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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

Keynes et el « Previous | |Next »
October 19, 2008

A quote from John Maynard Keynes, written in March 1933.

We have reached a critical point. We can ... see clearly the gulf to which our present path is leading. If governments did not take action, we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what ultimate outcome we cannot predict.

Keynes, an English liberal, aimed to preserve the market economy by making it work. In The General Theory of Employment, Interest and Money (1936) he argued that economic downturns are not necessarily self-correcting, as held by free market economists. The classical economists held that business cycles were unavoidable and that peaks and troughs (or booms and busts) would pass. They thought in terms of an artificial world of slight deviations from equilibrium.

Keynes contended that in certain circumstances economies could get stuck.

There was a certain stickiness as it were. If individuals and businesses try to save more, they will cut the incomes of other individuals and businesses, which will in turn cut their spending. The result can be a downward spiral that will not turn up again without outside intervention. So the government of a nation-state pumps money back into the economy by some means, such as spending on public works, to persuade individuals and businesses to save less and spend more themselves.

Hayek's response in the Road to Serfdom was that the application of Keynes policies gives too much power to the state and leads to socialism.

| Posted by Gary Sauer-Thompson at 3:17 PM | | Comments (1)


The basic doctrine for "settlement" politics anticipated from the eighteen nineties through to the formal enactment of the post-war late 'forties.
After Cleisthenes of Athens, "go to the people"; offer some stake in the project, contrary to the just misery in return for effort your oppressive ruler enemies (in our case unmasked by Marx and other radicals)offer, while they fatten.
I can't get over an atavistic remnant of the reactionary mentality flourishing this very moment through the example the US election, where the reactionaries grizzle about "socialism" because Obama innocently suggested that costs and rewards be shared, in the wake of the Wall St scandal.
And I remain more than ever in doubt as to the ALP Right, in the wake of further damage done to the "dumbed down" ABC last week.