On my list of blog posts to write was a response to Daron Acemoglu and James Robinson’s argument that Hitler’s economic policy was really a form of Keynesianism.
But, instead, I will outsource this one to Brad DeLong:
The question of what technocratic interventions work best–pegging the price of gold, constant reserve stock, stable money growth rule, lender of last resort, nominal GDP targetting, automatic stabilizers, deposit guarantees, expansionary fiscal policy at the zero nominal lower bound–is not a question of values and goals, but rather a pragmatic question of what works, of what macroeconomic policy is properly “neutral” rather than deflationary. And that is an empirical-technocratic question, rather than a value-philosophical one.
But, even so, right here and right now both the policies of fiscal expansion in a depression advocated by John Maynard Keynes and the policies of massive quantitative easing in a depression recommended by Milton Friedman are strongly left-wing policies–not right wing ones. And, right here and right now, higher income and wealth inequality in our system of money-driven politics has strengthened the right. Thus I have a hard time reading Acemoglu and Robinson’s resort to Hitler as anything other than an attempt to divert attention away from these facts.
But why do they do this?
I think that, once one recognizes this fact that both Keynes and Friedman are to the activist left of even the left edge of today’s policy spectrum, one cannot then escape the conclusion that today the entire right wing and a good part of the center is simply not sane. The position of the right today is, in essence, that (a) because the top managements of highly-leveraged money-center banks were unable to understand or control their derivative books, (b) tens of millions of additional people must be doomed to poverty and unemployment, for (c) the market giveth and the market taketh away: blessed be the name of the market.
And this is simply nutso.
Our technologies, resources, and preferences are what they were in 2007, and high unemployment because we will not repair our magneto is a choice, and a disastrous one, and an insane one, and a right-wing one.
Acemoglu and Robinson, I think, want at some level to be thought of as Very Serious People, as part of the Bipartisan Center. They do, I think, fear that if they took those additional logical steps that they would find themselves dismissed as “shrill”–as like Paul Krugman and company.
So they try to avert their own–and everybody else’s–gaze from the fact that right now to be truly technocratic and nonideological is to be advocating policies that are left of the entire political structure.
I have to agree with Acemoglu and Robinson. Keynesianism is not necessarily a left or right wing policy, but merely a method to combat capitalism’s vicissitudes. Therein lies the problem: capitalism. If we get rid of the system, we will not need “fix its” like Keynesianism.
I disagree Cornelius. Although I certainly see capitalism as a problem that needs to go away, changing it would just introduce different problems. The question is, can those new problems be managed better than those of capitalism.
My personal opinion is a better economic system would be economic democracy like that talked about by Prof. Wolff. A system that keeps markets but makes corporations where the workers are the owners and the owners are the workers.
Hi David.
I was actually working on a post concerning liberal, conservative, and radical views of macro-policy, and had a question. I understand that by outsourcing to Delong you are not giving wholesale support to his worldview. I also think there is nothing particularly radical or interesting in dismissing ideas because they come from someone who is somewhat mainstream. So I get the point, but nonetheless, I do wonder how you would have differed in your own response.
In particular, I doubt you’d say something like:
“Our technologies, resources, and preferences are what they were in 2007, and high unemployment because we will not repair our magneto is a choice, and a disastrous one, and an insane one, and a right-wing one.”
You’re right, Joe. My own response would have been somewhat different.
As I see it, one of the fundamental differences is that what mainstream economists (such as DeLong and Krugman) understand in terms of policy “mistakes” and a right-wing hijacking of the policy debate (via the influence of money on politics), others of us see in terms of the contradictions of capitalism. For example, right now, in terms of individual corporations, it’s simply not profitable to hire more workers and to engage in large-scale investment (and thus, in Marxian terminology, to use surplus-value to accumulate capital), and the instruments to help capital as a whole (such as monetary policy) are more designed to assist finance capital (and thus to keep inflation at or below 2 percent) and only indirectly other forms of capital (such as industrial capital, by keeping interest rates low). And right now, there’s no effective coalition of other fractions of capital to support a more Keynesian solution to the crisis (as DeLong and Krugman clearly prefer). So, current policy in the United States and Western Europe may be “nutso” but it’s a kind of nuttiness produced by the profit-motive and the contradictions of capitalism.
Does that make sense?
It does make sense. Thanks for the response. One thing that fascinates me is that among the opponents of austerity there is a significant theoretical and political diversity. So there is the struggle against austerity, and also the struggle over how we oppose austerity. The latter point worries me. It seems that some people on the left, and I’m certainly not implying you are in this category at all, are quick to invoke the authority of mainstream Keynesianism to dismiss the heterodoxies of the right. I understand why that move is attractive, but as I think Rick Wolff and your blog show, it really isn’t the only option.
You point to a real problem, Joe, in the sense that a certain kind of mainstream economics (e.g., the approach shared by Krugman and DeLong) has come to be accepted as the left-wing of the discussion. But, as I’ve tried to point out on numerous occasions, it is both the case that there are other theories and approaches within economics (including radical or Marxian economics) and that there are issues (such as inequality as a cause of the crises, the existence of exploitation, alternatives to capitalism, and so on) that mainstream economists simply refuse to discuss in any meaningful way. And some of our intellectual and political friends don’t see those differences. But that’s really our problem: to develop and disseminate the alternative approaches, inside and outside the discipline of economics.
The discussion of austerity these days is a bit like the previous discussions of neoliberalism. In both cases—of criticisms of and opposition to neoliberalism and austerity—there has been a turn to more regulated and more Keynesian forms of capitalist development instead of a critique of capitalism itself.
Personally, as I’ve written many times on this blog, I think Krugman, DeLong, and others have done a great service in pointing out the craziness of current austerity policies but then I and others have to part company with them precisely because our economics is not limited to mainstream theories and approaches.