We are all Keynesians now

[Rakesh Bhandari]

Sometime this week there was a story in the WSJ about Krugman's
recommendation that Japan should print yen madly. What would the class or
distributional consequences be of the resultant inflation? Would such a
strike against deflation and reduction in real interest rates indeed yield
that elusive investment boom? Would the devaluation of the yen be a
catastrophic blow to all the little geese high-flying Japan was supposed to
be leading?

As for the Keynesian and AFL-CIO view that
"there-is-no-savings-shortage-so-let-the-govt-spend" , are we all in
agreement with the following logic: "while Keynes is no longer politically
popular, [Robt]Pollin's collection suggests that he may nevertheless be
right--any successful efort to increase the aggregate saving rate will hurt
corporate investment. Increased saving shrinks the market for goods,
depresses the capital consumption allowances that finance gross investment,
and dampens current and future profits. Thus deficit reduction in the name
of freeing up aggregate saving for private investment is worse than simply
a misplaced effort: by depressing aggregate demand and thereby hurting
corporate saving, it actually harms real investment." Michele Naples,
review of R Pollin's Macroecon of Saving Finance and Investment in
Challenge, May June 1998.

It may be true  freed up savings wouldn't be invested, but will govt
spending and all the other Keynesian stimuli really have these desired
effects on real investment?

What are the grounds for skepticism about the Keynesian panacea? What do
people think of Mattick's critique--which as some know from previous email
lists I consider the most important Marxist contribution after World War II
(Marx and Keynes: the limits of the mixed economy; Economic Crisis and
Crisis Theory; Economics, Politics and the Age of Inflation; Marxism: last
refuge of the bourgeoisie? all books that need to be read ten times or so).

Best, Rakesh