[OPE-L:2875] Re: Re: Rx Economics/Keynes

From: riccardo bellofiore (bellofio@cisi.unito.it)
Date: Tue Apr 18 2000 - 15:07:29 EDT

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At 12:59 +0100 15-04-2000, Gerald Levy wrote:
>Re Riccardo's [OPE-L:2839]:
>> >I would say that Keynes' standpoint was that of an *economic mechanic*
>> >or a *pharmacist* writing prescriptions for the ailments of capital.
>> The same could be said for Ricardo when endorsing the battle against rents
>> (corn laws, etc.).
>The *purpose* of Ricardian theory was not simply a theoretical
>justification for the corn laws, etc. The purpose of Keynesian theory, I
>believe, though *was* normative in nature.

May be, but there's room for disagreemnt here. Keynes insisted again and
again that the monetary cranks who proposed public works etc (but not only
the monetary cranks! Also Pigou, that is his main target of criticism in
the GT!!) were unconvincing because they were not able to substitute the
orthodoxy with a more persuasive picture of the capitalist economy as
producing normally an equilibrium with involuntary unemployment. So I would
answer that the real novelty was his *theory*. So much so that, say,
Patinkin, who destroyed the Keynesian revolution, agreed with Keynes'
policy prescriptions.
>> >By concentrating his analysis on the *short-run*, he did not even attempt
>> >to comprehend the long-term processes of capital accumulation.
>> Kalecki said that the long run is a series of short run. I agree. The long
>> run as such does not exist.
>This is not helpful -- nor was JMK's trite comment that "In the long-run,
>we are all dead". I suppose it sounds good if you are at a cocktail party
>making small talk (and it is tautologically true), but it is an evasion.

I enjoy cocktails, especially after an hard day like this, when I would
like to kill all my colleagues, especially the full professors. And I'm
going to have a Cardinale at the bar (3/5 gin or vodka; 1/5 Bitter Campari;
1/5 Martini Extra Dry): caffé Tasso, for those who know Bergamo.

In any case, I find the idea that the long run does not exist, because it
help you understand that the trend is determined by the cycle.
>I will, however, assert that if it is the case that there is no LR, then
>we should abandon Marx and (just about) all economic theories except that
>of Keynes. Moreover, we should recognize that any attempt to make
>Keynesian theory compatible with Sraffian theory is impossible and should
>be abandoned.

That's true, if you read Sraffian theory in the way in which it is read by
Garegnani, that is prices as 'long-run' centers of gravity.
>Moreover, the above perspective is essentially a static and anti-dynamic
>perspective. Thus any attempt to combine Keynes with Goodwin and/or Minsky
>should be trashed.

I disagree. Minsky agreed with my quotes that the long run does not exist.
Goodwin may be debated. On Schumpeter, read Sylos Labini, who has a paper
on Schumpeter and Marx, where the idea is there. I am not denying the idea
of *tendencies* in capitalism, and short-run does not mean variable and
irrational animal spirits. Thus, I do not understand why you are so against
the idea that the long run is a sequence of short runs.

However, I admit that this point should be pursued more rigorously that I
did, so I accept your criticism in this sense.

>> My answer would be: for prescribing the right medicins, Keynes had to
>> discover the laws of capitalism in its own epoch, and in doing so he made
>> authentic, scientific discoveries, unknown to earlier political economy
>> (and critique of pol. ec.).
>Traditional (e.g. herbal) medicines do not require that one comprehend the
>nature of human anatomy. Rather, whatever the theological or cultural
>reason cited, they are based on experimentation. That is, they are
>observed "to work". Of course, Keynes couldn't know what would work until
>or if it did work. Yet, there is *no reason* to believe that for his
>policy proposals to work (temporarily and apparently) that he "had to
>discover the laws of capitalism in its own epoch". Moreover, given the SR
>character of his theory, such a observation on epochal laws is impossible.
>It would be like trying to understand the "laws" of 20th Century
>capitalism by observing conditions in Britain on the dates of April 12-23,

May be you're right, Jerry. I think Keyned made again and again an inquiry
about capitalism after WWI, starting from his The Consequences of the
Peace, until his death. And that he definitely was thinking that an epochal
change happened at the beginning of the century. Minsky, in a sense,
developed a stadial theory of capitalism ^Åhich enriched Keynes'
perspective. They didn't believe in secular predictions, but they actually
did inquiries on what was happening, and happened in the past, in
>> Yes, if he is furthering the scientific comprehension of how capitalism
>> work.
>His standpoint was more one of how to make capitalism work better.

Yes and no. Yes, he thought that capitalism could be reformed to work
better. But do you really believe that his utopia that 2 hours work a day
(to satisfy the old Adam within), or his distrust for the 'love for money',
is encapsulated in your phrase :'his standpoint was more one of how to make
capitalism work better'? I say him more in a family with people like John
Stuart Mill, speaking of his social ideals.
>> BTW, there is a methodological issue here. I think that economics cannot be
>> divorced from 'use', from 'practice'. The dimension of practice in Marx
>> was, to be very very short, class struggle from the standpoint of the
>> working class. The dimension of use for Keynes was to make both workers and
>> capitalists better of.
>I agree that "positive" and "normative" theory should not be rigidly
>Keynes' standpoint was that of liberalism. Yet, the liberalism of the
>early to mid-20th century had not the same meaning as the liberalism of
>the 18th and early 19th centuries.
>As for the alleged objective of making workers better off, I think we
>could look through the _Collected Works_ and find evidence to the

Have you something specific in mind? Won't you say that if instead of 12
millions of unemployed in the USA in 1932 we have full employment this
makes workers 'better off'? I agree that in the GT to have full emploument
workers must accept a reduction in real wage: but I observe that in the
writing after the GT Keynes accepted the criticisms against the negative
slope of labour demand.
>btw, what was Keynes's perspective on the General Strike of 1926?

Good question. I'll answer in another post.
>> P.S.: why didn't you said that Keynes was a *dentist*, but rather used the
>> term pharmacist?
>A dentist is focused on the micro level; Keynes was a macroeconomist.

I made my question because Keynes (I think in "Perspectives of our
Granchildren": that is, ourselves!) exactly wrote: it would be wonderful
when economists will become like dentists.

BTW, I suggest to everybody to read this 1930 paper. Keynes was such a
splendid writer. All of you may read it, maintaining your strong
criticisms, but at least enioying his prose (a good *medicine* after my


        Riccardo Bellofiore
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