Keynesian recovery of US economy in WWII

10 posts

Jargon

A few things:

Depression Era Populism / Post-War Keynesianism was a response to undeniable unrest of economically-literate worker collectives. Relatively speaking, many people back then understood what fractional reserve banking was.
Debt consumer society did not begin until the neoliberal revolution; the surplus of capital born of slashed wages was given back to the workers as cheap credit.
Post-war Keynesian consensus can be interpreted by infowarriors as a spoiler / letting-out-of-steam until a suitable catalyzing crisis (OPEC embargo) or maybe the int'l financial oligarchy's grip on power isn't as tight as they like us to think.
People think pre-Neoliberal economies weren't NWO because work was well paid and housing and family was an attainable goal for basically anyone.
Devoting a large proportion of economic resources to the military industrial sphere is trad.

A Gleaming Leprosy
Not the way we do it.
Welund
There is a perennial cause of left-wing materialistic revolutionaries and it's that they see the financial capitalists seemingly make something out of nothing, so they want to do the same. Occupy Wall Street's demand: if we can bailout banks, we can bail out students. However, while banks can steal from tax payers, you can't steal from yourself .

Petrodollar system = capital devoted to military, cheap garbage imports for Americans because oil consumers need petrodollars, inflation is outsourced (Military Keynesianism and Neoliberal trade policy). When the debt system fails, the leftists do the debtors' business and want to socialize the debt, rewarding mistakes of those on both ends of the debt equation.

For 2.5 decades, after which it socially, culturally, artistically collapsed . . . and before implementation of Neoliberalism. Depopulating Eastern Europe military Keynesianism also "worked" for the brief time it existed. You probably can't draw too many conclusions from small periods in history in the middle of tumultuous technological and totalitarian changes. For example, I don't think suburbs were organically formed in the USA. The postwar really shows its car culture planning/brainwashing for one.

Americans' real geographical competitors barely have militaries yet they run amok across the border. The USa subsidizes defense in Europe so they can flood their countries with Muslims/Africans and subsidize Asians so they can make a killing selling Western technology back to Americans. The US military budget is around 37% of the world's budget. Americans are also a special case where a conventional invasion would be rather pointless, due to geography and the prevalence of private weaponry.
Jargon
I don't know what this could mean. Gov'ts can create money (at cost or no), but banks create most of it (always at cost). Occupy wanted the Govt to create the money to pay off student loans. If anything that's quite a milquetoast request of them considering the alternatives (the Govt simply canceling the loans). I could be wrong but I think the "steal" idea here is coming from your notion of inflation's Cantillon effects? In which case, it bears repeating, that the Cantillon effects of inflation in America are specific to the configuration of our monetary system (money flows from Govt -> banks -> debtors). Imperative to understand: Cantillon effects are not intrinsic to inflation proper .

I don't understand what the equation is here.

The implementation of Neoliberalism was its collapse. Take any system of political economy and jack up energy prices 2x overnight and you will have problems regardless of policy. There's often this impression given by economists of the right (liberal right) that neoliberalism is somehow more stable than keynesianism, which, in a sense, is true. This is because Keynesianism requires the constant political energy to exert the primacy of the state's interests over those of the financial sector's. In this sense, there will always be little schemes and scams perpetrated by the latter in attempts to escape the clumsy grip of the former, which are always threatening to upset the existing order of full employment. In Neoliberalism, the economy sits comfortably in the muck of rentierdom and low-wages because there is no struggle at the top of the political structure; the interests of the financial sector are secured and thus you have secured a sustainable state of misery. This is not to say that Neoliberalism is stable itself (it isn't; 2008?), but that the right-wing critique of Keynesianism being somehow 'untenable', 'unviable', or 'impractical' is unwittingly correct. This is because it requires an authoritarian state that is deaf to kvetching, one that can execute policies without trying to "balance" interests. The Keynesian-democratic state exists in paradox as the law-givers are always in the flux of trying to "work something out" with their subjects and actually enforcing the laws that are in place.

Yeah I was just being silly I don't really approve of the American MIC.
Don Johnson
I don't know that they're being completely disingenuous, at least not consciously. I do think the Austrians raise important philosophical issues regarding the meaning and determination of economic variables that tend to be taken for granted by mainstream economics. According to the Austrians, the sole representation of valuable economic activity is the exchange itself, so whatever pattern of exchange obtains, like a trade deficit or surplus, doesn't really matter.

