[OPE-L:6799] Re: Re: Keynes and Kalecki

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Thu Mar 21 2002 - 13:37:33 EST

re 6798

>Within the Keynesian system the demand for investment goods does not 
>derive from the demand for consumption goods. Rather both investment 
>demand and labor demand are derived demands dependent on the level 
>of *aggregate* demand.
>In solidarity, Jerry

What then determines the level of aggregate demand? I think Steve 
implicitly presents in his interpretation of the Keynesian system the 
idea that it is determined by the prospects of final consumption.

As a side note,  Bush/Greenspan are attempting to bolster investment 
demand not so much by strenghtening final demand via direct military 
purchases and easy consumer credit (which in the US has led to common 
complaint by progressive economists that the Republicans are more 
Keynesian than the Democrats) but rather by brightening the prospects 
of long term profitability through, for example, lax anti trust law, 
union busting activity by the National Labor Relations Board,  and 
regressive tax cuts that will require much deeper slashes in the 
social wage than to which Bush and Greenspan are admitting.

Krugman has railed against the massive regressive tax cuts because of 
the pressure presumably put on the long bond by the prospect of huge 
future federal government deficits,  not because of how such cuts in 
the social wage by dimming the prospects of future demand for 
consumption goods reduce demand for investment goods in the present.

Bush is in fact attempting to ensure that direct and social wages 
will not keep pace with productivity gains in his attempt to revive 
investment demand.

Steve's Keynes seems to be an underconsumptionist but 
underconsumptionism fails to explain the downturn in investment 
demand--there had been no prior problem in the realization of surplus 
value--and more importantly the steps that are taken to revive 
investment demand.


This archive was generated by hypermail 2b30 : Tue Apr 02 2002 - 00:00:06 EST