2012년 7월 30일 월요일

[메모] some readings in Keynes's "spirit of enterprise"

자료 1: The Philosophy of Keynes's Economics: Probability, Uncertainty and Convention


All in all, Keynes's discussion in ^The General Theory^ (and in its subsequent defence) is a short-run snapshot of a dynamic long-run process. As Schumpeter(1954: 1175) observed of ^The General Theory^, but which has now been forgotten, ‘[t]hose who look for the essence of capitalism in the phenomena that attend the incessant recreation of this apparatus and the incessant revolution that goes on within it must therefore be excused if they hold that Keynes's theory abstracts from the essence of the capitalist process. But is it the case that elsewhere Keynes ‘abstracts from the essence of the capitalist process?’

Transformation and the entrepreneur

It turns out that Keynes does on occasion elsewhere allude to the creativity and change induced by the entrepreneur. In his essay ‘The end of laissez faire’, he argues that ‘[m]anyof the greatest economic evils of our time are the fruits of risk, uncertainty, and ignorance’(CWIXb: 291). Keynes's discussion is suggestive of a creative view of the economic process:

[i]t is becasue particular individuals, fortunate in situation or in abilities, are able to take advantage of uncertainty and ignorance, and also because for the same reason big business is often a lottery, that great inequalities of wealth come about; and these same factors are also the cause of unemployment of labour, or the disappointent of reasonable business expectations, and of the impairment of efficiency and production. (ibid.)

This discussion appears to link the discussion of uncertainty to capitalism's incessant drive to introduce product innovations and technological revolutions. Moreover, such an interpretation links well with Keynes's rejection of simplistic market-based selection-of-the-fittest arguments (ibid: 276, 282-3). If the future cannot be know in advance of its creation, then the market (or government for that matter) cannot select and learn the optimal rules and routines that characterise the economic environment because ^they are not yet there to be discovered^. However, a moment's reflection reveals that such an interpretation is contentious. To describe the economic process as a approximating a lottery, in which individuals ‘take advantage of uncertainty and ignorance’, is quite distinct from a stress on the new product, new methods of organisation, new governemts and new institutional structures that are originated within the processes of competition and history.

Likewise, in his review of H. G. Wells's ^The World of William Clissold^, Keynes(CWIX: 315-20) recognised the ‘creative force and constructive will’of the elite, arguing that the force for change came from men of knowledge and power--the business tycoons and the scientists. For an uncertain vocation: ‘It is enterprise which builds and improves the world's possessions... [and] the engine which drives enterpriseis ... profit’(CWIX: 132). However, such creativity was most important in earlier times, during the dawn of ‘individualistic’ capitalism. At the turn of the 20th century, however, Keynes was of the opinion that many of the previously profitable opportunities were nearing exhaustion; the entrepreneurial class had become degenerate, not least owing to the corrupting influence of avarice.

All in all, as Skidelsky(1992: 259) documents, Keynes, unlike Marshall, ‘had little respect for the business vocation... Keynes ranked business life so low partly because he considered that the material goods produced by entrepreneurs had less ethical value than the intellectual and aesthetic goods produced by dons and artists, [and] partly because he despised the "love of money" as a motive for action’. In sharp contrast to say. Schumpeter, Shackle, Marshall, or even Marx, Keynes seems to regard the entrepreneur as a necessary evil and far from heroic: ‘What chiefly impressed Keynes about British businessmen was their stupidity and laziness. He was an firm believer in the three-generation cycle: the man of energy and imagination creates the business; the son coasts along; the grandson goes bankrupt’(ibid.). In his essay ‘Am I a liberal?’, Keynes(CWIX: 327) argued that the transmission of wealth and power via hereditary principle underscores the decadence and decay of ‘individualistic’ capitalism and the emergence of a socialised, routinised form of capitalism, epitomised by the joint-stock corporation. And while Keynes sometimes talks about the ‘spirit of enterprise’, this is not equal to a recognition of those activities of enterprise that induce change and uncertainty. 

Overall, Keynes's vision of the capitalist process is ‘one lurching forward by fits and starts, while opportunites for exceptional profit cause, briefly, the gambing spirit to swamp the counsels of prudence’(Skidelsky 1992: 335). Indeed, it is significant, although from our perspective unsurprising, that Keynes argued that the ‘necessity of profit as a spur to effort...was greatly exaggerated’(quoted in idid.: 267). Keynes's theoretical discussion stands in sharp contrast to Schumpeter(1942) who defended profit as a reward for risk-taking and uncertainty-bearing, and linked it up to the creative processes of accumulation. What Keynes ‘underestimated was humanity's ingenuity in inventing ways to keep capital scarce’(Skidelsky 1992: 609). Keynes seeks to play down a heroic conceptualisation of the entrepreneurial function. His elitist orientation led him to regard entrepreneurs as a necessary evil who could contribute, not to civilisation, but to the possibility of civilisation.


자료 2: Perspectives on Keynesian Economics

(... ...) In the ^Treatise on Money^(1930), when discussing the use of monetary policy to influence the long-term rate of interest in order to offset the effects on investment of swings in the "spirit of enterprise", he argued that the short interest rates that the central bank could undoubtedly influence "affect long rates more than one might expect" because "mob psychology"--at first sight an unreliable foundation for monetary policy--in fact provided the basis for "a homeopathic cure". The real prospects do not suffer such large and quick changes as does "the spirit of enterprise" so "it is not unreasonable to depend on short-period influences for counteracting a violent, and perhaps unreasong change in sentiment". (...)

(...) As to swings in the above-mentioned "spirit of enterprise", which had already appeared, though not under that label, in the work of Frederick Lavington(1922) and Pigou(e.g. 1927) as driven by cumulative and contagious "errors of optimism and pessimism", these would reappear in the ^General Theory^ as consequences of exogenous changes in "animal spirits" that are there presented as more important determinants of the marginal effiiency of capital than any "weighted average of quantitative benefits multiplied by quantitative probabilities"(p. 161) (... ...)

자료 3:

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