As I always said — we have the best Congress that money can buy!!!

And rfemeber the repeal of the Glass Steagall Act was pushed by Clinton

Winston Churchill once said “No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of government except for all others forms that have been tried from time to time.” In a similar vien Keynes saw that capitalism was a very imperfect economic system but it was the best system humans have devised to achieve a civilized economic society. It only had two major faults — namely its inability to provide persistent full employment and its arbitrary and inequitable distribution of income and wealth [p. 372]. He believe his General theory had a bearing on reducing both these faults.

On page 362 of THE GENERAL THEORY, Keynes credits “Malthus [with] the notion of insufficiency of effective demandtakes a definite placeas a scientific explanation of unemployment”

In his essay on for our Graandchildren, Keynes argues thast if we can control popultion growth, then his policies for generating full employment will lead to an economic system where relative poverty will be abolished — although it will still not require an equal distribution of income and wealth.

Keynes recognized (page 374 ) that there “are valuable human activities which require the motive of money making and the environment of private wealth ownership for their full fruition….It is better for a man to tyranize over his bank balance than over his fellow citizens…But it is not necessary …that the game be played for such high stakes as present. Much lower stakes will serve equally well.”

No one said that increasing GDP per se must automatically improve the standard of living of all ther residents of a nation. It is true that the relative distribution of workers has falling since the eary days of Reagan — but with a bigger GDP pie, the workers during most of the Reagan years , even if the share of the pie was not rising, were better off than during the Carter years.

Again in the Clinton years GDP rose significantly, while the relative share of workers did not — but most of the 99% were not unhappy with their economic fate during most of the Clinton years — and Clinton actually ran a government surplus in some years!

Modern Monetary Theory has some elements that come close to Keynes’s theory of money. For example, Keynes believed tha most modern money was CHARTALIST — that is that money was that thing that the State declared was to be used to settle contractual obligations. And since the State was always the last rersort enforcer of contractal commitments — money is Chartelist.

Modern Monetary Theory tends to be more limited in that its proponents suggest that Money is only that thing that the State declares is necessary to pay one’s taxes.

I use to teach my classes that Ronald Reagan — with his tax cuts and tremendous increase in military spending — was probably the greatest Keynesian in the White House since FDR. And there is no question that under EReagan the economy improved and unemployment rate declined.

Regaarding Obama — his stimulus plan was only approximately $800 billion of which approximately 40% was tax cuts — and the amount of bang for the buck you get from tax cuts is less than spending on infrastructure, etc.
Moreoever, the payroll tax reduction was particularly poorly timed as a stimulus program since over indebted households (credit card debt particularly) were more likely to use their 2 per cent larger take home pay to reduce their credit card debt — and not buy products of US companies.

Seaglass — you might be interesrted in knowing that Keynes wrote as early as the mid 1920s against what we now call “offshoring” of domestic jobs — and if the Bretton Woods people had adopted the “Keynes Plan” instead of Harry Dexter White’s proposal of an IMF and a World Bank set up –= there would not be the problem of offshoring of decent US jobs.

you raise a good point about mercantilist policy and international trade. the biggest mercantilist countries currently are China, Germany, etc. and they often seem like “economic miracles”. But look what happend to the 1970-1980s mercantilist Japan over the last two decades– of continuing slump.

Keynes had an answer to the desire of each nation to become mercantilist– i.e., to have more competitive industries so exports grow faster than imports. It was the “Keynes Plan” presented at Bretton Woods! Unfortunately the Keynes plan was rejected by the US delegation under Harry Dexter White.

but 2 years later the USA adopted a form of the Keynes Plan when it introduced the Marshall Plan where the US gave away over four years approximately $13 billion of its GDP to Europe and Japan – and the result was both the giver and the recipients gained economically. If interested in a further discussion of a 21 century Keynes Plan proposal to stop mercsntilism and its resulting exhuastion of debtor nations see my 2009 book THE KEYNES SOLUTION.

