2013년 4월 19일 금요일

[발췌: B. Bartlett's] The New American Economy (2009)

출처: Bruce Bartlett, The New American Economy: The Failure of Reaganomics and a New Way Forward (Macmillan, 2009)
자료: 구글도서

※ 발췌(excerpts): p. 50~

( ... ) its[The General Theory's]  basic argument  was that it was impractical to reduce unemployment by forcing down money wages to adjust for a monetary inflation.[23] It was vastly preferable, Keynes explained, to simply reduce real (inflation-adjusted) wages by offsetting the deflation with a compensating inflation. As he put it early in the book:

Whilst workers will usually resist a reduction of money-wages, it is not their practice to withdraw their labor whenever there is a rise in the price of wage-goods. It is sometimes said that it would be illogical for labor to resist a reduction of money-wages but not to resist a reduction of real wages ... But, whether logical or illogical, experience shows that this is how labor in fact behaves.[24]

Further on Keynes was even more explicit about using inflation to reduce real wages in order to raise employment. "A movement by employers to revise money-wage bargains downward will be much more strongly resisted than a gradual and automatic lowering of real wages as a result of rising prices," he wrote.[25]

Keynes's argument basically boiled down to practicality. "A flexible wage policy and a flexible money policy come analytically to the same thing," he explained, "inasmuch as they are alternative means of changing the quantity of money in terms of wage-goods." Keynes conceded that the governments could theoretically force down wage rates by decree but that only authoritarian states had such power. Every nation, however, had the power to alter the value of its currency and thus the price level through monetary policy. As he put it:
A change in the quantity of money ... is already within the power of most governments by open-market policy or analogous measures. Having regard to human nature and our institutions, it can only be a foolish person who would prefer a flexible wage policy to a flexible money policy, unless he can point to advantages from the former which are not obtainable from the latter. Moreover, other things being equal, a method which is comparatively easy to apply should be deemed preferable to a method which is probably so difficult as to be impracticable. ... It can only be an unjust person who would prefer a flexible wage policy to a flexible money policy.[26]
Part of the problem, however, was getting money out into the economy where it could do some good. Lower interest rates by themselves would not bring forth additional investment because of a liquidity trap that results when market rates are so low that money and bonds become virtually interchangeable. ( ... )

Getting the money moving, so to speak, requires the government to engage in deficit financing precisely for the purpose of increasing market interest rates, which would get the economy out of the liquidity trap and make an expansionary policy effective once again. It didn't really matter what the money raised by borrowing was spent on as long as it involved the purchase of goods and services. Income transfers and tax cuts were less effective because much of the money would be saved, thus frustrating the need to raise interest rates. It would be best for governments to finance the construction of socially beneficial public works, such as roads and buildings.[28] But for macroeconomic purposes it was not necessary that the construction be inherently productive, because the primary purpose of the effort was to create a mechanism for making monetary policy effective.

Towards this end, Keynes suggested that pyramid-building, earthquakes, and even wars might serve an economically useful purpose when the economy was stuck in a liquidity trap (...) He jokingly proposed that governments might even bury cash in old mine shafts that had been filled with rubbish. The resources expended by entrepreneurs to dig up the money would make the scheme economically productive to society by employing workers, creating incomes, and mobilizing capital.[29]

( ... ... )

The Obama administration tried to make this point as well in early 2009 in trying to get a massive stimulus bill enacted. It was more important to do something quickly, it explained, even if it meant wasting a lot of money on programs of dubious value. Growth would not come from the programs themselves but from the overall impact of the deficit on the economy. But because it did not explain the Keynesian argument very well, the Obama administration left itself open to easy attack by Republican who ridiculed the stimulus as a grab bag of spending with no inherent logic.

Reaction to The General Theory

p. 53~

The initial reaction to The General Theory among professional economists was quite modest. They recognized very quickly that Keynes wasn't really saying anything much different than he had been saying all along.  ( ... Alvin. H. Hansen's story ... )

Shortly after, Wassily Leontief ( ... ) was equally dismissive. "The difference between Mr. Keynes's new theory of economic equilibrium and the 'orthodox' classical scheme is fundamentally a difference in assumption," he wrote ( ... ).[31] I that same issue, economist Jacob Viner ( ... ) also saw no meaningful difference between Keynes's theory and the traditional view except in terms of his preference for inflation over wage cuts as a cure for unemployment: "Keynes's reasoning points obviously to the superiority of inflationary remedies for unemployment over money-wage reductions. ... The only clash here between Keynes's position and the orthodox one is in his denial that reduction of money wage rates is a remedy for underemployment."[32]

Later economists came to the same controversyㅡKeynes had simply assumed "sticky" wages and adapted a theory around that assumption.[33] This was not nothing in the days of the Great Depression, but hardly earth shattering. Indeed, it didn't have any effect whatsoever on economic policy in the near term.

