2013년 4월 18일 목요일

[발췌: Galbraith's] Keynes, Roosevelt, and the Complementary Revolutions (1983[1985])

출처: Harold L Wattel, eds., The Policy Consequences of John Maynard Keynes (M.E. Sharpe, 1985)
자료: 구글도서

of which:


Keynes, Roosevelt, and the Complementary Revolutions
by John Kenneth Galbraith


※ 발췌(excerpts):

p. 54:

( ... ... )

My qualification for the exercise just mentioned is evident and increasingly rare; it consists in durability, the fact that, in some slight measure, I was there. I knew both Roosevelt and Keynes, though in greatly subordinate role of the much younger man. In the spring of 1941, I was put in charge of price-control operations as these were made necessary by the emerging threat of war. My job involved a fairly impressive exercise of economic power, one of the greatest associated with the wartime mobilization. It has always been my impression that, admist the preoccupations of the time, the president, whom of course I met, was, nonetheless, only marginally aware of my existence. My connection with Keynes was greater. In 1937, I went to Cambridge to study under him, attend the famous Keynes seminar. It was the year of his first heart attack; he did not appear at the university during the ensuing months. (It was for me a disappointing but not wholly grave deprivation; I had, in his place, Joan Robinson, R. F. Kahn, and Piero Sraffa, who were as privy to Keynes's thought and system as Keynes himself and, indeed, talked of nothing else.) In later years in wartime Washington I did meet him, partly to discuss price control strategy and again as one of the young Keynesians who sought to bring his ideas into the Roosevelt administration. As I have elsewhere told, the Keynesian ideas came to the United States and to Washington by way of Harvard, an avenue that numersous Harvard graduates did not fail to see at the ( ... pp. 55-56 ... )

p. 57:

( ... ) became committed all but unconsciously to his fair simpler policy design.

In the autumn of 1936, or possibly the winter of the following year, my younger colleagues at Harvard proposed an evening seminar on The General Theory, over which it was my rather modest privilege to preside. It was the nearly endless opportunity to discuss Keynes's ancillary propositions and to differ over what he really meant that allowed our sessions to continue. Had we been confined to what was relevant for public policy, we would have been through, alas, in a couple of weeks. In using complexity, obscurity, and not infrequent contradiction, Keynes was in the great tradition of Karl Marx and the Holy Scriptures, and it is not certain that Keynes was entirely without understanding and purpose in this matter. In the preface to The General Theory, he says, " ... I cannot achieve my object of persuading economists to re-examine critically certain of their basic assumptions except by highly abstract argument and also much controversy."

I have said that Keynes was not certainly interested in reformㅡin softening the sharp edges of capitalism. That he saw this as an underlying requirement for the survival of the system I do not doubt; he did not, in the depression years, want it to take precedence over the management of output as a whole. In the open letter to President Roosevelt to which I earlier adverted, he not only criticized NRAㅡ"an error in choice"ㅡbut worried lest the reforming thrust of other features of the Roosevelt Revolution be undermining business confidence. Nothing was of such social consequence as higher production and employment. His fears about business confidence would today, I trust, be better understood. We have come to accept that an expressed concern for business confidence is the cover story for resistance to unwelcome social reform just as the need for improved incentive is the accepted cover story for the natural wish of the affluent for more after-tax income to enjoy. Keynes's different social orientation notwithstanding, the Roosevelt and the Keynesian revolutions were wonderfully complementary.


The Balanced-budget Totem

Again the matter is starkly simple. The Roosevelt reforms, almost without exception, required money. This was especially so of thoseㅡCWA, PWA, WPA, CCCㅡthat involved relief and job creation. This money the Keynesian Revolution provided without the need to increase taxes. It came from benign public borrowing, a desirable public deficit. Thus the complementarity. However, I must not exaggerate. This complementarity, at least until the late 1930s, was extensively unrecognizedㅡin all the early Roosevelt years there remained a strong commitment to the balanced budget, even at the cost of politically difficult and economically repressive tax action. The delayed recognition of the fortunate association between the Roosevelt and the Keynesian designs was, indeed, one of the more remarkable circumstances of the depression decade. One cause, which I have mentioned already, was Roosevelt's own doubts. More important were those of the reputable economic community and the general world of business and finance. The balanced budget was for them, as for some it remains, not an economic concept but a religious totem. In violating it, one invited punishment of untold severity in a world to come. And at a less theological level, it was thought to risk inflation. Nothing in retrospect is more remarkable than the concern in those years of the economists and the esteemed financial minds over the dangers of inflation amid the most severe and enduring deflationary movement in all economic experience.

Out of totemic commitment to what were called "sound principles of finance" came the political and ideological excoriation of Keynes. By the late 1930s, this was not greatly less than that accorded Roosevelt; it rivaled that of Marx. Some may have sensed that the Keynesian ideas were somehow symbiotic with Roosevelt reforms. They concealed their true and proper cost; nothing resists social-welfare expenditure like a tight budget. Some of the excoriation derived from the youth and adverse personality of the Keynesian advocates; on grave financial matters, young and dubiously tailored scholars were not meant to intrude. But again the cause was mostly the perverse conservative psyche.