Yes but after long discussions with Hicks, I managed to get him worked up enough that he wrote an article entitled “ISLM:An Explanation” which I published in the JOURNAL OF POST KEYNESIAN ECONOMICS in 1980-81 winter issue. In this article Hicks recanted on his ISLM mathematical model and wrote “As time has gone on I have myself become dissatisfied with it [the ISLM model]. Hicks then went on to indicate this ISLM model was not even a potted verion of Keynes’s General Theory.

Keynes was for balancing the operating budget of government — but for deficit financing the capital budget of government. Keynes wanted deficit spending to create (in cooperation with private initative[as he said in THE GENERAL THEORY]) productive capital improvements, e.g., infrastructure, better water systems, etc.

And in fact, President Eisnerhower, while not a “Keynesian”, embarked on the largest public works project in history — the US interstate highwway system — financed by deficits. Was that not productive?

And do not entrepreneurial firms continually finance large investment projects by deficits? and does a successful firm ever have a zero total debt on the liability side of its balance sheet?

Yes Hayek was providing a model that was remote from reality– and as Keynes then pointed out, the classical economists such as Hayek lived consistently in this unreal world.

But Keynes attempted to demonstrate in his book, that even if a perfectly competive free market economy could exist, as long as the people in that economy utilized money and money contracts to organize production and exchange, there was no automatic market mechanism to assure full employment. And that Keynes believed was a better description of the real world entrprenurial economy.

Ncholas do you not think it unusual that Keynes’s General theory, after world war 2, was taught on either the Samuelson interpretation of a Walrasian classical theory with fixity of wages and prices and/or John Hicks’s mathematical model [the ISLM model} -since as you point out Hicks was an LSE person original with a strong attachment to the Austrian theory?.

Keynes also reacted strongly against the Soviet system. In his boo, THE GENERAL THEORY, he argued that the state did not have to own the means of production, i.e., nationalized industries.

Regarding Paul Samuelson and the Taking of America by Keynesians please note :
In their book THE COMING OF KEYNEIANISM TO AMERICA [1996] David Colander and Harry Landreth report that Paul Samuelson stated that after reading the General Theory in 1936, he found the General Theory analysis “unpalatable” and not comprehensible. In his interview with Colander, Samuelson said that: “The way I finally convinced myself was to just stop worrying about it [about understanding Keynes’s analysis]. I asked myself: why do I refuse a paradigm that enables me to understand the Roosevelt upturn from 1933 till 1937? … I was content to assume that there was enough rigidity in relative prices and wages to make the Keynesian alternative to Walras operative”. In other words Samuelson admits he did not understand Keynes’s analysis. Instead Samuelson assumed that Keynes was presenting a traditional general equilibrium classical theory model where wage and price rigidity caused unemployment.
This direct quote from Samuelson should make it apparent that Samuelson’s mind was already so filled with contrary classical theory notions that he never made any attempt to catch the clues to Keynes’s general theory analytical foundation that rested on removing three classical axioms– axioms that were essential to Hayek’s Austrian theory. In 1986, fifty years after Keynes’s The General Theory was published Samuelson was still claiming that “we [Keynesians] always assumed that the Keynesian underemployment equilibrium floated on a substructure of administered prices and imperfect competition”. When pushed by Colander and Landreth as to whether this requirement of wage and price rigidity was ever formalized in his work, Samuelson’s response was “There was no need to”. If sticky wages and prices cause unemployment, however, then there was nothing revolutionary about Keynes’s analysis. Yet, Keynes had a whole chapter in the GENERAL THEORY [chapter 19 –Changes in Money Wages] that even if money wages and prices were flexible, there was no automatic free market mechanism to restore full employment and prosperity.

Accordingly, the entire last half of the book was a clash between those Keynesians who were to impatient to wait till the long run when wages would be flexible and those who thought only the free market long run can solve the unemployment problem.

How does this affect your view that the clash since the end of the Second World War was really between Keynes’s theory and Hayek’s classical theory?