2012년 10월 2일 화요일

[발췌] Economic Philosophy (Joan Robinson)

자료: Joan Robinson, Economic Philosophy
출판: Transaction Publishers, 2006 (재판)



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IV. Keynsian Revolution

Some of Keynes's contemporaries and seniors dislike the expression “the Keynesian Revolution”. There was nothing, they say, so vey new in the ^General Theory^[1] Of course everything can be found in Marshall, even the ^General Theory^. But we know what Marshall's pupils who had gone into the Treasury believed, from the famous White Paper of 1929[2] which was an example of neo-classical theory in action. In the General Election of that year Llyod George was fighting his campaign on a promise to abolish unemployment which had long been above 10 percent(it rose later 20 percent) by a programme of public works. The Treasury (very improperly from a constitutional point of view) was asked to show why this was impossible. Their argument is very simple. The total fund of saving is given, and if more is used for home investment, foreign lending, and consequently the export surplus, would be reduced correspondingly; there would be no advantage to the economy as a whole.[3]

Nowadays this seem merely laughable. It is not necessary now to repeat the familiar tale of the hard-fought victory of the theory of effective demand; we are concerned rather to see the relevance of the new line to the themes that we have been discussing.

First of all, Keynes brought back something of the hard-headedness of the Classic. He saw the capitalist system as a system, a going concern, a phase in historical development. Sometimes it filled him with rage an despair but on the whole he approved of it or at any rate he felt it worthwhile trying to patch it up and make it work tolerabley well. But like Adam Smith's, his defense was based on expediency --

For my part, I think that Capitalism wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.[1]

Secondly, Keynes brought back the moral problem that ^laissez-faire^ theory had abolished. It is true that in Cambridge we had never been taught that economics should be ^wertfrei^ or that the positive and the normative can be sharply divided. We knew that the search was for fruit as well as light. But the anodyne of ^laissez-faire^ had worked pretty thoroughly even in Cambridge. Marshall, certainly, was a great moralizer, but somehow the moral always came out that whatever is, is ^very nearly^ best. Pigou set out the argument of his ^Economics of Welfare^ in terms of exceptions to the rule that ^laissez faire^ ensures maximum satisfaction; he did not question the rule. Readjustments were needed here and there to make the distribution of resources between uses the most efficient possible. The inequality of the distribution of the product raised doubts, but they were easily deflected into Utopian daydreams. Even Keynes, as we have just seen, while he did not much like the profit motive, thought (in the Twenties) that it provided a better mechanism than any other “yet in sight” for operating the economic system, with the reservation that it did not necessarily make the best possible use of its resources.

In the Thirties a large part of its resources were not being used for anything at all; Keynes diagnosed the cause as a deep-seated defect in the mechanism, and thereny added an exception to the comfortable rule that every man in bettering himself was doing good to the commonwealth, so large as completely to disrupt the reconciliation of the pursuit of private profit with public beneficence.

The whole elaborate structure of the metaphysical justification for profit was blown up when he pointed out that capital yields a return not because it is ^productive^ but because it is ^scarce^.[1] Still worse, the notion that saving is a cause of unemployment cut the root of the justification for unequal income as a source of accumulation.

What made the ^General Theory^ so hard to accept was not its intellectual content, which in a calm mood can easily be mastered, but its shocking implications. Worse than private vices being public benefits, it seemed that the new doctrine was the still more disconcerting proposition that private virtues (of thriftiness and careful husbandry) were pubic vices.

We have seen our way through this now. When full employment is going to be maintained in any case, saving is certainly more desirable than spending from a public point of view. Saving is only bad when investment fails to make use of it. But at the time Keynes seemed to be upholding a "licentious system" that was even more objectionable than Mandeville's had been to Adam Smith. And, of cource, Keynes, like Mandeville, was a dreadful tease. He preferred not to coat his tart pills with any soothing sugar. The nastier, the more good they would do.

By making it impossible to believe any longer in an automatic reconciliation of conflicting interests into a harmonious whole, the ^General Theory^ brought out into the open the problem of choice and judgment that the neo-classicals had managed to smother. The ideology to end ideologies broke down. Economics once more became Political Economy.

Thirdly, Keynes brought back ^time^ into economic theory. He woke the Sleeping Princess from the long oblivion to which "equilibrium" and "perfect foresight" had condemned her and led her out into the world here and now.

This release took economics a great stride forward, away from theology towards science; now it si no longer necessary for hypotheses to be framed in such a form that we know in advance that they will be disproved. Hypotheses relating to a world where human beings actually live, where they cannot know the future or undo the past, have at least in principle the possibility of being set out in a testable form.


Keynes was very sceptical of econometrics(it is by no means certain that the work done in the last twenty years would have laid his doubts); but it was he who made the new statistical work possible. In ^How to Pay for the War^ he used first National Income tables set out in the modern manner by double entry, in a knock-up which Erwin Rothbarth made for him, and under his influence the method was officially accepted and is now unversally established.

