Keynsian Economics

[ElFlem]

Hey, I'm in Econ and we briefly went over Keynesian economics. I agree that most of Keynes' concepts we went over are believable, however, his concept about the obligation of society to provide employment to individuals in field that they are educated or have experience in. What are the prominent theories that are available about how society/government should provide jobs where there is a lack of demand? Roads can be built, parks can be monitored, street sign and cones can be manufactured but this leaves a whole myriad of other jobs that are determined directly by demand such as nursing, engineering etc...

 

[Oddball]

Keynes was an economic witch doctor and, not coincidentally, deeply into eugenics.

 

[Diuretic]

Hey, I'm in Econ and we briefly went over Keynesian economics. I agree that most of Keynes' concepts we went over are believable, however, his concept about the obligation of society to provide employment to individuals in field that they are educated or have experience in. What are the prominent theories that are available about how society/government should provide jobs where there is a lack of demand? Roads can be built, parks can be monitored, street sign and cones can be manufactured but this leaves a whole myriad of other jobs that are determined directly by demand such as nursing, engineering etc...

This is a technical question isn't it? If so you want an answer from someone familiar with economics (which means I'll keep quiet). If you want an answer based on other ideas then they might be forthcoming.

As for Keynes - his ideas worked. Just as well for capitalism because his General Theory was a flat-out attack on Marxism. Commenting on his General Theory he wrote:

"To understand my state of mind.....you know that I believe myself to be writing a book on economic theory which will largely revolutionise...the way the world thinks about economic problems....there will be a great change, and, in particular, the Richardian foundations of Marxism will be knocked away."

Why the free market fundies demonise Keynes I'll never know.

 

[Oddball]

Because he's an economic voodoo witch doctor, and how his theories have "worked" is a matter of conjecture, as nobody can turn back the clock to see what would've happened otherwise.

But hey....Just throw a few more vestal virgins in the volcano, to make the copra crop come in!

 

[Kevin_Kennedy]

Hey, I'm in Econ and we briefly went over Keynesian economics. I agree that most of Keynes' concepts we went over are believable, however, his concept about the obligation of society to provide employment to individuals in field that they are educated or have experience in. What are the prominent theories that are available about how society/government should provide jobs where there is a lack of demand? Roads can be built, parks can be monitored, street sign and cones can be manufactured but this leaves a whole myriad of other jobs that are determined directly by demand such as nursing, engineering etc...

This is a technical question isn't it? If so you want an answer from someone familiar with economics (which means I'll keep quiet). If you want an answer based on other ideas then they might be forthcoming.

As for Keynes - his ideas worked. Just as well for capitalism because his General Theory was a flat-out attack on Marxism. Commenting on his General Theory he wrote:

"To understand my state of mind.....you know that I believe myself to be writing a book on economic theory which will largely revolutionise...the way the world thinks about economic problems....there will be a great change, and, in particular, the Richardian foundations of Marxism will be knocked away."

Why the free market fundies demonise Keynes I'll never know.

Because Keynes did not advocate free markets. Why do the Keynesians "demonize" free market advocates? Because they advocate free markets. Just about any group demonizes other groups that don't agree with them.

 

[Paulie]

Why the free market fundies demonise Keynes I'll never know.

REAL free market "fundies" demonize him because he advocated the use of Federal Reserve monetary policy to couple with his ideas on fiscal policy.

A real free marketer does not accept the Federal Reserve in its current form, because it literally flies in the face of what a REAL free market actually is.

 

[midcan5]

The Danes are an example of one answer to your question. Societies function to maintain themselves and keep themselves healthy. Even Adam Smith who the wingnuts quote often recognized this fact. Conservatives dislike Keynes for the same reason Marxists dislike Keynes, Keynes was a brilliant man who recognized that economics is not magic and sometimes required a swift kick.

Danish example.

"Previously, unemployment benefits had been not only very generous--equal, in some cases, to 90 percent of lost wages--but also essentially unlimited. Under a new scheme pushed through by the Social Democrats, the government began limiting assistance to four years--and, even then, only on the condition that beneficiaries worked or enrolled in job training. Essentially, Rasmussen was triangulating between the two main poles of the country's political debate, in a manner much like the one Bill Clinton was employing in the United States at roughly the same time. But, because politics in Denmark were generally far to the left of the United States, the resulting compromise actually looked quite different. Relative to Clinton's welfare reform, Rasmussen's invested much more money in worker-counseling and training. The explicit goal was to recognize a social compact: Just as the unemployed were obligated to find new jobs, so the government was obligated to make sure the jobs were there (even if it meant creating them on the public payroll) and that the unemployed received proper training to succeed."

