[OPE-L:2939] Re: Re: Re: Re: Rx Economics/Keynes

From: riccardo bellofiore (bellofio@cisi.unito.it)
Date: Sat Apr 29 2000 - 05:04:41 EDT

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thank you for your informed post. I would like to get into some more
research on the issue of the General Strike1926 , but I could not do that,
so I'll take your information as welcome. [BTW, you may believe it or not,
a long time ago a I made little inquiry about Keynes and Robertson on the
General Strike, and the result were interesting, not mainly on the issue of
the two being on the side of the workers, but on the issue of the
categories they used (Robertson at the time was ahead of Keynes) which were
quite revolutionary, relative to the neoclassical thinking of the time].

I also appreciate your irony. But may I clarify some points? First, of
course I never denied that Keynes ever thought that capitalism was better
than, say, soviet comunism; I've never said that Keynes was a socialist.
Rather, Keynes thought that capitalism, though plenty of faults, was
economically efficient, but morally disputable.

Second, the issue of both workers and capitalists as both better-off etc: I
took this statement as uncontroversial. Imagine that there is involuntary
unemployment (say, USA, 1932): don't you think that if aggregate demand
expand, and profits and employment are higher, and there is some
unemployment benefits, both classes are better off, at least from the point
of use value? Was not this point at the heart of the famous Kalecki's paper
on the political [not economic] limits to full employment?

Third, I want to clarify that my point about political economists is not
that they are left-wing. Take Schumpeter: in my view he was a political
economist of this century, but he was a conservative, for sure. I made a
couple of entry for an Encyclopedia on Politica Economy, published by
Routledge. I said this, and the editor corrected my entry reducing the
degree of conservativeness of JAS, almost making him a radical. This is a
strange habit in radical economics...

Just a couple of asides about Keynes and the 1926 General Strike. First,
consider that when speaking on the General Strike Keynes thought in term of
an open economy like UK, if I remember well the UK was again on the gold
standard, and this explains why he was against a wage rise; the picture in
the General Theory is partly different.

Second. I'm at home, and not at the University. I gave a look at the first
book I saw on my shelves, it was Peter Clarke, The Keynesian Revolution in
the Making, Clarendon. At p. 166 you find this:

"There is thus no doubt that Keynes recognized the need to cut costs and
that some of his proposals [in the '20s] were indirectly designed to reduce
real wages; but it is surely also true that he consistently rejected a
policy of wage cuts on political and social grounds. In offering advice, in
short, he regarded the theoretical premiss of flexible prices as
inappropriate to the real world: 'The idea of the Conservatives', he said
in 1925, 'that you can, for example, alter the value of money and then
leave the consequential adjustments to be brought aboutby the forces of
supply and demand, belong to the days of fifty or a hundred years ago when
trade unions were powerless, and when the economic juggernaut waw allowed
to crash along the highway of progress without obstruction and even with
applause'. The course of beating down wages, therefore, was not one which
he approved, even if the opportunity to implement it were offered. After
the General Strike, when such a policy might have been feasible, 'Mr
Baldwin decided - quite rightly - that it would be socially and politically
inexpedient to take advantage of the situation in this way.' In the
Treatise he described an attempt to cut wages as 'a dangerous enterprise in
a society which is both capitalist and democratic.'


At 14:13 +0100 28-04-2000, JERRY LEVY wrote:
>In a previous exchange, see Riccardo's [OPE-L:2875], the question of
>Keynes' perspective on the General Strike of 1926 was raised.
>For more information on this topic, see R.F. Harrod _The Life of
>John Maynard Keynes_ (NY, Avon, 1971; originally published in 1951
>by St. Martin's), pp. 435-439.
>"Liberals of all complexions agreed that the General Strike was
>not within the limits of constitutional action, that it must be
>defeated and that it must be made plain that any repetition was
>doomed to failure" (p. 436).
>Nonetheless, the liberals were divided on the tactics that they
>proposed for dealing with the specific way in which the strike
>should be defeated. Keynes, like Lloyd George, supported the
>position advanced by the Archbishop of Canterbury who held that
>after the strike was ended "negotiations should continue in some
>form, on the basis of a return to the *status quo* before the
>strike began and of letting bygones be bygones" (Ibid). This
>position led Keynes into a conflict with Lord Oxford.
>Riccardo previously claimed that Keynes had as his objective
>the desire to make both capitalists and workers better-off.
>I tend to doubt whether the British strikers of 1926 shared
>this accessment of Keynes. Indeed, with friends like that ....
>Yet, by supporting the crushing of the General Strike, Keynes
>did indeed show that he sought to make capitalists better off
>(so Riccardo is at least partially correct), forestall any
>revolutionary action by the British workers, and save British
>Of course, one would expect nothing more (or less) from a
>20th Cetury liberal.
>In solidarity, Jerry

        Riccardo Bellofiore
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