, etc.
So, where do we see a shining example of the successful implementation of Marx's theories in the real world? I don't know much about economics but a cursory review of recent history leaves me wondering.
really wish we had gotten someone a little younger, or comprehensive, or who at least have their finger on the pulse of the people to speak on this
Everything Crotty notes is pretty good. But Marx had money all wrong, in his day commodity currency was a meme - Keynes knew it was a myth, since Keynes had read Knapp and Mitchell-Innes and others, he knew monetary economics was *_not_* a mere veil over barter. Whereas what is tragic about Marx is that he got all the spiritual values correct (morals and ethics) but did not understand the monetary system. If you understand the monetary system (that state currencies are tax driven, not commodity driven) you realise why neoliberal capitalism can persist despite regular crises - the monopoly issuers of currency simply prop up the failed private banks using accounting entries - no gold is needed. In New Zealand our government has no "gold reserves" you don't need the stuff if you have a Law system backed by an army that enforces tax liabilities. But once you understand this, you also realize how to transition to greater socialism - since you now understand you do not need to "tax the rich" for any reason (what? to get the currency back from them the government monopoly issues?), you simply do not need rich people to exist at all. Euthanize the rentiers. That's Keynes.
"we know nothing about the future" = wrong. We know a lot about the future:
1- We know abundant, cheap energy supports growth. See S. Korea (ROK) and China last 50 years.
2- We know moving manufacturing offshore lowers working class labor value, increases dependency on political entities can't control, adds risk to national security, etc..
3- We know stagnant and/or lowering working class standard of living breeds political instability (Trump).
4- Etc...
I have a lot of criticism about the practical usefulness of Marxist economic policy ideas, but also don't like Keynsianism's ability to slip into modern neoliberlism. I still think a left Keynsian worker protecting stance is still best though.
Oh! i see! If you keep things the same (or even regress), then things are more predictable. Progress would throw everything off.
All those disastrous things are perfectly OK if the only reason and the goal of the game is profit, which it is under capitalism. That goal must be removed. If it stays, all others will follow sooner or later, there is no escape
What nonsense.
"We literally know nothing about the future"!?
What a terrible way to approach the world.
But is it wrong?
found the anthropocentrist
need American system [hamilton, Henry c Carey, et al] not these two British puppets.
After watching this interview I lose more respect to science. As he points out himself, he can turn Marx scriptures so that he can show everything he wants with it. So science is not science anymore but highly influenced by personal believes, world views and preferences...
Economics is increasingly removed from science. In my university they moved economics to the college of liberal arts, and this did happen for a reason. There is a lot of ideology in the social sciences and that includes economics. So its important to consider this.
@@jaycrow6871 yea im not sure if economics was ever even considered an exact science.
@@beingamo4 Economics is mathematical looking backwards..astrology going forwards
Marx was more than an economist. And he was particularly rigorous in his use of the scientific method when writing about political economy. Thinking that economics exists in a scientific and technical sphere, separate from politics and questions of power is your failure, not Marx's.
Economics has never been a hard science. It's a social science that tries to hang out with the ‘cool kids' (mathematics , physics , ...) Thinking they're superior to the social sciences.
Blah, blah, blah......... Good thing economists aren't allowed to design bridges.
Waste of time.
This is incredibly boring. Thank god for the Austrian School!
Lol
Yes, because excitement is what it's all about...
Boring is good, that's a good sign of economic thought and analysis.
If you want exciting and easy, sure we got the Austrian School. They are wrong, like even hardline pro market anti gov folk have pointed out, with data, they are not correct, and once you learn how banking works (not the way we're taught) you realize the Austrian School must be wrong as its based on a wrong foundation.
But yeah ok, if you have such a short attention span or so easily bored the Austrian School is indeed a great outlet!
@@SchrodingersCat8813 great answer lol
I have started a bit on Austrian thinkers, but I think the best idea for economy is to look at the various schools of economics, because the economy is complex enough to allow for truths in each to be valid.
@@fufu3539 Yes I am beginning to see Keynes a s a corrective to the excessive certainty of both free market and Marxist schools. How ironic that the critique of Keynesian so often describes it as overconfident social engineering.