Jonathan Cohn: Denmark as Neoliberal Utopia (New Republic, 2007)

"If you believe the conservative rhetoric on economics, this combination of high taxes, a large public sector, and lavish welfare benefits ought to be killing the Danish economy. But it's not. In fact, Denmark's economy has thrived. And nowhere is that more apparent than in the job market. By the time Rasmussen left office in 2001, the unemployment rate had fallen from a 1994 peak of 9.6 percent to 4.3 percent; in 2002, it fell below the U.S. rate, where it has remained ever since. For the most recent quarter of 2006, Denmark's standardized unemployment rate was 3.6 percent, compared with 4.7 percent in the United States. Moreover, while Europe has a reputation for fostering cadres of idle youth (a reputation that, in countries like France, has at least some basis in reality), in Denmark, a mere 3 percent of its 15- to 19-year-olds are neither in school nor working--the second-best rate in the developed world. (Tiny Luxembourg is first.) In the United States, by comparison, the figure is about 7 percent."


Jonathan Cohn: Denmark as Neoliberal Utopia (New Republic, 2007)



"What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable." Adam Smith 'The Wealth of Nations,' Book I Chapter VIII

"I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities..." Adam Smith

 

[Diuretic]

Hey, I'm in Econ and we briefly went over Keynesian economics. I agree that most of Keynes' concepts we went over are believable, however, his concept about the obligation of society to provide employment to individuals in field that they are educated or have experience in. What are the prominent theories that are available about how society/government should provide jobs where there is a lack of demand? Roads can be built, parks can be monitored, street sign and cones can be manufactured but this leaves a whole myriad of other jobs that are determined directly by demand such as nursing, engineering etc...

This is a technical question isn't it? If so you want an answer from someone familiar with economics (which means I'll keep quiet). If you want an answer based on other ideas then they might be forthcoming.

As for Keynes - his ideas worked. Just as well for capitalism because his General Theory was a flat-out attack on Marxism. Commenting on his General Theory he wrote:

"To understand my state of mind.....you know that I believe myself to be writing a book on economic theory which will largely revolutionise...the way the world thinks about economic problems....there will be a great change, and, in particular, the Richardian foundations of Marxism will be knocked away."

Why the free market fundies demonise Keynes I'll never know.

Because Keynes did not advocate free markets. Why do the Keynesians "demonize" free market advocates? Because they advocate free markets. Just about any group demonizes other groups that don't agree with them.

I think Keynes simply knew there is no such thing as a free market, it's an abstract concept useful for thinking about issues but it can't exist in reality. That's possibly why the advocates of the free market get cranky with him. Keynes' General Theory works in reality and so doing it dismantles the previous classical model. I'm no economist so I'm not able to argue the finer points but I'm able to see the historical effects of Keynes' General Theory.

 

[Diuretic]

Because he's an economic voodoo witch doctor, and how his theories have "worked" is a matter of conjecture, as nobody can turn back the clock to see what would've happened otherwise.

But hey....Just throw a few more vestal virgins in the volcano, to make the copra crop come in!

I don't know how many alternative economic theories were available at the time, but it was clear that classical theories had failed. It's also clear that Keynes' theory worked in practice. There's nothing remotely theoretical about the fact that Keynes' theory worked.

 

[Oddball]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

 

[Diuretic]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Fair enough, I just reached the limit of my knowledge, such as it is. All I can do now is learn.

 

[mascale]

Does anyone talk about current events in school, anymore? Economies don't seem to work very well.

Keynesians pointedly ignore the arithmetic they use to apply their trade. Keynesians do arithmetic, but won't so-state.

So if there is arithmetic, where do the numbers come from? They come from the currencies. The first main government intervention in economies is the currency. Now, since governments create the currencies, then anyone can guess who has the most currency. Anyone supportive of the laws of the government, which generally is responsible for making laws--and just coincidentally, making and spending money, easily has an upper hand in receiving currency.

People who receive currency, then have "incomes." So if the law is set so that more gets more, and less gets less--in statutes or in contracts--then any exchange in a market has already been rigged.

