Thanks for this. I really enjoyed/learnt from that.
What would be interesting, at least for this non-economist, is some teasing out of the differences between the Minsky/left(or post) Keynesian take on things, and the Marxist one (cf David Harvey/Sweeney and his heirs) which also focusses on crises being inherent in the system – and those crises becoming increasingly financialised.
1. Keynesians think there is a potential way for capitalism to reach equilibrium and escape periodic crises even if such policy options are not taken; but
2. Marxists think that although such crises may be mitigated by policy measures, they are endemic to the system by virtue of capitalism’s endless need to expand and reproduce capital?
I ask not quite from ignorance per se,but from that even more dangerous position of having a little knowledge. A very little.
Although we have to be careful of the word “Keynesian” here. I think there is a tradition of political economy (Minsky, Hansen, Keynes, Kaldor, Robinson, Galbraith (younger and elder), etc maybe Kalecki too) who believe that a “capitalist”economy, with government intervention and regulation (especially of finance) can be made more stable and avoid large scale crisis.
I’d recommend Ha-Joon Chang’s latest book here to (especially the chapters on “finance” and “free markets”). He’s doing a free lecture at the LSE next month too.
And whilst I don’t actually agree with all of this (and do agree with Davidson’s comments at the end) Stiglitz’s LRB review of Skidelsky’s new Keynes book is worth a read:
“Keynes’s great contribution was to save capitalism from the capitalists: if they had had their way, they would have imposed policies that weakened the economy and undermined political support for capitalism. The regulations and reform adopted in the aftermath of the Great Depression worked. Capitalism took on a more human face, and market economies became more stable. But these lessons were forgotten. Thatcher and Reagan ushered in a new era of deregulation, growing inequality and weakening social protection. We are now seeing the consequences, and not just in greater instability. Keynes’s insights are needed now if we’re to save capitalism once again from the capitalists.”
In his book Dark Continent (on Europe in the 20th century) Mark Mazower has an section where he writes that Keynes provided the model for Western Europe in the immediate decades after the war, whilst Kalecki provided the model for Eastern Europe. I’m not quite sure that’s right – but it’s certainly interesting. I’d favour a bit of both.
The problem with putting things the way Stiglitz does in that final paragraph of his review is it leaves one struggling to explain why, exactly, the powers-that-be decided to abandon a previously successful mode of international political economy. It makes the coming of neo-liberalism sound almost as if were a matter of whim, or fashion.
I’m struggling through – no that’s unfair, I’m carefully reading – The Enigma of Capital, David Harvey’s new-ish book. As far as I can tell he argues that the post war ‘Keynesian’ political economy ultimately broke down because of the sheer volume of ‘surplus’ capital needing to find profitable sources of investment, opportunities for which were blocked in the ‘Keynesian regime. Unlijke ,say, Glynn and Sutcliffe he doesn’t accord (well he doesn’t necessarily accord, anyway) logical priority to the profit squeeze by wages. He suggests it is even more fundamental.
I don’t know enough to judge these competing viewpoints. But I have an innate suspicion that arguing for a restoration of the post war international political economy is a non starter. ( Not that I’m accusing you of doing so, just to be clear).
Interesting. (I haven’t read much Harvey to be honest).
I think it’s important, in these discussions, to seperate out financial capital and industrial capital. Neo-liberalism has certainly been very helpful to financial capital, which appears to gotten the upper hand across the West. (Over both industrial capital and labour).
Well, I’m no Harvey expert but everyone talks of him in positive tones, so I thought I’d give him a go.
The idea that finance capital (‘fictitious’ capital, as Marx called it, disparagingly) is the real enemy is one that i have been brought up in, politically speaking. But the questions that Harvey ( and Sweezy’s heirs )addresses are how and why this occurred. & their analysis relies on the idea of stagnation, and the dearth of investment opportunities.