Introduction The causes of unemployment remain under-theorised. It remains the case, as Keynes ( 1973 ) claimed in the 1930s, that economic orthodoxy assumes efficient market ‘clearing’ but is therefore obliged to explain unemployment using a theory that assumes the phenomenon does not exist. Unemployment has to be explained away in terms of market ‘imperfections’. Elements of these orthodox accounts may be useful, and will be discussed below, but as stand-alone explanations they are unconvincing both theoretically and empirically (Sjöberg 2000 ). This
This book sees Keynes as neither villain nor hero and develops a sympathetic ‘left’ critique. Keynes was an avowedly elitist and pro-capitalist economist, whom the left should appropriate with caution. But his analysis provides insights at a level of concreteness which Marx’s analysis largely ignored and which were concerned with issues of the modern world which Marx could not have foreseen. A critical Marxist engagement can simultaneously increase the power of Keynes’s insight and enrich Marxism. To understand Keynes, whose work is liberally invoked but seldom read, the book first puts Keynes in context, explaining his biography and the extraordinary times in which he lived, his philosophy and his politics. The book describes Keynes’s developing critique of ‘the classics’, of mainstream economics as he found it, and summarises the General Theory. It shows how Keynes provides an enduringly valuable critique of orthodoxy but vital insights rather than a genuinely general theory. The book then develops a Marxist appropriation of Keynes’s insights. It argues that Marxist analysis of unemployment, of money and interest, and of the role of the state can be enriched through such a critical engagement. The book addresses Keynesianism after Keynes, critically reviewing the practices that came to be known as ‘Keynesianism’ and different theoretical traditions that have claimed his legacy. It considers the crisis of the 1970s, the subsequent anti-Keynesian turn, the economic and ecological crises of the twenty-first century, and the prospects of returning to Keynes and Keynesianism.
The Asian financial crisis of 1997-98 shook the foundations of the global economy and what began as a localised currency crisis soon engulfed the entire Asian region. This book explores what went wrong and how did the Asian economies long considered 'miracles' respond, among other things. The combined effects of growing unemployment, rising inflation, and the absence of a meaningful social safety-net system, pushed large numbers of displaced workers and their families into poverty. Resolving Thailand's notorious non-performing loans problem will depend on the fortunes of the country's real economy, and on the success of Thai Asset Management Corporation (TAMC). Under International Monetary Fund's (IMF) oversight, the Indonesian government has also taken steps to deal with the massive debt problem. After Indonesian Debt Restructuring Agency's (INDRA) failure, the Indonesian government passed the Company Bankruptcy and Debt Restructuring and/or Rehabilitation Act to facilitate reorganization of illiquid, but financially viable companies. Economic reforms in Korea were started by Kim Dae-Jung. the partial convertibility of the Renminbi (RMB), not being heavy burdened with short-term debt liabilities, and rapid foreign trade explains China's remarkable immunity to the "Asian flu". The proposed sovereign debt restructuring mechanism (SDRM) (modeled on corporate bankruptcy law) would allow countries to seek legal protection from creditors that stand in the way of restructuring, and in exchange debtors would have to negotiate with their creditors in good faith.
‘model’ or ‘system’ remains unsatisfactory, he discusses theoretical issues with which Marxists can potentially engage productively. Keynes makes important theoretical innovations and his insights into time and uncertainty, the motivations of investment, the role of consumption, the persistence of unemployment, the nature and role of money, and the establishment of interest rates all seem worth incorporating into any modern critical political economy. Keynes may have held a naively optimistic view of state capacities, but here too his identification of the fundamental
General Theory ’s achievement as more modest. Lawlor ( 2006 ) sees it as formalising more adequately what might already have been derived from Marshall. For Dow, ‘Keynes’s approach was to demonstrate the minimum changes to orthodox assumptions which would generate a result of persistent unemployment which would not be eradicated by market forces’ (Dow 1996 : 63). Keynes accomplishes this demonstration of unemployment equilibrium, according to Dowd, by deviating from the neo-classicals ‘with respect to only one assumption: that savings are a function of the rate of
and the rise of an apparently viable socialist alternative became widely attractive, not least to many of Keynes’s Cambridge contemporaries, and contrasted with the rise of fascism and nationalism, which culminated in a Second World War even more destructive than the First. A liberal economics based on enlightened self-interest in which, by assumption, neither states nor unemployment existed made sense neither as theory nor ideology, and Keynes became the most prominent of many economists trying to articulate a more realistic theory, a theory which would better
Introduction In a similar vein to the previous chapter on unemployment, this chapter and the next argue that there are problems and lacunae in Marx’s understanding of money and finance which a critical engagement with Keynes can help to address. This chapter again begins with Marx and assumes a degree of familiarity and sympathy with Marxist political economy in general and Marx’s views on money in particular. Marx said profound things about money, some of which anticipate Keynes. But as de Brunhoff’s ( 1976 ) sympathetic and honest account acknowledges
at the cost of suggesting a neat equivalence and potentially stable equilibrium. The Phillips Curve recognises the reality of unemployment but recasts it in terms of mechanical balance with inflation. The idea of IS/LM begins with Hicks’s ( 1937 ) elegant paper ‘Mr. Keynes and the “Classics”: a suggested reinterpretation’. Keynes apparently read the paper and approved (see e.g. Backhouse 2006 ). Against the elevated status it would later assume, Hicks was quite modest in his claims for his ‘little apparatus’ ( 1937 : 156), describing it as a ‘rough and ready
The well-being of Europe’s citizens depends less on individual consumption and more on their social consumption of essential goods and services – from water and retail banking to schools and care homes – in what we call the foundational economy. Individual consumption depends on market income, while foundational consumption depends on social infrastructure and delivery systems of networks and branches, which are neither created nor renewed automatically, even as incomes increase. This historically created foundational economy has been wrecked in the last generation by privatisation, outsourcing, franchising and the widespread penetration of opportunistic and predatory business models. The distinctive, primary role of public policy should therefore be to secure the supply of basic services for all citizens (not a quantum of economic growth and jobs). Reconstructing the foundational has to start with a vision of citizenship that identifies foundational entitlements as the conditions for dignified human development, and likewise has to depend on treating the business enterprises central to the foundational economy as juridical persons with claims to entitlements but also with responsibilities and duties. If the aim is citizen well-being and flourishing for the many not the few, then European politics at regional, national and EU level needs to be refocused on foundational consumption and securing universal minimum access and quality. If/when government is unresponsive, the impetus for change has to come from engaging citizens locally and regionally in actions which break with the top down politics of ‘vote for us and we will do this for you’.
compass. But private investment now drove remarkable sustained gains in productivity. Blaug continues that the boom therefore falsified Keynes’s prediction of chronic deficiency of effective demand because ‘private investment was bound to fall behind full-employment savings’ ( 1997 : 650). It becomes quite a stretch to associate the causes of the boom with the adoption of any specifically Keynesian orientation. Issues of employment and unemployment could also run counter to Keynes’s prescriptions. Papadimitriou and Wray comment that ‘[r]ather than achieving full