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At 08:37 PM 4/7/2000 +0100,Riccardo wrote:
I did not argue that Keynes said consumption is the purpose of production,
Keynes himself says this (GT.p104). You might like to claim that he should
not have said it (i.e., that it is inconsistent with other aspects of his
theory). But I think he is obliged to say it. We can conceive Economic
activity to have another goal only if we recognize that the specific social
relations through which it is carried out themselves realize a goal (this
at least follows from Marx's example; David Levine - based on Hegel -
argues that market relations realize the goal of individual
self-determination, but the principle is the same: that other purposes of
economic activity (such as the expansion of value) come from the social
form of economic activity). Since all systems of economic activity (or if
you like modes of production)satisfy needs, this common purpose cannot
provide the reason for the differences between them. This kind of
consideration (social form) cannot be incorporated into Keynes's conceptual
framework (there are evidences of its absence in the GT, such as his
supposition that medieval usury laws are meant to keep the rate of interest
lower than the marginal efficiency of capital p. 351, or that in earlier
historical periods, land had a high liquidity premium as money does in
modern society p. 241, I will get to his discussion of a cooperative
economy in a minute). Abstracting from social form does not prevent Keynes
From making observations about particular institutional features (e.g., of
the stock market). But it does prevent him from demonstrating that
economic activity has some other goal than satisfying needs.
As for MCM' -- even NeoClassicals know that the goal of the firm is money
profits. They think this can be ignored (abstracted from) and Keynes does
not. The question is why? We can distinguish 3 positions:
NeoClassicals - MCM' by firms (micro) maximizes satisfaction of needs at
the level of society as a whole (macro)
Marx - MCM'or the creation of surplus value is the macro level goal (as
well as micro or firm's goal) specific to capitalist relations of production
Keynes - macro level goal is the satisfaction of needs but (against NC) the
pursuit of money profits does not realize this goal EFFECTIVELY (because
money profits can be made by lending as well as production, by speculation,
on a short term basis etc, all of which are good points!). Keynes does not
differ with the NCs over what the goal of economic activity is (macro
level) but over how effectively a monetary economy realizes this goal.
On the cooperative vs. monetary economy question - the key difference for
Keynes between a cooperative and a monetary economy (if you follow his
argument closely) is that in the former, incomes are paid in goods. There
cannot be a short fall in aggregate demand. Money in this framework is
linked from the outset to the determination of the VOLUME of output. The
distinction between direct coordination of economic activity (in a planned
or traditional economy) and indirect coordination in a monetary economy is
Unemployment equilibrium - this is one of the consequences I meant when I
said that Keynes argues that the presence of money has important
consequences and therefore, that we should not abstract from money. This
does not undermine my point that explaining the necessary role of money
within the structure of capitalist relations (Marx)is different from the
argument that money, taken as present, has important consequences (Keynes).
I think these differences between Marx and Keynes are important: (1) Keynes
says lots of things (that social advantage differs from profitability, that
MCM is the goal of the firm, that monetary & real exchange economies behave
differently, these stand out but I am sure there are others) that sound
very promising. What matters though is what he means by them and what
basis he can give for them. (2)by distinguishing the meaning of those of
Keynes arguments that sound like Marx from Marx's position, we see what
Marx is getting at. For this reason, I don't think Keynes should just be
set aside as another tradition (& do my best to read Keynes carefully &
don't see that anything you have said contradicts my argument).
Last -- where does the abstraction of labor come from in Marx? In the first
instance from the equivalence of all commodities to money, no?
At 18:38 +0100 7-04-2000, Martha Campbell wrote:
>>True, Keynes recognized that a theory of capitalist society has to be a
>>theory of monetary production. But this is only because he recognizes
>>that money exists and that it has consequences that matter (e.g., we should
>>not ignore changes in the price level because these affect the burden of
>>debt and production is financed with debt, we should not conflate the
>>interest rate with the rate of profit because lending money is an
>>alternative to production). Ultimately though Keynes is forced to maintain
>>that consumption is the ultimate purpose of production (money or no money).