The descent into time has brought economic theory also into touch with history. Keynes himself lacked the scruple of a scholar. He would pick up any example to illustrate a thesis, and if one betrayed him he could always find another. He made wild suggestions, such as that Shakepeare's genius could have flourished only in an age of inflation,[1] or that civilisation cannot be found except where there were earthquakes to lead from time to time to a reconstruction boom.[2] These light-hearted arguments were only superficial ornaments to point the paradoxes of analysis. (He planned to take up economic history seriously at the age of seventy, and we cannot know how he would have turned out at it.) Though Keynes himself was no historian, the ^General Theory^ has opened up a great field for an analytical survey of economic history. Formerly there was almost no link between history and theory except the now discredited interpretation of price movements in terms of supply of gold.

In history, we learned that the mainspring of development was technical inventions; in theory, most of the exercises were in terms of a "given state of knowledge." Inventions were a special, difficult question; even when it was tackled, the argument was conducted by comparing two propositions, with different states of knowledge, each already in equilibrium. (Schumpeter, who brought a bowdlerized edition of Marx into academic doctrine, made his system hinge on inventions, but he was some way from the centre of orthodoxy; it was only after Keynes had broken the bounds that he could find a place in it.) In history, we learned of the growth and decay of economic systems; in theory, there was one set of principles that governed life on Roninson Crusoe's island, and among the mystical peasants who bartered cloth for wine, as much as in the City of London or in Chicago.

In history, nations are of various shapes and sizes, with various geographical features and social traditions; in theory there were only A and B, each with an endowment of factors indentical in all respects except their relative quantities, trading in idential goods.

In history, every event has its consequences, and the question What would have happened if that event had not occurred? is only an idle speculation; in theory there is one position of equilibrium that a system will arrive at, no matter where it starts.

The ^General Theory^ broke through the unnatural barrier and brought history and theory together again. But for theorists the descent into time has bot been easy. After twenty years, the awakened Princess is still dazed and groggy.

Keynes himself was not quite steady on his foot. His remark about the timeless multiplier[1] is highly suspicious. And the hard core of analysis, round which his flashing controversy wheels, is based upon comparisons of static short-period equilibrium positions each with a given rate of investment going on, though it purports to trace the effect of a change in the rate of investment taking place at a moment of time.

Keynes was interested only in very short-period questions (he used to say: "The long period is a subject for undergraduates") and so for him the distinction between making comparisons of the structure of different positions and tracing the consequences of change was perhaps not so very important, though thre was a tremendous amount of bally-ragging between him and Sir Dennis Robertson over the point.[2] But when it comes to long-run questions the distinction is indispensible, and those who learned to float in the smooth waters of equilibrium find the requirements of historical analysis very uncomfortable. We are still slipping and floundering about like ducks who have alighted on a pond and found it frozen over.

We have broken out of static equilibrium at least in connexion with the accumulation of capital. We have learned to distinguish the desire to save from the inducement to invest and (... page 79-81 ... )

(...) that the phenomenon of monopoly profit is not important, in spite of the fact that on every particular day that the sun shines, a number of monopolies that have not yet broken down will be merrily making hey. "In the long run we are all dear," but not all of us at once.

Long-run equilibrium is a slippery eel. Marshall evidently intended to mean by the long period a horizon which is always at a certain distance in the future, and this is a useful metaphor; but he slips into discussing a position of equilibrium which is shifted by the very process of approaching it and he got himself into a thorough tangle by drawing three-dimensional positions on a plance diagram.[1]

No one would deny that to speak of a tendency towards equilibrium that itself shifts the position towards which it is tending is a contradiction in terms. And yet it is still persists. It is for this reason that we must attribute its survival to some kind of psychological appeal that transcends reason.

Marshall was very well aware of the difficulty of making generalizations intended to apply to actual life in terms of timeless concepts. Normal price is the "value which economic forces would bring about if the general conditions of life were stationary for a run of time long enough to enable them all to work out their full effect."[2]

Sir Dennis Robertson, thinking it mere perversity in a critic not to be satisfied with this, indignantly repeats it.[3] But how if the economic forces present in a particular situation are mutually contradictory? Say, part of the investment that is being carried out is the result of expectations of profit which another part is going to make unobtainable? What is the equilibrium that the working out of these forces would lead to if it had time enough to get there? And in any case do "stationary conditions" apply to a given population and stock of capital, or a given rate of growth or a given acceleration of growth?

Even if these conundrums could be answered and a definite meaning given to the pasage through time of the normal point towards which the actual position is tending to move, we ought to inquire how far off from equilibrium the actual position tends to be - how fast is the reaction towards normal, compared to the speed of movement of the normal position? In what case is the gap growing, in what narrowing? These are interesting and important questions, but except in the special department - trade-cycle theory - where the Keynesian revolution commands the field, they are seldom posed, let alone answered. The argument stops when normal position has been described and the equilibrium lullably hushes further inquiry.