Keynes was, as an individual, exceedingly comfortable with the economic system he so brilliantly explored; it has also served him well in practical pecuniary terms. He was not, as he told George Bernard Shaw, attracted by Marx. So the broad thrust of his efforts, like that of Roosevelt, was conservative; it was to help ensure that the system would survive. But such conservatism in the English-speaking countries does not appeal to the truly committed conservative. It is the singular and enduring characteristic of the true conservative that he(or she) places principle above performance, orthodox over accommodation, constancy over change. Better to accept the unemployment, idled plants, and mass despair of the Great Depression, with all the resulting damage to the reputation of the capitalist system, than to retreat on true principle. Neither then nor in our own time can we understand the true conservativeㅡthe truly committed banker, business executive, economist, or more occasional politicianㅡunless we know how firm can be the controlling faith. In its defense, individuals will accept the suffering of others and, on less frequent occasions, their own. There is a basic rule for survival in the economic world: when someone in an important economic policy position is described as a person of high principle, all should promptly batten down the hatches and prepare for the worst.


A Willingness to Change

Keynes, as others have rightly remarked, was an economist of the depression. But he had no inflexible commitment to dogma; it was his greatest quality that he accommodated his ideas to change. He saw economic life as an historical process, not as a manifestation of static rules. It was the depression that caused him in The General Theory to depart from, indeed extensively reject, the far more orthodox view that he had manifested in his earlier Treatise on Money. (Few authors have more effectively destroyed their own classic.)  When World War II came, and inflation became a danger as distinct from a specious excuse for inaction, he went promptly on to advocate an incomes-and-prices policy. He accepted the inflationary dynamic of the wage/price interaction, the need for stabilizing union wage claims and the price of what could then be still called wage goods. Given this response, there can hardly be doubt that he would have continued to see an incomes-and-prices policy as part of the larger strategy of modern macroeconomic management. No one, certainly, would have been more amusingly contemptuous of the claim that such action somehow interferes with resource allocation in a world where corporations and unions have long used their market power to invade and influence market allocation in their own interests.

Nor would Keynes would have been surprised at the heavy social cost of the recent American and the continuing British commitment to astringent monetarism. The General Theory was a retreat from his earlier fascination with monetary policy and the required functional magic. He would not have applauded the recent rise to eminence of Professor Friedman and the exceedingly painful consequences from which we are just emerging. But perhaps he would not have been wholly surprised by this experience. He spoke strongly of the influence of economists "both when they are right and when they are wrong," and he never doubted a willingness to inflict pain and suffering in pursuit of these ideas. That which we have recently endured from the monetarists would not to him seem exceptional, although not for that reason more forgivable.

While Keynes would have also applauded the recent retreat of the Reagan administration from the monetarist commitment, he would, one imagines, be impressed by the eloquence of the new disciples he now has in Washington and their insistence that deficits are not only benign but deeply in accord with the highest Republican principles.

There is obvious danger, however, in this line of argument. One is strongly tempted to attribute to Keynes what one wished to believe oneself. I would hope, were Keynes back in life, that he would raise his voice against the fatuous nonsense about "crowding out"ㅡof the danger, even the inevitability, of public borrowing displacing private capital borrowing to the grave disadvantage of the latter. The issue is one of Federal Reserve policy. We will have such crowding out only as the Federal Reserve raises interest rates to suppress private investment, to restrain investment spending. This, in turn, will be in response to the renewed danger of inflation. I cannot think this unlikely. But it does not mean that there is some explicit pool of investment resources which, on being sucked dry, will bring automatic interest rate effects. The problem of the budget deficit, to repeat, is the problem of inflation and resulting Federal Reserve policy.


Monetary versus Fiscal Restraint

There are other problems of current policy where the world has moved beyond the age of Keynes. Keynes wrote at a time when interest rates, by modern standards, were at insignificant levels. It not being possible much to reduce interest rates, fiscal policy remained as the only active instrument of demand management. I would now argue the advantage of combining a more relaxed monetary policy with, in the not distant future, a much more conservative fiscal policy. Fiscal restraint is far less damaging to economic performance than monetary restraint made effective, as it must be, by high interest rates. This last, however, is the likely policy. There will be a strong temptation to counter the deficits that will survive recovery and the resulting demand-induced inflation with higher interest rates and reduced investment, rather than by adequate taxes and the resulting restraint on consumer demand. That, of course, is because the resort to investment restraint is politically far easier than the resort to taxes. This is supported by the curious myth that monetary policy is socially neutral, a proposition manifestly in conflict with the tendency for people who lend money to have more than those who borrow money. An active policy of monetary restraint is affirmatively damaging to economic efficiency, productivity, and growth. And this is no longer a matter of theoretical faith. It is the exceedingly practical lesson of the monetarist experiment of these last years in the United States and Britain.

I return in conclusion to my larger point. It was deeper conviction of Keynes that capitalism was worth saving, that it could be made to work. His enemies and antagonists should have been those who were committed to its demise. For some of those, some Marxian, he was, indeed, a regressive bourgeois apologist, the architect of an ineffective design for perpetuating an outworn system. But this opposition to Keynes was of slight consequence; his great conflict was with those whom he sought to save. It was there that the real passion was aroused. This, I venture to think, is the continuing lesson of Keynes as also of Roosevelt, and the lesson for our own day. Those who have the greatest stake in the system are most resistant to the measures by which its hardships are mitigated and its performance improved and made tolerable to people at large. When capitalism finally succumbs, it will be to the thunderous cheers of those who are celebrating their final victory over people like Keynes

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