Doug Henwood wrote:
Keynes
and the Keynesians never asked what investment was for (i.e., it was
just about raising the quantity, but not about what was being
created).
This isn't so in the case of Keynes whose conception of the purpose
of economic activity in the best of all imaginable worlds was very
close to Marx's and who, also like Marx, attributed significant
irrationality to the motivation behind private and public investment
in capitalism.
Thus he looked forward to an "ideal social republic of the future“ -
“the republic of my imagination” - where we would be free
“to return to some of the most sure and certain principles of
religion and traditional virtue - that avarice is a vice, that the
exaction of usury is a misdemeanour, and the love of money is
detestable, that those walk most truly in the paths of virtue and
sane wisdom who take least thought for the morrow. We shall once
more value ends above means and prefer the good to the useful. We
shall honour those who can teach us how to pluck the hour and day
virtuously and well, the delightful people who are capable to taking
direct enjoyment in things, the lilies of the field who toil not,
neither do they spin.” (Collected Writings, vol. IX, pp. 330-1)
Writing this in 1930, he put the time when (capitalism having
generated sufficient material wealth) buliding the ideal social
republic could become the conscious object of policy "at least a
hundred years" into the future. Then, though "there will still be
many people with intense, unsatisfied purposiveness who will blindly
pursue wealth”,
"the rest of us will no longer under any obligation to applaud and
encourage them. For we shall enquire more curiously than is safe
today into the true character of this 'purposiveness' with which in
varying degrees Nature has endowed almost all of us. For
purposiveness means that we are more concerned with the remote future
results of our actions than with their own quality or their immediate
effects on our own environment. The 'purposive' man is always trying
to secure a spurious and delusive immortality for his acts by pushing
his interest in them forward into time. He does not love his cat, but
his cat's kittens; nor, in truth, the kittens, but only the kittens'
kittens, and so on forward forever to the end of catdom. For him jam
is not jam unless it is a case of jam tomorrow and never jam today.
Thus by pushing his jam always forward into the future, he strives to
secure for his act of boiling it an immortality.” (IX 329-30)
He was scathingly critical of the "financial results" as the sole
criterion of public investment.
"The nineteenth century carried to extravagant lengths the criterion
of what one can call for short the financial results, as a test of
the advisability of any course of action sponsored by private or by
collective action. The whole conduct of life was made into a sort of
parody of an accountant's nightmare. Instead of using their vastly
increased material and technical resources to build a wonder-city,
they built slums; and they thought it right and advisable to build
slums because slums, on the test of private enterprise, 'paid',
whereas the wonder-city would, they thought, have been an act of
foolish extravagance, which would, in the imbecile idiom of the
financial fashion, have 'mortgaged the future'; though how the
construction today of great and glorious works can impoverish the
future no man can see until his mind is beset by false analogies from
an irrelevant accountancy. Even today we spend our time - half
vainly, but also, I must admit, half successfully - in trying to
persuade our countrymen that the nation as a whole will assuredly be
richer if unemployed men and machines are used to build much needed
houses than if they are supported in idleness. For the minds of this
generation are still so beclouded by bogus calculations that they
distrust conclusions which should be obvious, out of a reliance on a
system of financial accounting which casts doubts on whether the
operation will 'pay'. We have to remain poor because it does not
'pay' to be rich. We have to live in hovels, not because we cannot
build palaces, but because we cannot 'afford' them.” (XXI 241)
"Where we are using up resources, do not let us submit to the vile
doctrine of the nineteenth century that every enterprise must justify
itself in pounds, shillings and pence of cash income, with no other
denominator of values but this. I should like to see the war
memorials of this tragic struggle take the shape of an enrichment of
the civic life of every great centre of population. Why should we
not set aside, let us say, £50 millions a year for the next twenty
years to add in every substantial city of the realm the dignity of an
ancient university or a European capital to our local schools and
their surroundings, to our local government and its offices, and
above all perhaps, to provide a local centre of refreshment and
entertainment with an ample theatre, a concert hall, a dance hall, a
gallery, a British restaurant, canteens, cafés and so forth.
Assuredly we can afford this and much more. Anything we can actually
do we can afford. Once done, it is there. Nothing can take it from
us.” (XXVII 270)
The ultimate object was to build the "New Jerusalem".
“We are immeasurably richer than our predecessors. Is it not evident
that some sophistry, some fallacy, governs our collective action if
we are forced to be so much meaner than they in the embellishments of
life? ... With a big programme carried out at a properly regulated
pace we can hope to keep employment good for many years to come. We
shall, in very fact, have built our New Jerusalem out of the labour
which in our former vain folly we were keeping unused and unhappy in
enforced idleness”. (XXVII 270)
The psychopathology dominant in capitalism, however, led to a
preference for mining gold and making war over building the New
Jerusalem.
"When involuntary unemployment exists, the marginal disutility of
labour is necessarily less than the utility of the marginal product.
Indeed it may be much less. For a man who has been long unemployed
some measure of labour, instead of involving disutility, may have a
positive utility. If this is accepted, the above reasoning shows how
“wasteful” loan expenditure[8] may nevertheless enrich the community
on balance. Pyramid-building, earthquakes, even wars may serve to
increase wealth, if the education of our statesmen on the principles
of the classical economics stands in the way of anything better.
