Ed
----- Original Message -----
From: <mailto:[email protected]>Tom Walker
To:
<mailto:[email protected]>RE-DESIGNING
WORK, INCOME DISTRIBUTION,EDUCATION
Cc: <mailto:[email protected]>Keith Hudson
Sent: Friday, April 13, 2012 3:41 PM
Subject: Re: [Futurework] "Efficiency's Promise:
Too Go od to Be True" "More Jobs Predicted for Machi nes, Not People"
"Economic Possibilities for our Grandchildren"
is a good starting point. Keynes made the same
point with more precision 15 years later in a
letter to T. S. Eliot and a couple years before
that in a Treasury Department memorandum on full employment after the war.
<http://econospeak.blogspot.ca/2009/08/skidelsky-on-keynes-and-queens.html>http://econospeak.blogspot.ca/2009/08/skidelsky-on-keynes-and-queens.html
Here's how Keynes biographer Lord Skidelsky
summed up the relationship between the earlier essay and the later letter:
My final section can best be introduced by
quoting from a letter Keynes wrote to T.S. Eliot
on April 5, 1945: "The full employment policy by
means of investment," he wrote, "is only one
particular application of an intellectual
theorem. You can produce the result just as well
by consuming more or working less" (CW, XXVII, p. 384).
To make sense of this mysterious remark, one has
to go back to Keynes' essay, "Economic
Possibilities for our Grandchildren," first read
to Winchester schoolboys in 1928, or even
further back to G.E. Moore's Principia Ethica,
the bible of his youth and the source of his
ideas about the good life. Economics, Keynes
always insisted, is only useful if it can get us
over the hump of scarcity, as quickly as
possible, into the realm of plenty, when man
would confront his "real, his permanent
problem--how to use his freedom from pressing
economic cares ... to live wisely and agreeably
and well" (CW, IX, p. 328). "The full employment
policy by means of investment" is Keynes' method
of accelerating through the barrier. From this
perspective, the mass unemployment of the
interwar years was not just the result of a
random collapse of confidence, but the precursor
of what can happen to rich societies that fail
to make adequate preparations for the good life which wealth makes possible.
It is typical of Keynes that he should have
returned to this vision during the war itself,
as soon as it became clear that the Allies would
win. The core of it is contained in a memorandum
he wrote on May 25, 1943, entitled "The
Long-Term Problem of Full Employment." He saw
three phases after the war. In phase I, which he
thought might last five years, investment demand
would exceed full employment saving, leading to
inflation in the absence of rationing and other
controls. In this phase, the emphasis should be
on securing a high rate of saving in order to
reconstruct the war damaged economy. In phase 2,
which he thought might last between five and ten
years, he foresaw a rough equilibrium between
investment and full employment saving "in
conditions of freedom," with the state active in
varying the pace of investment projects. In
phase 3, investment demand is so saturated that
it cannot be brought up to the level of full
employment saving without embarking on wasteful
and unnecessary programmes. In this phase, the
aim of policy should be to encourage consumption
and discourage saving, and so absorb some of the
unwanted surplus by increasing leisure, with
shorter hours and more frequent holidays. This
will mark the entrance to the "golden age," the
age of capital saturation. Eventually, Keynes
thought, "depreciation funds should be almost
sufficient to provide all the gross investment
that is required" (CW, XXVII, pp. 321-324; also
see Keynes to Josiah Wedgwood, July 7, 1943, p.
350). It is the age, foreshadowed in the General
Theory, of the "euthanasia of the rentier,"
since there will be no demand for new capital.
The same objection can raised against this essay
in prophecy that was raised against Keynes'
earlier "Economic Possibilities for our
Grandchildren": that it assumes that all
material wants in the wealthy nations will be
quickly saturated, and that it completely
ignores the capital needs of the poor countries.
In these respects Keynes was a child of his
times. He did not foresee that technology would
constantly create new products and
underestimated the ability of advertising
constantly to create new wants. Above all, he
did not foresee the postwar population explosion
in the developing countries. This factor, more
than anything else, has rendered his prophecy academic.
