I think the superior work on this question was done by Ronald Meek in his essay "Economics and Ideology" (in Meek, R. 1967. Economics and Ideology and Other Essays, Chapman and Hall Ltd, London). He considers Joan Robinson's work that you mention, as well as Schumpeter's and Lange's, and I think carefully points out their arguments and the distinctions between them.
« we see that the incentive to invest is given from the outside the economics proper: through sudden bursts of optimism or pessimist, or by the definition of what we may call “the capitalist spirit.” »
N’est pas là qu’il serait fructueux de convoquer Daniel Kahneman ? Je n’ai jamais oublié un cours de Gilles Gaston Granger - GGG - « vous les économistes quand nous ne savez pas expliquer quelque chose vous faites appel à la Psychologie ». Autrement dit vous tapez en touche comme on dit au 🏉.
Hello Mr. Milanovic, as a layperson I frequently enjoy your essays on political economy since they are comprehensible without appearing to reduce complexity. I just wonder: have you read the book Keynes Against Capitalism? Would you at all entertain its thesis, that at certain points in his life Keynes came around to more serious socialist commitments, at least from a gradualist point of view? You allude to Keynes's ideological flexibility around certain stabilizing measures that could be arguably construed as socialist but are nonetheless marshaled in the service of capitalism. I think that would incline you against the book's argument, since in this role Keynes is ultimately still an "adviser to power." Just to clarify, I'm only familiar with the book by way of the review essay published in Catalyst.
“ The other explanation of economic crises in Marx is the unbalanced growth of departments that produce consumption goods and those that produce investment goods but this explanation holds less interest for Keynesians.” could we expand on this? It seems pertinent to the Global Financial Crisis if 2008.
+ What Lazzarato calls immaterial labour, for example how we produce data without being “wage-workers”, would that classify as a Keynesian attempt in zero unemployment, or are wages crucial for that definition?
Excellent article explaining Marx and Keynes in so simple words that give me lot of confidence that my basics of economics is sound. If I may, you have already made the reference to Schumpeter. I would add the name Tinbergen to complete the classic economics that Marx, Keynes and Adam Smith help build. First Marx, I think he was very correct to be skeptical about capitalism on the premise that the entrepreneur would eventually exploit the labor and as you nicely summarized that labor would eventually be exploited when the circular flow of consumption and production is completed in the economy. And as you mention Marx was predicting the eventual outcome of capitalism that he foresaw as leading to economic crises and that would be leading to other forms of crises or conflict including class conflict. And your recent article 'hopelessness' talks about it when you convincingly suggest that liberal and capitalist countries have not taken inequality seriously. Then of course Keynes is brilliant in devising the short term production targets for the economy that can be stated as management of yearly budgets by any government in the world. How I understand it both Marx and Keynes then were talking about financial economics. For example when Marx write Das Capital, at that time and it still is that finance and financial innovation is the most relevant form for capital creation by credit generation where the beneficiaries were land lords or industrialists. And as you rightly points out Capitalist re invest their capital that is known as retained earnings instead of investing it on the welfare of the labor. In case of Keynesian economics also, I have extensively written in case of Pakistan that has many times in the regimes of subsequent governments was bailed out by IMF and the World Bank. My take was finance and debt could be good only if asymmetric information about the economy and production is transformed into productive activities through micro level research of the economy or enterprise at local levels. If productivity is increased that happens very often within US by the US entrepreneur, then debt is nothing but balancing the yearly national accounts. Even at this basic level, Pakistan has failed to perform with accumulating debt burden whereas countries like Bangladesh and India have micro managed their economies.