No one so-states.

"Crow, James Crow: Shaken, Not Stirred!'
(Actually, the economy has always worked well, for so many--who clearly deserved it(?)!)

 

[Neubarth]

Does anyone talk about current events in school, anymore? Economies don't seem to work very well.

Anyone supportive of the laws of the government, which generally is responsible for making laws--and just coincidentally, making and spending money, easily has an upper hand in receiving currency.

People who receive currency, then have "incomes."

So if the law is -- --..(?)!)

Indeed, economies don't always seem to work very well.
When that happens, we have the Fed to try to get things rolling again. Bernanke is doing a magnificent job of getting the GDP numbers under control, because in his eye, GDP is the answer.

I don't agree with him on that as I believe full employment is the answer. We need to get people back to work, not just balance the GDP numbers. Some of what Bernanke is doing is working to put people back to work, but he could be doing a far better job. Yet, he is still in love with GDP.

 

[Neubarth]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Fair enough, I just reached the limit of my knowledge, such as it is. All I can do now is learn.

Western Australia could use that water.

 

[Diuretic]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Fair enough, I just reached the limit of my knowledge, such as it is. All I can do now is learn.

Western Australia could use that water.

There's no water there. You're the victim of a mirage.

 

[Diuretic]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Now I just want to revisit these points.

I think it's entirely possible to verify that Keynes General Theory worked. I'll have a look and see if I can find some evidence.

As I understand it one of the central tenets of classical economics is the idea of the free market can regulate itself. Well we know that's a fail.

There's nothing command and control about Keynes that I can see. But then I haven't finished reading the General Theory yet. Command and control is a long way from stimulus spending.

The economy in my country seems to be reasonably robust in the wake of the GFC. Properly regulated financial institutions worked okay and our federal government instituted stimulus spending programmes which seem to have staved off a recession. Whether they will be seen as successful in the medium term remains to be seen but right now things look pretty good. Maybe after this latest collapse we may finally see some evidence about the validity of Keynesian theory.

 

[midcan5]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Huh!!!!! Those statements are just bizarre. And while I realize you are just a moonie others can check out the information below.

The GD is the best example of Keynesian economics working. FDR did wonders and WWII finished the work by Gov spending on a massive scale. After the war, the returning soldiers created stability till Reagan started the destruction of the middle class.

For those interested in a high level critique of the FM see Treanor.

Summary
Timeline of the Great Depression
The Great Depression, to 1935

Democracy - Not "The Free Market" - Will Save America's Middle Class
"In actual fact, there is no such thing as a "free market." Markets are the creation of government. Governments provide a stable currency to make markets possible. They provide a legal infrastructure and court systems to enforce the contracts that make markets possible. They provide educated workforces through public education, and those workers show up at their places of business after traveling on public roads, rails, or airways provided by government. Businesses that use the "free market" are protected by police and fire departments provided by government, and send their communications - from phone to fax to internet - over lines that follow public rights-of-way maintained and protected by government."

Treanor will make you think even when you disagree. I feel like he is criticizing libertarianism here but he is European so the ideologies are slightly differnt. Read him.

The ethics of the free market: why market liberalism is wrong.
"The moral, political and social objections to market liberalism [libertarianism] and the market itself. The market is not a neutral 'process', it is a structure deliberately imposed, to implement the goals of a liberal ideology. It can be ethically assessed, and rejected, on that basis: criticism of the market overlaps with general critique of [libertarianism] liberalism."


Paul Craig Roberts: Watching Greed Murder the Economy
"These sensible suggestions will be demonized by ideological “free market” economists and opposed by the offshoring corporations, whose swollen profits allow them to hire “free market” economists as shills and to elect representatives to serve their interests."


Joe Bageant: Life in the Post-Political Age
"...At the precise moment that the intellectual underpinnings of conservative free market ideas that have dominated politics for the past 30 years are crumbling across the globe. Obama calls for a post ideological and partisan world."


Boston Review — Dean Baker: Free Market Myth
"In general, political debates over regulation have been wrongly cast as disputes over the extent of regulation, with conservatives assumed to prefer less regulation, while liberals prefer more. In fact conservatives do not necessarily desire less regulation, nor do liberals necessarily desire more. Conservatives support regulatory structures that cause income to flow upward, while liberals support regulatory structures that promote equality. “Less” regulation does not imply greater inequality, nor is the reverse true."


