Charles Brown
>>> James Farmelant <farmelantj at juno.com> 08/06/99 04:57PM >>>
Would you say that Paul Samuelson was a leading
"bastard Keynesian"? Didn't he win the Nobel Prize
for attempting to reconcile Keynesianism with neo-classical
economic theory?
Jim Farmelant
On Fri, 06 Aug 1999 15:18:38 -0700 Roger Odisio <rodisio at igc.org> writes:
>Seth Ackerman wrote:
>
>> Can someone explain to me the salient differences between Bastard
>> Keynesianism and the more "authentic" versions? do these differences
>have
>> any real policy implications?
>>
>> Seth
>
>I'll take a crack at that from the deep recesses of my memory, Seth.
>What I
>can tell you is only one part of the story, and in simplified version.
>
>"Bastard Keynesians" is a term coined by Joan Robinson, writing in the
>50s.
>Robinson was actually a student of Keynes in the 30s when he was
>developing
>the General Theory, and she always retained a sort of protective
>approach to
>the corpus of his thought. Hence her reaction when his work was
>distorted.
>
>Keynes attacked the neoclassicals of his day most fundamentally by
>showing
>theirs was a static equilibrium theory, complete with automatic
>tendencies
>toward that equilibrium. What to do when the economy turned down?
>Nothing,
>they said. In the General Theory (he called it the General Theory
>because
>he argued that all of neoclassical theory was but a restricted,
>special
>case), Keynes wrote of the many fundamental problems left unadressed
>by
>neoclassical theory; e.g., disconnects between savings and investment
>such
>that you can't save your way to prosperity (the problems of Say's
>Law),
>the
>"liqidity trap" when interest rates got too low, and other such things
>that
>clearly showed some of the dissembling possibilities of unfettered
>capitalism. One way to summarize: Keynes added time to the
>neoclassical
>static model (see stuff by GLS Schackle and Robinson explaining this)
>and
>studied its effects.
>
>According to Robinson (and she's right), first chance they got, the
>bastard
>Keynesians took time back out of the theory. They embraced
>superficial
>parts
>like deficit spending to correct short term problems of aggregate
>demand
>(so
>that Nixon could proclaim "we are all Keynesians now"--the extreme
>form
>of
>bastardization, of course; also the point of Doug's reference to the
>bastard
>Keynesian state). But they replaced the heart of Keynes' macro
>insights
>with
>static ISLM curves--you tweak the money supply here or savings there
>and
>poof! you're back on track toward equilibrated nirvana. In short,
>they
>are
>bastard Keynesians because they grabbed hold of a few trappings, and
>threw
>away the insights that call into question how capitalism functions.
>
>Policy implications? His analysis led Keynes, a rather conservative
>fella,
>who e.g., had little use for Marx, to blurt out that, to deal with the
>problems he had shown, perhaps it was necessary to have social control
>of
>investment. Put another way, don't kid yourself that your are getting
>the
>heart of the problem when you debate the effects on growth of a tax
>cut
>vs.
>govt. spending.
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