I’m reading the General Theory, but felt like typing something. I take a lot of hand notes, but typing is easier. I will underscore with respect to this post specifically, and this whole blog more generally, is that I am often thinking out loud. Most of these sorts of things used to–and in many case still do–go to private “notebooks”. But some of it gets out here, for the possible use of somebody.
Keynes basic idea is that production comes from Capitalists, which is to say “savers”. (His entire body of work is intended to glorify consumption and denigrate savings. In this, he echoes his Fabian mentor George Bernard Shaw, who likewise denigrated savings.) What he wants to do is integrate these savers into a system at equilibrium, which for him means full employment, and production equal to demand. Like Shaw, he is unconcerned with the details of what is produced, so long as he can control the access to Capital of the producers.
His nightmare scenario–which in popular myth was played out in the early 1930’s–is the production glut. Our pot-bellied, cigar smoking Capitalists have invested in, uh, table tennis rackets. Trouble is, the workers can’t afford to buy any more. The savings of the savers has bought too much. If they had paid their workers more, and saved less–or, hell, spent it on caviar, claret, and courtesans–then the workers would have the money to buy table tennis rackets and all would be right with the world. But they were too greedy.
So what do they do? Let some workers go, so that they can discount the table tennis rackets, and keep the same amount of money. But what? Now there is less money to spend. What to do?
Never fear, Uncle Debtor is here. Rather than lay those people off, intrepid Capitalist, and create structural unemployment, why not take this free money from the government, to pay off your table tennis rackets? You keep them employed, and they can then buy the badminton rackets you had intended to manufacture. You will need to pay them more, though, which is why we gave you all that money.
What has happened? In the short run, everybody wins. Capitalists get money, and the workers keep their jobs. What else has happened? The money has been created from scratch, by the government. The government now has the right to claim it as a levy in the form of taxation, from the very people who just got the money. Moreover, it has probably caused an inflationary effect, such that the buying power of everyone–workers and Capitalists alike–has diminished.
Keynes talks very specifically–I will be offering the quotes in my formal treatment–about the devaluation of money to destroy the investing class. He allows for some differences of wealth, but no big ones, and none that are in principle beyond the reach of the government, both in terms of graduated taxation, and outright confiscation through money creation.
Think of it this way: let’s say someone walked up to you and handed you ten $100 bills, and an invoice, payable in a year, for $1,200. Are you ahead? Is that a smart transaction? This is the essence of Keynesism.
As I view it, the problem is that classical economists have done a piss poor job of coming up with desirable economic equilibriums. Keynes has the appeal of offering (but self evidently not actually fostering) full employment of the sort normal people would want.
The missing link, which nobody seems to be willing to see or discuss, for whatever reason, is the inflationary, confiscatory nature of banking. This is what devalues our labor. This is how our collective innovatory genius gets diluted, such that most of us work long careers, at multiple jobs, and have little to show.
Socialism is not a solution. It is, to invoke the metaphor of Fabius Maximus, a delaying maneuver. It is postponing a reckoning. It is the creed of fools and scoundrels.
We need to imagine a future at rest. I am in full agreement with this. Yet, the way to solve unemployment is to raise the value of labor, and the way to do this is through enhancements in productivity that are NOT STOLEN.
It pains me to see this, but it is PRECISELY the doctrines of Keynes, in tandem with the natural avarice of bankers the world over, which has forestalled this. Not only did Keynes not point us to the promised land, he led us IN THE OPPOSITE DIRECTION. Had he not come along, had he been run over by a bus, or stabbed by a jealous lover of either gender, then the world economy would be much farther along. Everything he advocated has made us less rich, more poor, less free, and more indebted.
You want one name upon which to hang the albatross of our international debt crises? He’s your man.
I’ll have more to say in coming days.