Project Syndicate
"But, while the global financial crisis did reveal fraud on a massive scale, the underlying cause of the crisis was not fraud but the failure of the market to knit together the self-interest of those who sold and resold sub-prime mortgages with the interests of the investors in financial institutions that bought them. The fact that an even larger catastrophe would have resulted had governments not been willing to draw on taxpayer funds to bail out the banks was an additional blow to those who have told us to trust the unregulated market." Peter Singer

 

[mascale]

The OP wanted to know about demand being created, so the "Democracy--Not 'The Free Market' clicky-thingy is mostly to the point.

'In actual fact, there is no such thing as a "free market." Markets are the creation of government. Governments provide a stable currency to make markets possible. They provide a legal infrastructure and court systems to enforce the contracts that make markets possible. They provide educated workforces through public education, and those workers show up at their places of business after traveling on public roads, rails, or airways provided by government. Businesses that use the "free market" are protected by police and fire departments provided by government, and send their communications - from phone to fax to internet - over lines that follow public rights-of-way maintained and protected by government."

Keynesians create "Demand" so that central governments have something to tax, and repay the spending costs. The Great Depression--WWII--Post-War Recession/Recovery--Korean Police Action--Post-Police Action Recession/Recovery--Vietnam War--Post-War Recession/Recovery--Reagan Revolution--Gulf War(?)--Post-War Recession/Recovery--Clinton Budget Surpluses: Do not represent much thinking suggested by Keynes, and would not be said Keynesian at all.

These are better called, "A Scam!"

The teacher in the classroom is entirely a part of it. Clearly, teaching is not possible, at any grade level, unless it is believed some kids are better than other kids, and that all the other kids are not worth the extra effort. If anyone has a teacher with no doctorate, then anyone knows something about themselves, and how they are regarded by the neighbors.

The more advanced status is war. "Buddies" go into armed conflict, to see who comes back. In point of fact, they tend to hope it's they themselves--and at whatever, "price."

"Crow, James Crow: Shaken, Not Stirred!"
(In fact, Europe was so quaintly ashamed after WWII, that they did support the creation of Israel, over there someplace, and no longer, coincidentally, anywhere near a government, in Europe, so far ever again!)

 

[Kevin_Kennedy]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Now I just want to revisit these points.

I think it's entirely possible to verify that Keynes General Theory worked. I'll have a look and see if I can find some evidence.

As I understand it one of the central tenets of classical economics is the idea of the free market can regulate itself. Well we know that's a fail.

There's nothing command and control about Keynes that I can see. But then I haven't finished reading the General Theory yet. Command and control is a long way from stimulus spending.

The economy in my country seems to be reasonably robust in the wake of the GFC. Properly regulated financial institutions worked okay and our federal government instituted stimulus spending programmes which seem to have staved off a recession. Whether they will be seen as successful in the medium term remains to be seen but right now things look pretty good. Maybe after this latest collapse we may finally see some evidence about the validity of Keynesian theory.

We know that the free market has failed to regulate itself? When did we learn this? Have we ever tried it out?

 

[Diuretic]

That they have been claimed to have worked is entirely subjective opinion, not physically verifiable fact.

The classical theories didn't "fail" any more than meterology can fail.

That Keynesean models are used for attempted economic command and control makes them inherently anti-free market.

Now I just want to revisit these points.

I think it's entirely possible to verify that Keynes General Theory worked. I'll have a look and see if I can find some evidence.

As I understand it one of the central tenets of classical economics is the idea of the free market can regulate itself. Well we know that's a fail.

There's nothing command and control about Keynes that I can see. But then I haven't finished reading the General Theory yet. Command and control is a long way from stimulus spending.

The economy in my country seems to be reasonably robust in the wake of the GFC. Properly regulated financial institutions worked okay and our federal government instituted stimulus spending programmes which seem to have staved off a recession. Whether they will be seen as successful in the medium term remains to be seen but right now things look pretty good. Maybe after this latest collapse we may finally see some evidence about the validity of Keynesian theory.

We know that the free market has failed to regulate itself? When did we learn this? Have we ever tried it out?

The US did. It failed and nearly took down the rest of the world.

I know, I know, the argument is that the regulations, such as they were, were at fault. They were at fault alright, for being bloody useless. As I said, a pure free market is an abstract, it doesn't exist in reality, at least not in advanced industrial societies.