I am not sure what aspect of Doug's definition of Keynesianism this would fit, but I would like to comment on this sketch as an exercise in relating it to Value.
>Increasing government spending or the money supply relieves business, to some
>extent, the pressures of competition.
I would suggest that it creates the illusion that the glass ceiling of total social Value is removed. To some extent by stimulating exchange again this is real. In a sense the marxist concept of the law of Value implies that it differs at different times of the capitalist economic cycle. If Value is the aggregate socially necessary labour time for the production of all the commodities of the society, then at a time of capitalist boom and great confidence all the productive forces are used at peak capacity creating the maximum amount of commodities. When the overproduction causes a crisis, the economic activity sinks to a point where the socially necessary labour time has to take account of the very sticky circulation of capital and the total sum of goods and services is much less.
Perhaps I have misphrased this. The Total Social Value remains the same but the quantity of commodities, and therefore money, which represent it, is substantially different at different stages of the economic cycle, given the prevailing conditions of production. I would appreciate comments about the best way to phrase this.
Competition is supposedly what makes
>business efficient. The absence of competition allowance inefficiencies to
>accumulate and fictitious capital to multiply.
I presume we would regard this argument with many reservations. There is of course not perfect competion in capitalism. etc etc.
>The Japanese bubble economy is a perfect, albeit extreme, example of this
>phenomenon. As the money supply was pumped up, business invested; investments
>prospered, creating an irrational exuberance that seemed to be validated
>because of the high-level of demand.
I do not see why the Japanese economy is called a bubble economy. It just seems to me an economy with a hangover of a period of exuberance. I know western reporters enjoy discovering the untrustworthy practices of Japanese bankers who claim unrealistic figures for their assets, particularly held in land, but those assets seemed perfectly rational when the west feared that the Japanese economy was so dynamic it was going to overtake the USA in the 21st century.
The word "bubble" is only applicable in terms of addressing to what extent the accumulation of Japanese capital was self-contained and to what extent it was dependent on, and vulnerable to, interaction with other compartments of the world economy. This is a contradiction which will vary between relative independence and relative dependence.
I am not sure that it is correct to say "money supply was pumped up", as if this was by dubious human intervention. This occurs naturally in an expansionary phase of the capitalist cycle.
As for the exuberance being "irrational" it is only irrational in the sense that capitalists for all their hard headed realism in other ways, dare not look at the objective fact that total Social Value is a zero sum game. (Even while productivity rises over the years). There is a fundamental inescapable contradiction between the need for capital to accumulate ever more surplus value, and the limited purchasing power of the masses. One way or other this has to be readjusted. Otherwise it readjusts itself.
Chris Burford
London.