>> Keynes could not explain why a capitalist economy cannot get along without
>>money (cannot explain why money is necessary).
>This is clearly *contradicted* by Keynes' distinction between a cooperative
>economy and an entrpreneur economy in the Collected Writings, where Keynes
>go so far as to endorse Marx' view of the capitalist process as D-M-D'.
>Note also that in the General Theory, consumption is *dependent* on income,
>income is dependent on investment, and investment is dependent on net
>profits (inversely related, given expectations, from the interest rate).
>The notion of autonomous investment is indeed very, very strange for one
>who is argued to have said that consumption is the ultimate purpose of
>production (money or no money).
>>The general principle (apart from the specific case of money) is that (as I
>>think Patrick Murray would say) the form (money) is there, and while it is
>>not entirely irrelevant (as in Ricardo) it does not matter very much.
>It is just used by Keynes in explaing the structure of production and the
>distribution of income (Treatise), and the persistence of mass
>'equilibrium' unemployment (General Theory)!!! Does this means that "it
>does not matter very much"?
>>does not for Keynes indicate the content (use value, not value is the goal
>>of production for K).
>Not true, see above.
>>It cannot be systematically incorporated into the
>>theory (meaning, Keynes cannot explain the necessity of money).
>This, I do not understand. What does it mean that Keynes cannot explain the
>*necessity* of money? For a person who in the Treatise said that capitalist
>has to be necessarily financed is a rather odd feature. Probably you mean
>that he does not deduce money as Marx, so he cannot explain the necessity
>of money as Marx does. Not strange, since he is Keynes.
>>All K can
>>do is notice effects of money and assert their importance for macro
>I would say: excellent! Orthodox theory has difficulty even in admitting
>the existence of money in general economic equilibrium and in micro-founded
>>I think this is why the Keynesian position has difficulty
>>defending its insights against neoclassical assaults: that its revision of
>>neoclassical theory is not fundamental enough precisely because it does not
>>take form seriously.
>It is not a reformulation of Neoclassical theory, it is an *attack* against
>it!!! Don't forget that Keynes titled his major opus The *General* Theory.
>>I doubt James Galbraith has any notion of these
>Probably, you're right. But I guess he would find quite meaningless most of
>your references to Keynes.
>This mail is just to note how difficult is to speak of (and may be even
>engage in a dialogue with) other traditions. Marxians have become very
>susceptible of how their theory is apprehended by other, heterodox and
>orthodox, streams of thought. I guess we should deserve the same caution in
>talking about them.
>To Rakesh: Hegel is relevant because of the notion of the *abstraction* of
>labour, which is one of the most difficult in Marx, and totally absent in
>Keynes. That said, it's clear that it is possible to say quite correct
>things about capitalism without knowing anything about Hegel. The issue is:
>may we understand Marx without re-reading Hegel? I would argue: no.
>>>Fred, ok vol i, chap i analysis demonstrates that value or social labor can
>>>only be represented as other than it is--in monetary terms (Patrick
>>>Murray). This demonstration of the necessity of money (Fred Moseley) then
>>>casts doubt on any modelling of capitalist society that takes as its givens
>>>or presuppositions physical quantities (see Fred Moseley again). A theory
>>>of capitalist society has to be one of monetary production. Brilliant.
>>>Now what does Hegel have to do with this? Keynes recognized the last point
>>>without knowledge of Hegel; indeed James Galbraith has argued that Keynes
>>>was inspired by Einstein's use of non Euclidean geometry in breaking with a
>>>two dimensional classical economics in his development of a monetary theory
>>>of production. Riccardo and others of course could speak to this.
>>Martha Campbell, Assistant Professor, Economics, Potsdam College of SUNY,
>>Postdam, NY 13676, Office Phone (315) 267-2201, Home Phone: (315) 265-2673.
> Riccardo Bellofiore
>Office: Department of Economics
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Martha Campbell, Assistant Professor, Economics, Potsdam College of SUNY,
Postdam, NY 13676, Office Phone (315) 267-2201, Home Phone: (315) 265-2673.
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