Paul writes: > I would be interested to hear why you say the Nazis were proto-Keynesian. Any particular authors you think I should look at?<
Landes, Temin, etc. > Even IF the overall budget was de facto expansionary in a significant way ... one still has an "incomes policy" (break the unions, etc) that is contractionary...so the overall effect of Nazi policy on aggregate demand is hardly proto-Keynesian. ...< I don't interpret "proto-Keynesian" as necessarily involving a leftward shift in income distribution. It's only social-democratic Keynesianism. US-style military Keynesianism or mainstream Keynesianism doesn't involve distributional shifts as central. >... I should have said: hyper-inflation of 1920s *followed by the depression of the early '30s*. But, as you can imagine, I think the point remains unchanged: when you follow these disasters you get a spurious bounce, even if you haven't stumbled on the "right" or even sustainable growth policies.< I don't think that the bounce was "spurious" as much as being something that couldn't last. Most Keynesian policies put into practice don't work in the long run, either. (Some do.) >Digressing from the question of the Nazi policies were or were not actually proto-Keynesian for a moment -- don't you think it is still a bit of an open question how much Swedish SD (or American New Deal) actually produced in the 1930s? After all the policies were a patchwork, applied in a hit and miss way, and overall magnitudes that were relatively small (particularly when it comes to budget deficits in the 1930s). And in the US there was a second downturn in '37, no? Is it, at least *partly* a question of "right place, right time", plus people want to believe the New Deal changed the macro-economy because it was at least standing for the right people in a sincere way and had so many other positive attributes. Is the record of post-war Keynesianism so impressive that you feel it also worked in the 1930's ...?< Ever since E. Cary Brown, it's been generally accepted that FDR wasn't applying a Keynesian theory until he was forced to do so by WW2. (As my Dad used to say, it was Hitler who ended the Depression in the US.) I agree with that. You're right that FDR's policy was a patchwork. I also don't see the postwar Keynesian policy as much more than the automatic stabilizers and the large and stable military budget. Active policy was rare, often had the wrong effects (e.g., the 1964 tax cut, which combined with the War to promote inflation), or had minimal effect (e.g., the 1968 tax surcharge). It was only with Reagan and Bush II that "Keynesianism" became big. Sweden is different. People like Gunnar Myrdal were promoting Keynesianism without using his name or theory (because they did it before 1936). Of course, Keynesianism is hard to do in a small economy. Jim Devine