Nevertheless, it does raise some pretty
fundamental questions about what economics is
for, as well as the distinctly awkward question
of how far the peoples of wealthy nations should
continue postponing their own "golden age" until
everyone in the world has caught up with them.
What is certain is that Keynes would never have
worshipped at the altar of GDP. The rate of
per-capita income growth was only important to
him as an indication of the speed at which
societies were approaching material abundance.
Beyond that point, he expected that rates of
growth would and should slow down. One can
surmise that he would have had little sympathy
for "endogenous growth theory" which promises to
postpone the slowdown of rich countries, and
thus the "catch up" of poorer countries, into a far distant future.
My purpose in this paper has not been to enter
into an argument with Keynes. It has been to
show that his thought, from whatever period of
his life one chooses to take it, is richer, more
suggestive, and more unexpected than the
textbook Keynesianism that still flourishes, or
the administrative Keynesianism that ruled
policy in the 1950s and 1960s. His views on the
minimum sustainable rate of unemployment and his
fiscal philosophy still have a great deal to
offer governments. His reminder that economics
needs to retain its connection with the
non-economic ends of life as these have been
conceived by moralists and ethical philosophers
remains a necessary warning against blind
worship of the golden calf, and against
marketization carried to extreme lengths. So I
say: Down with Keynesianism, and up with Keynes!
On Fri, Apr 13, 2012 at 11:50 AM, Arthur Cordell
<<mailto:[email protected]>[email protected]> wrote:
Keith see the url below Economic Possibilities for our Grandchildren
<http://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchi%0Aldren.htm>http://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchi
ldren.htm
Keynes saw the world quite clearly. He saw a future where we wouldn't have
create work and worry about unemployment.
-----Original Message-----
From:
<mailto:[email protected]>[email protected]
[mailto:[email protected]] On Behalf Of Ed Weick
Sent: Friday, April 13, 2012 2:12 PM
To: Keith Hudson; RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION
Subject: Re: [Futurework] "Efficiency's Promise: Too Go od to Be True" "More
Jobs Predicted for Machi nes, Not People"
Not sure that you have Keynes and Marx right here, Keith. When I studied
economics, Keynesianism was still very much the vogue. I don't recall that
his solutions were to be applied via the banks or printing money. Rather,
the idea was to involve large scale public works etc. when the private
sector ran out of steam and the public sector had to kick in. I suppose
that borrowing and printing money might have been part of this, but it was
not emphasized. As for Marx, the ideas were very good, but how would you
ever do what he recommended. Well, as Lenin and Stalin demonstrated, the
state would do it, and in doing it, they would convert a humane idea into a
horror show.
One of the best books I've read on why good ideas go terribly wrong is John
Gray's "Black Mass". If you haven't read it, do take a look.
Ed
----- Original Message -----
From: Keith Hudson
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION ; Tom Walker
Sent: Thursday, April 12, 2012 10:32 PM
Subject: Re: [Futurework] "Efficiency's Promise: Too Go od to Be True" "More
Jobs Predicted for Machi nes, Not People"
Tom,
Your previous comments over the years on FW concerning the "lump of labour
fallacy" caused quite a change of mind in my own thinking, so I was
interested to read your recent exegesis of the increasing
automation-joblessness problem on your ecologicalheadstand website. There,
you contrast the different approaches taken by Marx and Keynes in trying to
solve the same problem. Here, I'd just like to describe what I think are the
reasons why they both failed.
Marx was writing at a time when factory conditions were still atrocious (or
at least had been a few years previously according to the out-of-date
statistics that Engels was feeding him with) and workers (mostly fresh from
the countryside and highly biddable) were being badly exploited by the
factory owners (with the exception of a few such as Robert Owen, and some of
the Quakers, etc). On the whole, though, workers were slowly beginning to
prosper and, due to gradually improving water and sewage works in the large
cities, children were surviving in larger numbers and the population was
expanding at a fast clip. They were beginning to buy modest versions of the
sort of consumer products that the middle-class were already buying. Growing
production efficiencies were such that a growing demand could be met and
even if workers were displaced from one factory due to more automation they
could usually find another job in a factory in a slightly newer industry.