These are subsidiary reasons for the survival and revival of pre-Keynesian ideas. The main reason, as always, we must look for in the ideological sphere. Keynes brought back the moral problem into economics by destroying the neo-classical reconciliation of private egoism and public service. He also exposed another weakness. There is another conflict in human life, akin to the conflict between myself now and in the future. This conflict the neo-classical ideology did not really resolve; rather it was evaded. Prudence is something akin to virtue and needs the exercise of self-command. The concept of ^waiting^ as a sacrifice is connected with the view that any owner of wealth is under a constant temptation to consume it in "present gratifications" and interest is the "reward" that leads him to refrain.

Because the neo-classical system was always so hazy about an economy as a whole and kept the spotlight on relative prices, it was able to leave the crucial question of the proper rate of saving in this unsatisfactory state. If I discount the future, then, when that future day becomes the present, I shall kick myself. Is the optimum rate of saving for society to be trusted to such chuckle-headed types? And what about posterity? Family feeling is a weak prop, for it is precisely the bachelors who have the biggest margin for saving. It was partly as a refuge from these awkward questions that the stationary state in which accumulation has come to an end was so valuable to Marshall's successors.

Ten year before the ^General Theory^, Keynes had pronounced the funeral oration on ^laissez faire^ --

Let us clear from the ground the metaphysical or general principles upon which, from time to time, ^laissez-faire^ has been founded. It it ^not^ true that individuals possess a prescriptive "natural liberty" in their economic activities. There is ^no^ "compact" conferring perpetual rights on those who Have or on those who Acquire. The world is ^not^ so managed from above that private and social interest always coincide. It is ^not^ so managed here below that in practive they coincide. It is ^not^ a correct deduction from the Principles of Economics that enlightened self-interest always operates in the public interest. Nor is it ture that self-interest generally ^is^ enlightened; more often individuals acting separately to promote their own end are too ignorant or too weak to attain even these. Experience does ^not^ show that individual, when they make up a social unit, are always less clear-sighted than when they act separately.

We cannot, therefore, settle on abstract grounds, but must handle on its merits in detail, what Burke termed "one of the finest problems in legislation, namely, to determine what the State ought to take upon itself to direct by the public wisdom, and what it ought to leave, with as little interference as possible, to individual exertion." We have to discriminate between what Bentham, in his forgotten but useful nomenclature, used to term ^Agenda^ and ^Non-Agenda^, and to do this without Bentham's prior presumption that interference is, at the same time, "generally needless" and "generally pernicious."[1]

[1] ^Essays in Persuasion^, pp. 312-13.

In ^The End of Laissez-faire^ Keynes had only this to say on the question of accumulation --

My second example relates to Savings and Investment. I believe that some co-ordinated act of intelligent judgment is required as to the scale on which it is desirable that the community as a whole should save, the scale on which these savings should go abroad in the form of foreign investments, and whether the present organization of the investment market distributes savings along the most nationally productive channels. I do not think that these matters should be left entirely to the chances of private judgment and private profits, as they are at present.[1]

When the whole question of seeing that potential savings are not run to waste in unemployment, that the investible resources shall be used, is added to the ^agenda^, it seems as if there is precious little ^non-agenda^ left.

To disput the main point has become impossible. But Keynes himself had moments of nostalgia for the old doctrines.

"The Social Philosophy towards which the General Theory might lead" is markedly less radical than the arguments of the book has led the reader to expect -

Our criticism of the accepted classical theory of economics has consisted not so much in finding logical flaws in its analysis as in pointing out that its tacit assumptions are seldom or never satisfied, with the result that it cannot solve the economic problems of the actual world. But if our central controls succeed in establishing an aggregate volume of output corresponding to full employment as nearly as is practicable, the classical theory comes into its own again from this points onwards. If we suppose the volume of output to be given , i.e. to be determined by forces outside the classical scheme of thought, then there is no objection to be raised against the classical analysis of the matter in which private self-interest will determine what in particular in produced, in what proportions the factors of production will be combined to produce it, and how the value of the final product will be distributed between them.[2]

[1] Ibid., p. 318
[2] ^General Theory^, p. 378.

In this diminished kingdom ^laissez faire^ can still flourish; from this ground it can make sallies to recapture lost territory. It is this rallying of the old ideological forces round their oriflamme - the optimum distribution of resources in long-period equilibrium - that accounts for the slow progress that has been made in bringing the so-called theory of Value and Distribution into touch with historic time and the so-called theory of Welfare into touch with human life.


In some ways the unkindest cut of all was Keynes' repudiation of the doctrine that tariff must be harmful to the country that imposes them. He did not delve into the pure thoery and the Bickerdike argument. He was interested in the much simpler and more straightforward point that a tariff which deflects demand from foreign to home goods increases employment in home industries.

Keyens, brought up in the strictest sect of the Pharisees, had been a dogmatic Free-Trader in his day. With his usual lack of patriotism for his own past ideas he chooses himself in the ^General Theory^ as the exponent of the doctrine that he now wants to attack -


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