Take The General Theory Of Employment, Interest And Money: With The Economic Consequences Of The Peace Compiled By John Maynard Keynes Expressed As E-Text
tantos apontamentos deste livro! Chiça, Keynes, . . John Maynard Keynesis perhaps the foremost economic thinker of the twentieth century, On economic theory, he ranks with Adam Smith and Karl Marx and his impact on how economics was practiced, from the Great Depression to thes, was unmatched.
The General Theory of Employment, Interest and Money was first published in, But its ideas had been forming for decades as a student at Cambridge, Keynes had written to a friend of his love for 'Free Trade and free thought'.
Keynes's limpid style, concise prose, and vivid descriptions have helped to keep his ideas alive as have the novelty and clarity, at times even the ambiguity, of his macroeconomic vision.
He was troubled, above all, by high unemployment rates and large disparities in wealth and income, Only by curbing both, he thought, could individualism, 'the most powerful instrument to better the future', be safeguarded, The twentyfirst century may yet prove him right,
In The Economic Consequences of the Peace, Keynes elegantly and acutely exposes the folly of imposing austerity on a defeated and struggling nation.
Who am I to judge one of the most important text of theth century In all honesty, GTEIM is one of the most difficult books I've ever read, and it is a frustrating read because I am a layman and not an economist, the target audience of this book.
My proper education in economics is a couple of units in business school and my yearclass with Mr Oeding, who preached that wars help economies I find out later that this isn't really the case.
What happened intriggered an interest in me to find out how money works, but the deeper you dive into the idea of money, the more subjective the idea becomes.
The concept of money becomes in effect, more abstract, The idea of money is still abstract back in thes when Keynes were still developing his ideas, sparring with the Austrians and dealing with the Great Depression that took countries down in the lates.
By, Keynes ideas have crystallised and his thoughts are transposed in GTEMI, It is an academic text for academics, but his hopes are that eventually, the text will be accessible for a wider audience.
It is hard to pin down ideas that strike me in the book the ideas are familiar from my economics courses, although the terminology may be different.
Over the years, Keynesian ideas are better represented in graphs digestible in courses and even YouTube videos, but it is challenging to imagine to conceptualise his ideas in your head.
The question for the layman becomes then, is it worth reading when there are other resources available that can summarise this for you inminutes or less That depends.
In my case, I love to read and I do put the classics in a pedestal, In my extreme, the only way to respect the classics and influential ideas is to go back to the original text.
Nevertheless, I still loved reading Keynes it took me almost three weeks to finish GTMEI and the CotP, I had to reread and reexplore ideas that confused me.
I'm still not sure how savings equal investment, and the implications of the schedule of marginal efficiency of investment on employment.
But when I grasped a concept, and held on to it, my brain was in euphorics,
Keynes was way ahead of his time, Although he didn't take down the classical concepts of economics, he managed to poke holes in Ricardo and Pigou's ideas blokes who won prizes in economics.
Keynes is still relevant today, his ideas are still contested by his successors in Stiglitz and Krugman against the followers of the Boston School.
The ideas of increased fiscal spending to stimulate growth has perhaps saved America from the Great Depression via the New Deal, but those ideas are still being played out in how much governments are borrowing and pumping money by quantitative easing in the past dozen years.
Equally interesting in the book is Consequences of the Peace, which read more as a historical text than an academic text.
Keynes pulled no punches in criticising the Allies infringing on the economic freedom of the defeated German empire, Where an economic cooperation was needed more than ever, European greed eventually cornered Germany to give birth to something desperate in fascism.
Keynes was right all along,
No, GTMEI is not for everybody, but if you like your economics and this part of history fascinates you then it is worth reading.
This part of the review is dedicated exclusively to The General Theory for Consequences of the Peace, please see below, later.
Keynes has always occupied an ambivalent space in my limited understanding of political economy, On the one hand, he was an avowed antimarxist, a member of the British Liberal Party and proudly bourgeois.
On the other hand, his framework set the stage for redistributive policies that Western bourgeois governments implemented in spite of themselves and which contemporary neoliberals are still very apprehensive towards.
The least you could say is that the ruling class itself doesnt quite know what to do with Keynes.
Radhika Desai, one of the sharpest marxist politicologists active, a decade ago wrote sitelinkan article reappraising his radical credentials, and so here we are now.
As opposed to Marx, who built Capital as a selfcontained logical construction where each new argument rests on the previous, Keynes works with the tools his contemporaries were used to.
This immediately proves to be a barrier to amateurs like me, but Ill try to reconstruct his argument anyway.
Keynes view of capitalism is inherently radical, in the sense that he believes it to be naturally crisisprone.
There are no “natural” equilibriums, the market is not a neutral arena but a forcefield that plays by its own rules, not those of society, and the great majority of the people suffer.