By mid-1940, Keynes was lamenting that the federal government had still not done nearly enough to raise spending by an amount sufficient to really make a differnce, economically. In a New Republic article, he complained that spending was "hopelessly inadequate." Keynes speculated that only "war conditions" would bring forth expenditures "on the scale necessary to make the grand experiment which would prove my case."[42]

Depression's End

WWII finally did what the New Deal couldn't do and ended Great Depression. If forced the federal government to run deficits on an unprecedented scale, while the Federal Reserve fixed interest rates and provided as much liquidity to the banking system as necessary to keep them from rising.[43] Economists concluded that the war brought about the ultimate success of Keynesian economic theory and they all adopted the new approach en masse. Within a few years, it was hard to find any economist who was not essentially a Keynesian.

Ironically, at the very moment of his great triumph, Keynes himself was backing away from his own program. In 1944, economist F. A. Hayek published The Road to Serfdom, a book that was hightly critical of the growth of government, partly as the result of widespread adoption of Keynesian economic theories. Nevertheless, in June 1944 letter to Hayek, Keynes proclaimed himself to be largely in agreement with his argument. Indeed, not only in agreement with it, "but in a deeply moved agreement."[44]

In the last article he ever wrote, Keynes tried to turn the clock back toward the classical economics that had been thoroughly discredited by the length and depth of the Great Depression and ultimately superseded by Keynesian economics. Keynes warned that the baby had been thrown out with the bathwater and economists needed to appreciate the enduring truths of classical economics. As he put it:
I find myself moved, not for the first time, to remind contemporary economists that the classical teaching embodied some permanent truths of great significance, which we are liable today to overlook because we associate them with other doctrines which we cannot now accept without much qualification. There are in these matters deep undercurrents at work, natural forces, one call call them, or even the invisible hand, which are operating toward equilibrium. If it were not for, we could not have got on even so well as we have for many decades past.[45]
( ... ... )

Keynes as a Conservative

One thing that is a constant in Keynes's efforts is that they were consistently motivated by a desire to maintain the liberal capitalist order. Honest conservatives have always understood this. In 1945 economist David McCord Wright noted that a conservative political candidate could easily run a campaign "largely on quotations from The General Theory." The following year, economist Gottfried Harbeler of the conservative Austrian school conceded that the specific policy recommendations of Keynesian economics were not at all revolutionary. "They are in fact very conservative," he admitted.[53]

In 1981 ^Wealth and Poverty^ author George Gilder said that Keynes's works "are far more favorable to supply-side economic policy than current Keynesians comprehend." He thought that Keynes deserved special credit for restoring "to a position of appropriate centrality in economic thought the vital role and activity of the individual capitalist." Peter Drucker, another conservative admirer of Keynes, viewed him as not merely conservative but ultraconservative:
He had two basic motivations. One was to destroy the labor unions and the other was to maintain the free market. Keynes despised the American Keynesians. His whole idea was to have an impotent government that would do nothing but, through tax and spending policies, maintain the equilibrium of the free market. Keynes was the real father of neoconservatism, far more than Hayek![54]

John Kenneth Galbraith, whose politics were well to the left of Keynes, not to mention Drucker, agreed with this assessment. "The broad thrust of his efforts, like that of Roosevelt, was conservative; it was to endure[ensure] that the system would survive," he wrote. But, Galbraith added, "such conservatism in the English-speaking countries does not appeal to the truly committed conservative."[55]

Keynes's friend and biographer Harrod tells us that underneath his veneer of trendy liberalism, Keynes was always deeply conservative.[56]
He valued institutions which had historic roots in the country; he was a great upholder of the virtues of the middle-class which, in his view, had been responsible for all the good things that we now enjoy; he believed in the supreme value of intellectual leadership, in the wisdom of the chosen few; he was interested in showing how narrow was the circle of kinship from which the great British leaders in statesmanship and thinking had been drawn; and he was an intense lover of his country. ... He was not a Socialist. His regard for the middle-class, for artists, scientist and brain workers of all kinds made him dislike the class-conscious elements of Socialism. He had no egalitarian sentiment; if he wanted to improve the lot of the poor... that was not for the sake of equality, but in order to make their lives happier and better. ... He did not think it would be beneficial for the State to run industry and trade. He considered the doctrine of State Socialism to be quite obsolete.[57]
As Keynes himself explained, "the class war will find me on the side of the educated bourgeois." Conservative icon Edmund Burke was one of his political heroes. Keynes expressed contempt for the British Labor Party, calling its members "sectaries of an outworn creed mumbling moss-grown demi-semi Fabian Marxism." He also termed the British Labor Party an "immense destructive force" that responded to "anti-communist rubbish with anti-capitalist rubbish."[58]

( ... ... )

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