Keynes and Marx

Many today call Keynes a socialist, probably because he is popular with "liberal" thinkers ("Liberal" now has a new meaning, thereby tricking everyone.) However, categorizing people is a subjective thing, it depends on where you are and how you define others. For example, I see him as a dead limey.

We can see Keynes as a socialist, but Marxists, per this article, see him as a confused capitalist, a Fabian.  Americans think his notions are "socialist," but that may be an imprecise term to wield in a higher-level conversation.

Below is the beginning of an article (I hope I can call it an article) from 1973 which was dedicated to proving Keynes was wrong under Marxist theory. I am going to sift through this, but I thought it was worth sending along to those who want to sort out the minds behind the hysteria in the "markets." It is of interest, as I am reading, of late, that his current economic condition should put an end to Keynes' death grip on economic theory and the end of fiat money.

The article is an interesting insight into why a handful of people pull the levers that they pull, affecting all of us. The real problem is most Americans are devoid of any understanding of economics/money theory, just as long as they got  flat screens.  The saying is if you don't study history, you will relive it. I don't think that applies. Here, we should adopt:  History will happen to those who are sure it is irrelevant.

I guess in a sense, there is no history. Like there is no democracy or baseball.  These are concepts, collections of philosophy, laws, and lessons. So, except for baseball, people don't seem to be interested in all that fluffy abstract stuff. 

Sorry about the typography.  You may want to just hit the headline and go to the article. 

Socialist Education Bulletin, Nº 1, July 1973

MARX VERSUS KEYNES

The failure of government-controlled capitalism

Introduction

The material in this bulletin has been taken, with minor changes, from articles which originally appeared in the Socialist Standard during the past five years. They bring together in one document a criticism of .Keynesian economics from a Marxian point of view. 

As the first article says, Keynsism is now the dominant economic orthodoxy, taught in schools and universities as a supposedly accurate description of how capitalism works or can be made to work. It is also the implicit theory behind the reformist practice of both the Labour and Conservative parties. For Keynsism holds that capitalism can be controlled by governments so as to function in the interest of all. A knowledge of Marxian economics shows this Keynesian – and indeed general 

reformist – claim to be false. For capitalism is a class system, based on the 

exploitation of the majority, which can only function by putting profits before human needs. Practice – the failure of all post-war governments to redeem their election promises about full employment, stable prices, steady and continuous growth – has also confirmed that capitalism is governed by economic laws which government intervention cannot overcome, despite what Keynes taught. 

The Marxian criticism of Keynes must be distinguished from that of those who argue that what is wrong with Keynsism is that it advocates only government intervention in an essentially private-enterprise economy, not government ownership of industry. 

That a state capitalist economy could function in the interest of all is equally illusory, but we cannot go into this here. The Marxian alternative to both Keynsism and state capitalism is Socialism, a non-market, non-monetary society based on the common ownership and democratic control of the means of production by and in the interest of the whole community. 

Only on this basis can production be democratically planned to provide what human beings need, both as individuals and as a community. 

Education Committee, 

The Socialist Party of Great Britain, 52 Clapham High Street, London, S.W,4 7UN. 

_____________________________________________________________________

THE KEYNSINAN MYTH

Socialists have always held that the boom-slump cycle and periodic unemployment 

are inherent features of the system of production for the market with a view to profit i.e., capitalism. But, say the critics, there has been full employment in Britain for over twenty years; there has been no slump on the scale of the 1930’s. Marx, they say, has been proved wrong. Capitalism has changed, thanks to the theories and policies of John Maynard Keynes.

Keynes was a British economist who died just after the last war. He wrote a number of widely-read books on economic and political matters and held various government posts. His theories on how to get full employment and avoid slumps are to be found in his General Theory of Employment, Interest and Money which appeared in 1936. 

The economic doctrines Keynes attacked in this book taught that capitalism automatically led to the full and most efficient use of productive resources. These doctrines said that unemployment was to be explained either by over-population or by restrictions on production and trade, such as monopolies and trade unions, State interference and tariffs. Overproduction was impossible because “supply creates its own demand”. This last dogma was known as Say’s Law after a French economist of the early 19th century. Say argued that as every sale was a purchase and vice versa a shortage of purchasing power was impossible. 

Keynes denied that laissez-faire capitalism automatically led to full employment and went on to show how over-production and unemployment could occur: since all that was produced in a given period wasn’t all consumed in that period there was a gap between productive capacity and what Keynes called consumption. This gap could be filled by the making of means of production, or investment. However as investment depends on what businessmen think are the chances of making profits there is no guarantee that this gap will be filled. And if it is not filled then there will be idle resources and unemployment. Keynes suggested ways of overcoming this condition. The State should first try to encourage consumption and investment. 

As the poor tend to spend a larger proportion of their income than the rich, one way of encouraging spending, Keynes suggested, was to redistribute some of the income of the rich to the poor. Low interest rates might encourage businessmen to invest so a policy of reducing the price of money by increasing its supply was called for. Keynes believed that although these measures were useful they would not be enough. In the end the State itself would have to 

increase its own spending and even take steps to control investment directly. In overthrowing Say’s Lawn Keynes was doing nothing new (though he thought he 

was). Marx had done this before when he pointed out that, although Say was right 

about every sale being a purchase, because the buyer and seller were different people 

the seller could interrupt circulation if for any reason he didn’t re-spend the money 

immediately. Thus both Marx and Keynes showed how overproduction was possible 

under capitalism. Marx went further and showed how it was also inescapable from 

time to time. The basic proposition of the Keynsians comes to this: steady growth at full employment level can be kept if the State controls spending and investment so that when a boom is developing its cuts down, and when a slump threatens it increases, its spending.  [Gene = This starts us down the road of controlling money, bail outs, etc. Sound familiar?]

Keynes had been a critic of laissez-faire for a long time before he wrote his General 

Theory. He was a member of the Liberal Party and sympathetic to the kind of state 

capitalist schemes the Fabians pushed. When he wrote this book he already had an 

international reputation as a leading economist. His book was given wide publicity 

because in it a well-known economist provided a theoretical justification for policies already being tried in the 1930ts. 

Keynes’ theories and policies – equalizing taxation, cheap money, State control – were eagerly spread by the Labour Party and “progressives” generally. After all, this was what they – and Keynes himself, for that matter – had long been advocating. Helped by these partisans Keynesian economics has become the dominant economic theory. In Britain it completely conquered the universities and government departments. In America some conservative ’economists are still fighting a rearguard action on behalf of laissez-faire against Keynes’ theories which they see as state capitalism (to them “socialism”) . 

It is true that Keynesian economics is a theory of state capitalism. It is a theory that capitalism can be managed by professional economists from government departments. [The rearguard is correct...]

It is Fabianism in new guise: capitalism run by “experts” . In Britain the first Keynesian budget was that of 1940 so the “experts” have been in 

charge for over thirty years. How have they fared? Have they been able to control 

capitalism?

ETC ETC

--