Now coming to your reference of Schumpeter and my mention of Tinbergen is that the transformation of the economy post industrialization where countries like India and South Korea benefitted by Marxist theories with closed economic policies, the variable technology has been added to the debate. Recently well known New York Time Columnist agrees with me or I seem to agree with her that technology thereby endogenizing the process of capital creation through either human capital or innovation can change post 21st century economics both at national level and global level. Here the reference of Harvard professor Dani Rodrik is important who suggests that productivity and good jobs may salvage capitalism because capitalism is more then an economic framework but values like freedom of expression, robust and independent govt regulation and rule of law is associated with liberal democracies like the US or even quasi liberal democracies like EU. Thus the endogenous framework where by the very act of generating production through labor, land and capital especially in the long run should lead to learning by doing and innovation. This is happened in China but it is not that simple because empirical evidence suggests that most countries that lead to innovation were closed economies and protected their indigenous industries and that is in contrast with liberal international trade theory. Nevertheless, even capitalism by following Schumpeterian economics had lead to inequalities and as Thomas Picketty has shown that rate of return of production is skewed towards capitalist than labor in most modern economies. Rise in number of billionaires is clear evidence to it and rising inequalities further give credence to Marx and its seems there is no escape within capitalism to not to exploit labor and eventually the economy leading to a crises. The theory by Professor Dani Rodrik that he refers to as productivism has yet to find its application in most of the production processes.
Thanks for your interesting insights. Folwing your argument, if is the point of view --the long term in Marx vs the short term in Keynes-- wich explains differences between both, then: (1) The fact that technology (development of productive forces) is basic in Marx and not in Keynes, could be explained just by this different aproach?; (2) a progressive macro policy could use Keynesian theory to manage and regulate a capitalist economy without forgetting long term Marx view as an anchor to don't let behind the many for the few
Interesting but neither economist described what is really going on, let alone knew what to do about it. Therefore discussions of their doctrinal differences seem little more than weed whacking.
I'd add that the marxian definition of capital is self increasing value, so accumulation is not just moses and prophets, it is literally capitals nature.
Dear Professor,
I think the superior work on this question was done by Ronald Meek in his essay "Economics and Ideology" (in Meek, R. 1967. Economics and Ideology and Other Essays, Chapman and Hall Ltd, London). He considers Joan Robinson's work that you mention, as well as Schumpeter's and Lange's, and I think carefully points out their arguments and the distinctions between them.
« we see that the incentive to invest is given from the outside the economics proper: through sudden bursts of optimism or pessimist, or by the definition of what we may call “the capitalist spirit.” »
N’est pas là qu’il serait fructueux de convoquer Daniel Kahneman ? Je n’ai jamais oublié un cours de Gilles Gaston Granger - GGG - « vous les économistes quand nous ne savez pas expliquer quelque chose vous faites appel à la Psychologie ». Autrement dit vous tapez en touche comme on dit au 🏉.
https://www.erudit.org/fr/revues/ltp/1975-v31-n3-ltp0995/1020493ar.pdf
3.11 3.12 3.13 sont extraordinairement clairs
Very informative post
Hello Mr. Milanovic, as a layperson I frequently enjoy your essays on political economy since they are comprehensible without appearing to reduce complexity. I just wonder: have you read the book Keynes Against Capitalism? Would you at all entertain its thesis, that at certain points in his life Keynes came around to more serious socialist commitments, at least from a gradualist point of view? You allude to Keynes's ideological flexibility around certain stabilizing measures that could be arguably construed as socialist but are nonetheless marshaled in the service of capitalism. I think that would incline you against the book's argument, since in this role Keynes is ultimately still an "adviser to power." Just to clarify, I'm only familiar with the book by way of the review essay published in Catalyst.
I am not well versed with economic theory.
“ The other explanation of economic crises in Marx is the unbalanced growth of departments that produce consumption goods and those that produce investment goods but this explanation holds less interest for Keynesians.” could we expand on this? It seems pertinent to the Global Financial Crisis if 2008.
+ What Lazzarato calls immaterial labour, for example how we produce data without being “wage-workers”, would that classify as a Keynesian attempt in zero unemployment, or are wages crucial for that definition?
