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August 22, 2007

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John Doylemason

John Maynard Keynes’s economic strategies involving government spending to prompt structural investments in the nation’s infrastructure to stir up investment in the private market. This is not to be construed with laissez-faire economic patterns that involve governments rarely being involved, but rather Keynes hopes that governments join in the market in numerous ways.

Large governments may be littered with red tape, but Keynes believes strongly that if numerous smaller States and local governments are “semi-autonomous” groups, then the actions of all groups will be quite clear and straight forward allowing a superb market.

The second is that the individual should be very independent and self serving to a large degree. It should not be up to the government to protect its citizens from all ills of society but rather up to the citizen to protect himself from society, having the government control what is suitable protection measures.

The last is that the state should be involved in all market investment matters rather than the individual. Humans on a whole are largely self serving as stated above, if it was up to the citizen, only his immediate needs and goals would be assessed. It will then be up to the government to aid in any investment in order to expand the market for the greater good of society.

thomas wheat

Alright so I’m at the end and everything I was going to write about that I thought was “fresh” is now stale.Practically everyone who has posted has a done a excellent job in summarizing what John Maynard Keynes thought “needed to be done” in order to get back to a good world of free trade, economic progress, cultural uplift, and political reason. That being in a nutshell—as everyone has already stated—the practice of laissez-fare should be a thing of the past.
……Keynes has to be one of the most misquoted economists of the twentieth-century. Perhaps the most misunderstood aspect deals with his view regarding the use of government intervention in failed markets. The commonly held belief that Keynes advocated government intervention (in the form of regulation, etc) wholeheartedly is a complete fallacy. As Danielle pointed out prior, he thought government intervention in the free market economy was only justified when there is a complete void in the private sector. Meaning if the private sector is actively trying to remedy a given problem the government should mind its own business. This has interesting modern day implications since most of government intervention in failed markets occur when there in no void in the private sector. If Keynes believed what he did today there would be arguments that is in fact a neo-conservative, not a neo-liberal.

Helen Louie

Kinzie, Kent and the previous responses have done a great job explaining the prescriptions of Keynes. I don't know what else that is "fresh" that I can add because I agree with most of my classmates because I also believe that the core of Keynes’ plan to save the world is through the state. As the title of his work shows, he does not believe that laissez-faire is an effective way for the economy and markets to operate. However, he does not believe in the complete opposite, such that of Marx. Although, he believes that the government should be involved, he believes that the involvement should be limited and that the individual should also be involved. Thus, I agree with the previous responses that say he’s in a “happy medium”. He believes that the state should only get involved when it is necessary. Therefore, he believes that it is necessary to have a balance between the individual and the state. Keynes as stated by my classmates believes that the state needs to have certain fiscal and monetary policies in order to help national economics and international politics. Keynes’ advice is extremely insightful and was useful in the past and still applies today. Keynes believes that laissez-faire lead to the cause of the Great Depression, I also believe that this is true; however, as a result of government intervention during the Great Depression, some situations worsen.

I believe that the state today is still trying to follow Keynes’ advice, but in some aspects have gotten sidetracked. Today’s government is more involved in matters than how Keynes would have wanted, however, according to Keynes, the government needs to worry about other matters that are currently not being solved. There has been an increase in the number of international institutions, as Keynes wanted, however, these institutions are still not very powerful and have had a lot of setbacks. Therefore, Keynes’ prescriptions for a “wisely managed” capitalist state are not all possible and he would be disappointed in what has happened. Or it can be that the world has changed such that not all of Keynes’ prescriptions apply or will be hard to apply.

(I apologize for the lateness of my response, has this always been due on Tuesdays?)

Alexander Henson

A “wisely managed” form of capitalism is, by and large, what Keynes insists will get the job done in free market economies. By deconstructing the historical roots and current (for him) notions of laissez faire, it allows him to clearly delineate the gears of a type of capitalism that works precisely because the government intervenes only when necessary.

Keynes separates the “technically social” from the “technically individual”, which plays a central role in how he envisions the ideal functions of capitalism. The notions of the “technically social” borrow heavily from the Marxian readings Keynes references earlier, things that Keynes refers to as “functions which fall outside the sphere of the individual, to those decisions which are made by no one if the State does not make them.”

Where these ideas of “technically social” and “technically individual” falter is that, like in modern governments, there is likely to be conflict between governments and individuals as to what is “social” and what is “individual”. Additionally, while Keynes implies throughout his essay that government will simply take care of that which aggregated individuals’ actions do not take care of, it still imposes a sort of invisible hierarchy, where the government is fulfilling some functions that are needed and, in all likelihood, some functions that aren’t needed. Keynes includes a disclaimer of sorts when he states that “it is not within the scope of my purpose on this occasion to develop practical policies”, but the problem therein lies in the fact that once his theories are applied to practical policies, they undoubtedly will run into some of the problems that I have mentioned.

