Keynesian recovery of US economy in WWII

10 posts

Don Johnson
Broseph
What matters is that economics has been crippled by Keynes because of The General Theory and the championing of him around that timeframe. In the book he makes all these assertions that everyone back then and still today just take for granted. The entire study of economics has devolved into protecting his sacred screeds.
Jargon

The thing is, Keynesianism isn't really 'of' Keynes. If we take Keynesianism to be the basic postulates that an unmolested market economy has an inherent tendency toward demand-deficiency and has little or no ability itself to reverse this inherent tendency, then Keynesianism is actually much older than Keynes. He was just an upper-class Anglo who formalized what was already obvious enough to the rest of the world in a nigh-unintelligible treatise, a sufficiently respectable personality to serve as a lightning rod for an idea both necessary and heavily-laden with class-political implications, without whom the gap between the laws of economics and the mores of respectability may not have ever been bridged.

If Keynesianism is the above plus his specific policy recommendations, i.e. deficits in depressions, surpluses in booms, stimulus via public works and lowered interest rates, then fair enough.

Re: Rothbard and Friedman, you can tell that they are shameless and sleazy liars because in all of their answers to questions of this nature they will always float blissfully over what is, for honest thinkers, the most glaring issue in all economic questions: how does this effect incomes? And from this question a slew of others: what is the structure of incomes? What are their sources? Without these questions we are left with a model of economy which has no structure of incomes, a model of assumed employment, income and stability, pure as the driven snow; a presupposition of a perfect economy in approaching economic questions. The economics of R and F is useful only to those for whom the issue is never "Do I have enough money?" but "Am I satisfied with the available selection of consumer goods?"

A Gleaming Leprosy
I think American post-war prosperity is mostly a myth. I reckon that in the broad strokes you had this system of full employment Keynesianism which combined with America's military expenditures and trade policies put inflationary strain on the economy, first leading to the creation of the Economic Stabilization Agency, then Kennedy's "jawbone" wage-price guidelines, and then finally Nixon's freeze and the collapse of Bretton Woods. In the end the only way this chronic inflationary pressure, which had been a problem since 1950 , could be contained was by instituting the Reagan/Thatcher neoliberal regime where vast swathes of people would be permanently unemployed or underemployed in service sector jobs, consumer credit would substitute for wage increases, real wages would not keep pace with productivity gains, and women and immigrants would be brought into the workforce to keep wages down. Macrobius has lots of interesting things to say about the origin of said regime.
Welund
"Inherent tendency toward demand-deficiency." How is this plus the "recommendations" not an excuse to create the consumer society?

I think the main problem left out of modern economics is who-whom. At which point you have to discard pseudo-objective abstract claims on benefiting "the economy" or arbitrarily these workers but not these other workers, or even people that aren't workers at all - wives, monks, whatever. In that isolated video Friedman appears correct.
Don Johnson
Inflation was fairly moderate until the late 70s, and the inflation of the 70s was not necessarily bad for the middle and working classes, as it inflated away their debts. It was bad for the people on the other side of the trade - the wealthy, banks, large companies - who own assets, lend money, and employ labor. This is why the Reagan/Thatcher neoliberal regime was brought in. The neoliberal regime promoted asset price inflation and suppressed wage inflation, so while official measures of inflation like the CPI were "contained," there was significant inflation in the major parts of middle and working class budgets like real estate, education, and healthcare. Cheap food and other basic consumer goods were necessary to prevent riots and civil unrest.
Rodger Young

That's a key point, when neoliberal shills refer to the "economy", what they are really referring to is the prices of consumerist trash and the profits of shareholders in various global megacorps. What must be asked is how does this actually improve the living conditions of your average american worker, they will not have a real answer for it other than usual cliche fallbacks like GDP. Who actually benefits from this GDP increase, not the average citizen thats for sure. Unfortunately most proles fall for it when the ZOG apparatus at large declares "our stats show open borders and free trade grow the economy!" because they don't realize how the neoliberal "economy" actually relates to them.

A Gleaming Leprosy
Domestic inflation began to go up in the later '60s, but my point is that much of the inflation was exported overseas (which DeGaulle complained about), and most Americans didn't notice this happening until the chickens came home to roost with the collapse of Bretton Woods. See Wikipedia's article on the London Gold Pool or the very good book The Imperious Economy , which is unfortunately only available in dead-tree form.
Jargon
This is a false equivocation / implication. How consumeristic an economy will be is an unconditioned element, much like Mises' concept of the Originary Rate of Interest; the Originary Rate of Interest determines the supply / demand / price of loanable funds, not the other way around. The people's aggregate time preference determines the degree of consumerism. Sufficient demand, on the other hand, just determines whether the existing produce of the economy can be consumed. In cases of insufficient demand, the produce is consumed by drawing out credit, which must continue until financial destabilization, bankruptcy and property transfer, after which point the cycle repeats itself. It's imperative to understand that: people having enough money to consume what they produce is not consumerism, consumerism is the manifestation of their collective high time-preference; one can easily envision comparing an economy in which agg. demand of consumer goods is paired up to agg. supply of consumer goods and an economy in which agg. demand for consumer goods lags far behind agg. supply of consumer goods but the supply there is higher, implying a more consumeristic structure of economy.

Well it's an uncontroversial fact that the vast majority of people on earth get the vast majority of their purchasing power from selling their labor, rather than owning capital assets or land, so any policy which increases the returns to capital or land at the expense of the returns to labor is going to be bad for the (real) economy.
Welund

What makes people think the pre-Neoliberal, depression and war governments were anything but the NWO to put it bluntly? (Hence devoting so much of the economy to the military industrial sphere, and creating the outsourcing + simulated demand/debt consumer society.)

There was nothing economically, culturally, socially, artistically, racially sustainable about the postwar era.