I think Keynesians can have a tendency to focus excessively on economic variables and on the analogy of the economy as a circular flow and machine, and become divorced from the real economy. Incomes are ultimately meaningful in terms of the real goods they can purchase. On the other hand, the Austrian focus on the exchange leads to a kind of economic Panglossianism in which whatever pattern of exchange obtains is optimal by definition.
Jargon
This I think is key. The Austrian framework is such that nothing exists outside the pertinent economic actors' perception of it and, even then, only when they come together for an exchange. From this it follows that there are no distinct quantities, only relative quantities; things are only observable after the fact of exchange and only through the lenses of the parties of exchange. Factor in the expectation that all exchange represents a psychic gain and you end up with a set of extraordinarily entitled assumptions about economic phenomena.

This is in distinction to the more classical tradition of econ (as opposed to the Neo-classical tradition, whose father is Austrian subjectivism), which has no mission to reduce economy to exchange. Exchange is of course a part of economy, but so is production. In order to analyze production, one must accept the factors of production and their returns (profit, interest, rent, wages). The moment one accepts this cost-structure perspective of production, any illusion of Panglossianism must instantly be blown away; the fact of 'economic rent' becomes apparent under any serious theoretical investigation of the factors of production, as do other imperfections.

At the risk of proposing something close to "Judenphysik", I think it's possible that the the difference between these two arches of thought, Classical and Neoclassical, is indicative of deeper trends. Austrian subjectivism finds a home in Semitic thought, which is infamous for abstraction and detachment from material constraint. The classical sense of objectivity and materiality in observing economics belies an intuitive approach.

This might be bullshit but it could be that Austrian subjectivism's true goal is not to find the truth but to create a perfect science. With classical economics there wasn't really a strictly defined epistemology; it was more or less appeals to unsystematic reason. Austrian subjectivism and its reduction of economic phenomena to the domain of its perceiver creates the foundation of a science with a clear epistemology - from there one can create a praxeological basis for economics - but at the expense of its ability to offer any commentary on economic phenomena "as they are". Austrian subjectivism is thus a science without any risk of internal contradiction but a science with severely limited scope; Mises just wanted to have the status of being the first person in history to find an effective use for the synthetic a priori.
Welund
Well, I think we should stop giving loans backed by the government because there are too many degrees (titular inflation), and do more of what Trump is trying do to reduce foreign competition (visas, illegals, and outsourcing). The last is the trickiest.

If you ask for jubilee you over paid for in the first place, may not have needed and it was even destructive for you, you are asking for crumbs and worse. People should not have allowed themselves to get into debt in the first place. Don't do it.

The more I looked into it, the more it seemed fractional reserve banking was just a standard function of banks.

America as a pyramid scheme and whore to foreigners. The organic basis is missing, from the food up. I forget what your overall goal is and even if we disagree there.

Yes, I agree. It led to people who cannot resist Neoliberalism, and who think some Keynesian patches would "fix" it. This system needs to go, but I am speaking more revolutionary here.

I didn't take you so seriously.
Jargon
And what's the significance of that? Whether it's the standard function of banks? Because it's certainly not the textbook macro-econ definition for banks, which is that they are mediate savings to investment. What the standard function of banks "is" or "is not" is not such a matter-of-fact question. Presumably this kind of thing interests you so I'll just recommend Frederick Soddy, whose archive page has recently been clipped down quite a bit but still includes one of his best works, The Role of Money . In my opinion this is mandatory reading for anyone interested in politics. There are a lot of books that cover the same topic but I think this one gets to the heart of it the best. I don't mean to condescend if you've already read it.
Dogmatic Tower
  • First and foremost, you can't cut your way to growth.
  • "Efficiency" gains are trivial compared to growth fueled by an absolutely greater amount of public and private spending. And when your idea of "efficiency" lowers wages and raises unemployment, it's a net negative.
  • "Crowding out" is overstated, if it occurs at all. Money invested will be put to some profitable use, no matter whether John Q. Public or Uncle Sam signs the check. At worst, you crush profit margins, which is the worst thing that some people can imagine.
  • Investment and consumption are pro-cyclical, meaning an economy left to its own devices will blow bubbles and cannot recover from a stall.
  • When the money supply does not grow - whether from tight monetary policy and/or from banks refusing to lend - "growth" can only come from Dutch disease ... though if the only metric you care about is stock prices or quarterly profits, things may be doing just fine for you.
Immediately after WWII, when all the economic activity associated with the war ended and all the war workers were sent home, a recession erupted. Now that observation is somewhat tautological ... but the response was to repurpose all the "excess" productivity and start churning out consumer goods. Not New Deal make-work funded with deficit spending, but still not something a neoliberal or ironically named "supply sider" would have imagined doing. But then most of contemporary economics is nothing but apologetics for rent seeking.
Broseph
The form of "Cutting to growth" we see now is idiotic primarily because it's of the following form:
e.g. 10,000 nurses work in your nation. They are and can only be employed by the government. The gov't lays off 2,000 of them. What are nurses, who are trained in nursing going to do if they can't be nurses?