Dear Professor Milanovic,
Excellent article explaining Marx and Keynes in so simple words that give me lot of confidence that my basics of economics is sound. If I may, you have already made the reference to Schumpeter. I would add the name Tinbergen to complete the classic economics that Marx, Keynes and Adam Smith help build. First Marx, I think he was very correct to be skeptical about capitalism on the premise that the entrepreneur would eventually exploit the labor and as you nicely summarized that labor would eventually be exploited when the circular flow of consumption and production is completed in the economy. And as you mention Marx was predicting the eventual outcome of capitalism that he foresaw as leading to economic crises and that would be leading to other forms of crises or conflict including class conflict. And your recent article 'hopelessness' talks about it when you convincingly suggest that liberal and capitalist countries have not taken inequality seriously. Then of course Keynes is brilliant in devising the short term production targets for the economy that can be stated as management of yearly budgets by any government in the world. How I understand it both Marx and Keynes then were talking about financial economics. For example when Marx write Das Capital, at that time and it still is that finance and financial innovation is the most relevant form for capital creation by credit generation where the beneficiaries were land lords or industrialists. And as you rightly points out Capitalist re invest their capital that is known as retained earnings instead of investing it on the welfare of the labor. In case of Keynesian economics also, I have extensively written in case of Pakistan that has many times in the regimes of subsequent governments was bailed out by IMF and the World Bank. My take was finance and debt could be good only if asymmetric information about the economy and production is transformed into productive activities through micro level research of the economy or enterprise at local levels. If productivity is increased that happens very often within US by the US entrepreneur, then debt is nothing but balancing the yearly national accounts. Even at this basic level, Pakistan has failed to perform with accumulating debt burden whereas countries like Bangladesh and India have micro managed their economies.
Now coming to your reference of Schumpeter and my mention of Tinbergen is that the transformation of the economy post industrialization where countries like India and South Korea benefitted by Marxist theories with closed economic policies, the variable technology has been added to the debate. Recently well known New York Time Columnist agrees with me or I seem to agree with her that technology thereby endogenizing the process of capital creation through either human capital or innovation can change post 21st century economics both at national level and global level. Here the reference of Harvard professor Dani Rodrik is important who suggests that productivity and good jobs may salvage capitalism because capitalism is more then an economic framework but values like freedom of expression, robust and independent govt regulation and rule of law is associated with liberal democracies like the US or even quasi liberal democracies like EU. Thus the endogenous framework where by the very act of generating production through labor, land and capital especially in the long run should lead to learning by doing and innovation. This is happened in China but it is not that simple because empirical evidence suggests that most countries that lead to innovation were closed economies and protected their indigenous industries and that is in contrast with liberal international trade theory. Nevertheless, even capitalism by following Schumpeterian economics had lead to inequalities and as Thomas Picketty has shown that rate of return of production is skewed towards capitalist than labor in most modern economies. Rise in number of billionaires is clear evidence to it and rising inequalities further give credence to Marx and its seems there is no escape within capitalism to not to exploit labor and eventually the economy leading to a crises. The theory by Professor Dani Rodrik that he refers to as productivism has yet to find its application in most of the production processes.
wonderful thank you branko very illuminating as always. i am busy trying to understand Capital better at the moment and this was very helpful.
Thanks for your interesting insights. Folwing your argument, if is the point of view --the long term in Marx vs the short term in Keynes-- wich explains differences between both, then: (1) The fact that technology (development of productive forces) is basic in Marx and not in Keynes, could be explained just by this different aproach?; (2) a progressive macro policy could use Keynesian theory to manage and regulate a capitalist economy without forgetting long term Marx view as an anchor to don't let behind the many for the few
Interesting but neither economist described what is really going on, let alone knew what to do about it. Therefore discussions of their doctrinal differences seem little more than weed whacking.
I'd add that the marxian definition of capital is self increasing value, so accumulation is not just moses and prophets, it is literally capitals nature.