Note, however, that when Marx was writing none of the consumer goods were
yet important enough (or pricey enough) that they were transformational both
in their economic effects (the saving of money to buy the goods) and in
their social use. Within two or three decades, however, workers were able to
buy a bicycle, for example, which enabled them to be much more choosy about
where they might work for the best wages.
By the time Keynes was writing most of the iconic consumer goods that we
have today (electrical goods of many sorts, telephone, radio, television,
car) were already in existence for the enjoyment of a growing middle-class
(what I term the 20-class of today), but not yet for most of the population
(what I term the 20-class of today). And they certainly weren't for the
millions of workers in the industries which had been highly profitable
(producing highly exportable goods) in the years before World War I. These
were cotton, coal, ship building, heavy engineering (bridges, railway
locomotives, etc). These were no longer profitable (or exportable) because,
although money had inflated three times during the War, the Bank of England
(then more powerful than the Government) was intent on deflating the pound
until it was as valuable as the pre-war pound. Many workers' wages in the
big industries were ground down and owners couldn't get the capital to
reinstate their machinery, worn-down by the war. Exports were drying up.
Keynes' General Theory was therefore concerned mostly with how to overcome
this large-scale unemployment problem rather than to describe an economic
theory of an economy in equilibrium. Although there was a cornucopia of
consumer goods that were, in theory, available for millions of workers to
buy they simply hadn't enough wages (or had none at all) to buy them with.
But neither Marx or Keynes were able to imagine a world in which credit
would become so widely available as today (or, rather until 2008). By
1980/90 or so, not only were workers receiving wages that enabled them to
buy consumer goods that Marx could never even dream of, workers were able to
get credit for money far beyond anything Keynes could possibly imagine. In
his day (when he wrote his Theory), the big commercial banks were growing so
fast and so out of control of the Bank of England (or of the Fed in America)
that instead of keeping up to 20% or even 30% of cash in reserve when they
created credit (to carefully assessed customers) they allowed their reserves
to decline to almost nothing (0% to 2% or 3%) by the time of the 2008/9
crash, Instead of being constrained to give credit of something up to 3 or 4
times their reserves, they were beginning to give almost unlimited credit.
And, just to make sure (so they thought) they were all in addition buying
and selling insurance policies (derivatives) from one another. In Japan,
America and Europe, the commercial banks felt impregnable until 2008/9 hit
them (though it hit Japan in 1990). (The small number of investment banks
were in far better condition because they were clever enough to invent the
myriad of derivatives with which they conned the high street banks.)
But despite the limitations of their respective theories, both Marx and
Keynes (geniuses both to be sure) were aware that the very real problem of
almost total automation of consumer goods still existed over the longer
term. Who would be able to buy them? It is this ultimate problem which
neither has been able to solve. Marx's solution (communism) has already
collapsed, Keynes' solution (government controlled money-printing and
attempted bail-outs of the banks) looks very much as though it is not
succeeding.
Keith
At 00:11 13/04/2012, you wrote:
An invisible thread connects David Owen's The Conundrum ( "Efficiency's
Promise: Too Good to Be True") and Erik Brynjolfsson's and Andrew McAfee's
Race Against the Machine ( "More Jobs Predicted for Machines, Not People").
Both books address real -- and very important -- problems but they both
arrive at false conclusions.
The "conundrum," according to Owen, boils down to a lack of commitment
driven by conflicting motives, "Do we honestly care?" he laments at the end,
citing George Orwell's observation that, "All left-wing parties in the
highly industrialized countries are at bottom a sham, because they make it
their business to fight against something which they do not really wish to
destroy."
Meanwhile, Brynjolfsson and McAfee prescribe the clichéd panaceas of
education, "flexibility" and entrepreneurship: "Our skills and institutions
will have to improve faster to keep up lest more and more of the labor force
faces technological unemployment."
continued at:
<http://ecologicalheadstand.blogspot.ca/2012/04/efficiencys-promise-too-good-%0Ato-be-true.html?spref=fb>http://ecologicalheadstand.blogspot.ca/2012/04/efficiencys-promise-too-good-
to-be-true.html?spref=fb
--
Cheers,
Tom Walker (Sandwichman)
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Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com>http://allisstatus.wordpress.com
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--
Cheers,
Tom Walker (Sandwichman)
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