My latest article in The American Conservative is here. A teaser:
Indeed, you would be hard-pressed to find a conservative who admits to being an orthodox Keynesian, conservatives having joined the Church of the Supply Side many years ago. But though Keynesianism tends to be associated with big-government “liberalism”—in its original form, liberalism stood for small government in all realms—many who take Keynes’s approach to economics are nevertheless self-identified conservatives. In practice, “conservative Keynesian” is not a contradiction in terms.
3 comments:
I suppose I should number myself among the military Keynesians, since I believe that overinvestment and underconsumption are real and chronic tendencies under state capitalism, and that the combination of military spending and large-scale global destruction of capital in WWII is what kept those tendencies from being fatal in Depression 1.0. (Although technically I think the stagnationist theory much better than Keynes did--Keynes saw investment only as a kind of spending, and really didn't see overaccumulation as a problem).
But I'd much prefer to eliminate the forms of state intervention that create those tendencies, rather than leaving them in place and relying on a new layer of state policy to fix the problem.
The Georgist Dan Sullivan wrote somewhere (I've never managed to track it down) that when state policies artificially reduce the returns to labor and increase the returns to land and capital, and thereby shift income from classes with a high propensity to spend to classes with a high propensity to save, there are only two possible ways to deal with the chronic crisis tendencies that result:
1) You can eliminate the forms of privilege that create the maldistribution of purchasing power in the first place. Or
2) You can add a new layer of government policy to redistribute purchasing power and stimulate aggregate demand.
If you don't do 1, all that's left is 2.
In any case, you're right that Bush deserves credit as the biggest Keynesian in many years, given the scale of his spending.
By that criterion, Mises and Schumpeter were military Keynesians. They also saw those things as chronic tendencies under state capitalism that fuel the drive for more intervention and war. But I don't think that is the criterion. A (sincere?) Keynesian believes that intervention is required for the welfare of the people, not just special interests, and that the problems they seek to address are rooted in the free market. You, Mises, an Schumpeter do not.
Well, the mainstream Keynesians certainly have a misguided view about the causes of such chronic tendencies. From what I've seen, most agree with Galbraith that the capital-intensive, mass production methods Chandler celebrates are inherently more "efficient" and "progressive" than decentralized, demand-pull economies--and therefore government intervention (and microeconomic mechanisms) to guarantee consumption are necessary for "progress."
Despite occasional glimmers of outside-the-box thinking by conventional liberals like Matt Yglesias (e.g. the idea that a shorter workweek and less planned obsolescence might be preferable to employing idle industrial capacity), most of them are utterly incredulous that economies of scale might not be quite as decisive as they're cracked up to be.
But given the chronic tendencies described above, I think the Keynesians and other underconsumptionists (as well as neo-Marxists like Mattick and O'Connor) are fairly on the mark in describing the mechanics of the existing system.
Stromberg's article "State Monopoly Capitalism and Imperialism" is still the best argument I know of on the dovetailing between Austrian and left-wing heterodox economics.
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