"It is curious how common sense, wriggling for an escape
from absurd conclusions, has been apt to reach a preference for
wholly 'wasteful' forms of loan expenditure rather than for partly
wasteful forms, which, because they are not wholly wasteful, tend to
be judged on strict 'business' principles. For example, unemployment
relief financed by loans is more readily accepted than the financing
of improvements at a charge below the current rate of interest;
whilst the form of digging holes in the ground known as gold-mining,
which not only adds nothing whatever to the real wealth of the world
but involves the disutility of labour, is the most acceptable of all
solutions.
"If the Treasury were to fill old bottles with
banknotes, bury them at suitable depths in disused coalmines which
are then filled up to the surface with town rubbish, and leave it to
private enterprise on well-tried principles of laissez-faire to dig
the notes up again (the right to do so being obtained, of course, by
tendering for leases of the note-bearing territory), there need be no
more unemployment and, with the help of the repercussions, the real
income of the community, and its capital wealth also, would probably
become a good deal greater than it actually is. It would, indeed, be
more sensible to build houses and the like; but if there are
political and practical difficulties in the way of this, the above
would be better than nothing.
"The analogy between this expedient and the goldmines of
the real world is complete. At periods when gold is available at
suitable depths experience shows that the real wealth of the world
increases rapidly; and when but little of it is so available, our
wealth suffers stagnation or decline. Thus gold-mines are of the
greatest value and importance to civilisation. just as wars have been
the only form of large-scale loan expenditure which statesmen have
thought justifiable, so gold-mining is the only pretext for digging
holes in the ground which has recommended itself to bankers as sound
finance; and each of these activities has played its part in progress-
failing something better. To mention a detail, the tendency in slumps
for the price of gold to rise in terms of labour and materials aids
eventual recovery, because it increases the depth at which gold-
digging pays and lowers the minimum grade of ore which is payable.
"In addition to the probable effect of increased
supplies of gold on the rate of interest, gold-mining is for two
reasons a highly practical form of investment, if we are precluded
from increasing employment by means which at the same time increase
our stock of useful wealth. In the first place, owing to the gambling
attractions which it offers it is carried on without too close a
regard to the ruling rate of interest. In the second place the
result, namely, the increased stock of gold, does not, as in other
cases, have the effect of diminishing its marginal utility. Since the
value of a house depends on its utility, every house which is built
serves to diminish the prospective rents obtainable from further
house-building and therefore lessens the attraction of further
similar investment unless the rate of interest is falling part passu.
But the fruits of gold-mining do not suffer from this disadvantage,
and a check can only come through a rise of the wage-unit in terms of
gold, which is not likely to occur unless and until employment is
substantially better. Moreover, there is no subsequent reverse effect
on account of provision for user and supplementary costs, as in the
case of less durable forms of wealth.
"Ancient Egypt was doubly fortunate, and doubtless owed
to this its fabled wealth, in that it possessed two activities,
namely, pyramid-building as well as the search for the precious
metals, the fruits of which, since they could not serve the needs of
man by being consumed, did not stale with abundance. The Middle Ages
built cathedrals and sang dirges. Two pyramids, two masses for the
dead, are twice as good as one; but not so two railways from London
to York. Thus we are so sensible, have schooled ourselves to so close
a semblance of prudent financiers, taking careful thought before we
add to the 'financial' burdens of posterity by building them houses
to live in, that we have no such easy, escape from the sufferings of
unemployment. We have to accept them as an inevitable result of
applying to the conduct of the State the maxims which are best
calculated to “enrich” an individual by enabling him to pile up
claims to enjoyment which he does- not intend to exercise at any
definite time."
<http://www.marxists.org/reference/subject/economics/keynes/general-
theory/ch10.htm>
The "complex" underpinning this preference is spelled out later in
the General Theory.
“For my own part, I believe that there is social and psychological
justification for significant inequalities of incomes and wealth, but
not for such large disparities as exist today. There are valuable
human activities which require the motive of money-making and the
environment of private wealth-ownership for their full fruition.
Moreover, dangerous human proclivities can be canalised into
comparatively harmless channels by the existence of opportunities for
money-making and private wealth, which, if they cannot be satisfied
in this way, may find their outlet in cruelty, the reckless pursuit
of personal power and authority, and other forms of self-
aggrandisement. It is better that a man should tyrannise over his
bank balance than over his fellow-citizens; and whilst the former is
sometimes denounced as being but a means to the latter, sometimes at
least it is an alternative. But it is not necessary for the
stimulation of these activities and the satisfaction of these
proclivities that the game should be played for such high stakes as
at present. Much lower stakes will serve the purpose equally well, as
soon as the players are accustomed to them. The task of transmuting
human nature must not be confused with the task of managing it.
Though in the ideal commonwealth men may have been taught or inspired
or bred to take no interest in the stakes, it may still be wise and
prudent statesmanship to allow the game to be played, subject to
rules and limitations, so long as the average man, or even a
significant section of the community, is in fact strongly addicted to
the money-making passion."
<http://www.marxists.org/reference/subject/economics/keynes/general-
theory/ch24.htm>
The psychopathology has proven more difficult to overcome that Keynes
himself anticipated
Ted