Keynes is before all else concerned with guaranteeing full employment: anything else exposes capitalism to social upheaval that might bury it.
The economic hegemony which he arose in dictated that the free market will itself balance supply, demand and interest to find the optimal rate of employment, but Keynes doesnt buy this.
If, in such circumstances, we start from a position of full employment, entrepreneurs will necessarily make losses if they continue to offer employment on a scale which will utilise the whole of the existing stock of capital.
Hence the stock of capital and the level of employment will have to shrink until the community becomes so impoverished that the aggregate of saving has become zero, the positive saving of some individuals or groups being
offset by the negative saving of others.
Thus for a society such as we have supposed, the position of equilibrium, under conditions of laissezfaire, will be one in which employment is low enough and the standard of life sufficiently miserable to bring savings to zero.
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He opposes Says Law, which basically holds that every commodity produced will generate funds for a consumer to buy it: the economy as a perfect closed loop.
Within this universe, all that would be needed is to unburden entrepreneurs and allow them to create wealth and consumers.
Not so for Keynes: production will only be expanded if a profit can be guaranteed and hence effective demand must be high enough.
Effective demand consists of two parts: consumption demand purchases by anyone, to consume a product and investment demand purchases of capital goods to expand capital.
The trouble is that even though enough wealth exists to increase effective demand to levels where full employment is guaranteed, the private control over this wealth means some of it will not be recycled into consumption or investment but hoarded.
The greater the wealth per person, the smaller the proportion of it will be spent on necessities, and hence the smaller the percentage of this will go towards consumption.
In other words, simply raising the consumption demand ie personal income would not efficiently realize enough demand to fuel full employment: investment demand itself must be raised.
Keynes doesnt want to ditch the market, Or at least, not necessarily, In his most probably bestknown anecdote, he proposes to bury bottles of cash money and allow the free market to dig them out.
Perfectly sensible, seen from a market POV, Raising investment demand can be as simple as limiting the interest rates: after all, the decision to invest and hence to borrow money to invest with is contingent on the price of this borrowing being lower than the expected return on investment.
This would amount to a frontal attack on the world of finance capital: getting this parasitical layer out of the equation would, to Keynes, allow for full employment and continuously increasing investment.
Indeed, the entire problem of economic development can be traced back to hoarding “That the world after several millennia of steady individual saving, is so poor as it is in accumulated capitalassets, is to be explained, in my opinion, neither by the improvident propensities of mankind, nor even by the destruction of war, but by the high liquiditypremiums ie.
preference for hoarding money as money, instead of investing it as capital formerly attaching to the ownership of land and now attaching to money.
”. In other words, money hoards and the power of finance and debt restrain the productive capacities of capital,
What would Keynes ideal economic system look like “The most sensible way of gradually getting rid of many of the objectionable features of capitalism” would go through the “gradual disappearance of a rate of return on accumulated wealth” by making “capitalgoods so abundant that the marginal efficiency of capital is zero”, ie, the “euthanasia of the rentier Interest today rewards no genuine sacrifice, any more than does the rent of land.
”. In other words, Keynes wants to save the entrepreneurs by culling the rentiers, This view goes back to Adam Smith thats not to say that it is a conservative position, quite the opposite the classical economists, and Keynes along with them, were aware of fundamental problems of capitalism the failure to correctly reinvest accumulated profit, a trait they shared with Marx.
Generations of Keynesian bastardization have, however, erased this,
In a sense, Keynes betrayed his own vision by his political blindness, He clearly understands the contradictory nature of capitalism on a technical level, yet does not connect this to a political agency or programme.
His analysis being moved by both concern for the plight of the working class and admiration for the creativity of the entrepreneur, he sought to save the latter by placating the former and eliminating the rentier.
Given that he calls for a “somewhat comprehensive socialization of investment”, one could wonder what remains that makes this system capitalist.
Private property would be left intact, only its use would be socialized forcing rentiers to take on the mantle of the entrepreneur.
But the political unity of the rentier class with the “entrepreneurial” class which simply comes down to two poles of the capitalist axis is fundamental, while a unity of the working class with the industrial capitalists can only be achieved under workingclass hegemony.
There is hence no subject to appeal to for this programme, outside the working class, But Keynes only mentions it politically in a tradeunion context: workers will push back when wages are cut and unite to increase their wages in a situation of full employment they would not form a party and become their own autonomous political agent.
All in all, useful stuff that Id need to take some economics classes for to fully “get”.
But an interesting reminder of how even bourgeois social scientists can can arrive at radical observations and solutions, It is their fundamental class position that bars them from actually putting it into practice, In our days, “Keynesianism” in common parlance means state intervention and bailouts, Reading the General Theory cures you of this misconception, .