Ellen Dobie

It seems that the majority of my classmates have done a sufficient job in summarizing the Keynesian vision of state intervention meddled with individual rights--a kind of economic step-child of Ayn Rand and Karl Marx. Instead of re-stating what has already been laid out, I would like to explore modern-day manifestations of Keynesian thought and how his economic manifesto would play out in today's globalized world.

My first reaction upon reading his philosophical discussion of both the history of the laissez-faire doctrine and then his own assertion that government intervention of fiscal and monetary policy is needed to temper an economy dominated by private industry is the historical parallel to the rise and fall of free trade/neoliberal policy in the financial world of the 1990s. Leading neoliberal economists such as Jeffrey Sachs experienced their own comparable Keynesian wakeup call when neoliberal reforms of the former Soviet Union (primarily the liberalization of their financial markets) went awry—indeed, it is now more commonly held knowledge that some regulation (from both government bodies and international bodies such as the IMF) is needed of such markets. Sachs has since repented and is now one of the leading global anti-poverty crusaders.

It seems that Keynes’ assertion that a healthy economy needs active government involvement (of the fiscal and monetary nature) is very much relevant today—the Keynesian equation of GDP = C + G + I + NX is a building block on any macroeconomics course and used to justify tax cuts, increased government spending in the name of GDP boosts. Of course, any “modern” political economist would make a few new amendments to Keynes’ manifesto to accommodate our increasingly globalized society. I would first ask Keynes the use of his life-long argument that statesmen should get back to instating policy of free trade and “economic progress,” specifically in relation to international development economic policy. It seems that many developing nations have already passed the learning curve with respect to jumping on the free-trade bandwagon; attempts to liberalize their trading borders means that they have to jump barriers that must higher to compete with the already fierce competition of industrialized nations (found in periphery countries such as the United States or within Europe.) Instead of hammering more free-trade policies down these countries’ throats, I see a few other constructive options such as regional economic development (such as regional free-trade zones such as MERCOSUR in South America.) When does a policy-maker stop chasing the close-to-impossible vision of a perfectly liberalized free trade global market, and begin to accept realities of developing nations and their relationships to capitalism? And how does the United States, with its protectionist agricultural markets (and other markets,) reconcile its own economic interests domestically (which seems to be protectionism) and internationally (which seems to be the pursuit of bilateral free-trade agreements.)

Ziwei Hu

Specifically in the context of the post World War I period, Keynes argued that the reparation payments called for by the Treaty of Versailles were excessive and impossible for Germany to pay. Furthermore, these reparations would impoverish and “[reduce] Germany to servitude for a generation, [degrade] the lives of millions of human beings, and [deprive] a whole nation of happiness”, which Keynes appropriately described as “abhorrent and detestable.” Instead of imposing these extreme costs on Germany, Keynes advocated policies that would help Germany recover from the ravages of World War I, such as lowering the reparation payments to an amount that Germany was actually capable of paying, providing Germany with large low-interest loans and material aid. In doing so, the Allied powers would be not only helping Germany, but also ameliorating the European economy as a whole, in the long run. He saw a clear link between economic prosperity and political stability.

The underlying assumption behind the policies that Keynes espouses is of course, that the government must intervene when markets fail or when catastrophes occur. He envisions a much more active role for the government in the market than any of his predecessors. As Christina has already mentioned, one of Keynes’ recommendations for the post World War I reconstruction of Europe was the establishment of a Free Trade Union sponsored by the League of Nations, which would facilitate trade between the nations and help prevent future wars by creating economic interdependices. He saw an important place for international governmental cooperation, such as this Free Trade Union, and also the creation of an International Bank for Reconstruction and Development

Keynes writes “Even though the result disappoint us, must we not base our actions on better expectations, and believe that the prosperity and happiness of one country promotes that of others, that the solidarity of man is not a fiction, and that nations can still afford to treat other nations as fellow creatures?” This statement seems to belie an overall optimistic point of view, that when well managed and effectively implemented bya capable government, capitalism can be a force for progress.

Colin Zealear

Being so late Keynes' life story has already been summarized as well as the four expectations he has from the state(public policy, central bank, foreign investment, division of government) in order to re-establish economic progress and stability in hopes of reassembling humpty-dumpty. It has also already been mentioned that this did require economists to abandon classical theories to find an answer. Keynes warns of the 'animal side of man' and for policy makers to respect this inherent evil and not be myopic when conosidering a nation's well being. This became a vital forthcoming to protect merchants of the contemporary market place. These guidelines are still being set in stone and are the center of political-economic problems worldwide today.

I would have quoted several of Keynes'clairvoyant concepts but by now they are redundant so I will just say that reorganizing Europe's economy after a world war must have been much harder than we can imagine. Put yourself in John M. K.'s shoes, not only is free information imparative, an idea at that day in age was almost unheard of because of less communication and the immense amount of labor needed, to allow any decision to be properly executed but also, recall the dictators in power at the time and how they would still refused to permit actions viewed as positive due to a conflict with the tumultuous political ideals that were being praised. It must have seemed an impossible task just to get people to listen let alone follow a newly concieved and unfounded way of analizing economic situations.

In hindsight, Keynes was a genius to not only recognize a need for a shift, or atleast alteration, in the paradigm of economic reasoning from a classical liberal mindset, to a neo-classical post guerre du monde mentality of global aid and socialism, through economic reasoning rather than militaristic, but to commence its implimention, that would only be realized much later with the establishment of the European Union. Although he wasn't totally successful in rebuilding the economic statures of several destitute European nations, he did offer a means to an end. By showing the finish line, Keynes helped economists see the route to get there more clearly and were able to expediate a resolution because of it.

Vaishnavi Jayakumar

Keynes believed that the solution to the economic woes surrounding him at the time was to incorporate state involvement into everyday affairs. He writes that "the outstanding faults of the economic society in which we live are its failure to provide for hte full employment and its arbitrary and inequitable distribution of wealth and incomes." Yet rather than propose a command-economy style government where businesses are run by arms of government, he proposed "semi-autonomous corporations" with "prescribed limitations" instead - a remarkably progressive balancing act for the time he was living in.

Considering the post-WWI devastation that Keynes was witness to, his aversion to pure laissez-faire economics is understandable. "It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest" - clearly referring to the free-market economy that was in vogue at the moment, Keynes was more in favour of a compromise being struck between complete autonomy of the individual and complete state control of supply and demand. He envisioned governments being more involved in the economics of the country, suggesting a Free Trade Union that would run under the auspices of the now-defunct League of Nations. This clearly demonstrates his desire to tie political and economic prosperity to one another. His policies were strokes of genius for the time period he wrote in, though not necessarily universally applicable (nor do I think he intended them to be so).

Tomas Salcedo

Keynes deems the model of each individuals aims leading to the advancement of public good as antiquated. He points out how this notion has acheived an almost religious significance in the minds of political philosifers. The idea of capitalism being managed by the governement in order for it to acheive the most broadly virtuous outcomes resonates with previous thinkers such as J.S. Mill. What Laissez Faire thinkers seem to ignore is that within a doctrine that invokes the survival of the fittest as a proper mechanism for determining well being, their is the built in flaw that some in the society are bound to fall through the cracks. Keyenes illustrates this flaw with the analogy of the giraffes, amongst whom those with the longest necks prosper and those with the shortest die out. While not invoking altruism as a rationale, he does simply point out that the idea that the short necked giraffes would starve out as a result of not being able to reach the leaves at the top of the trees would constitute a moral dearth, and hence be a failure of the economic system to appropriately manage the distribution of goods and services. It is upon this foundation that he makes the case for managed capitalism, and I believe successfully forces the reader to depart from the previously ubiquitous paradigm of laissez faire.

Zaheer Cassim

Keynes was a communist in disguise. Why do I say that?

Look at what Keynes first says about Karl Marx theory. He basically states that Marxist socialism will never work. “How a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men and, through them, the events of history” (chapter 3), but in Keynes prescription for laissez fair, he discusses more control of business by state, a savings system implemented by the state, and more control over the population of the country by which the state will dictate what are adequate and inadequate numbers.

Keynes also emphasizes the unjust system of survival of the fittest. In a way, Keynes is reiterating the same problem Marx had with traditional laissez fair in that it only benefited a few, the bourgeoisie, while the masses suffered.

Keynes refers to big enterprises as a social entity. The people in the big business become lost within it. They begin part of the machine. How does this happen? Through the division of labor, which was one of Marx most significant points.

Why does Keynes go through so much trouble to hide his true feelings? Keynes is clever. He knows that if he openly supports Marx’s socialism, no one will take him seriously. So he first answers those critics by totally ruling out Marx’s theories, but then promotes measures where capitalism would shift into a system of semi communism.

If you think about it, it does make some sense. Keynes is seeing the atrocities of World War unfold before his very eyes; the man is desperate to make sense of the world. Marx’s theory is based on a very noble and surreal logic that everyone is equal and that the individual can do what ever he or she wants to. It’s like a fantasy world that Keynes bought into.

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