Keynes "The General Theory of Employment, Interest, and Money"

[FDRrocks]

Have any of you guys read this? I just recieved a copy and read the foreword and Keynes implies that it will probably not be easily understood by the lay-person. I am most certainly that lay-person.

I know very little about Economics, but pick things up well. Do you more seasoned fellows think I could handle this book if I read it attentively? It does look pretty heavy.

If not, do you guys have any literature or online resources you would reccomend I peruse before delving into this

[Maple]

1. You need some general economics

before you go delving into Keynesian thot

"Keynesian economics (aka Keynesianism) is a theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, published in 1936.

The key central conclusion of Keynesian economics is that there is no strong automatic tendency for the level of output and employment in the economy to move toward the full employment level. This contrasts with the conclusion in neoclassical economics that adjustment in prices and interest rates would tend to produce full employment in the economy, often known as Say's law."

And it's VERY outdated stuff.

[rogerashton]

2. Which is outdated?

"there is no strong automatic tendency for the level of output and employment in the economy to move toward the full employment level"

or

"the conclusion in neoclassical economics that adjustment in prices and interest rates would tend to produce full employment in the economy, often known as Say's law."

I would say that Say's law is at least 150 years outdated, if that is what you mean.

However, the General Theory is difficult without a solid background, tricky with one, and I guess it is outdated in the sense that Keynesian thinking has advanced a good deal since then. "New Keynesian open-economy macroeconomics" is the hot current thing among economists who call themselves Keynesian. My chapters 17-25 in

http://william-king.www.drexel.edu/top/prin/txt/EcoToC.html

give what I am told is a pretty approachable version of the standard textbook Keynesian approach.

[FDRrocks]

4. Thanks for the link

I have read half of this book. And my brain is glazed over throughout most of it *gag*

[jab105]

10. Have you read Peddling Prosperity (1994) by Krugman.....

He talks quite a bit about Keynes and Friedman...

[FDRrocks]

17. No...

But I very well may! I'll add it to the top of my reading list cause I need to get in the know on the economics. Thanks for the recommendation.

How I just have 1400 more pages of book to put behind me....

[rogerashton]

25. Peddling Prosperity

Has been updated in the second edition, I think. It has good overviews of the major schools of thot in modern macroeconomics -- and the associated political swindles.

[rapier]

3. notes

I've never read it. It's been said that it is in fact unreadable, or at best inpenetrable.

One thing I do know is that what is called Keynesianism doesen't exist. Or rather he had no coherent idology or logically consistent theory of economics, despite the title. It's true he did advise fiscal largess to fight the depression. While it has been popular in conservative circles ever since to decry this the funny thing is that this is now totally accepted by them The BUdget Director this week said deficit spending now is a good thing. So it goes. To reduce his beliefs or 'theory' to this point is an absurdity.

THe one quote from Keyne's that sticks with me is that "Markets can stay irrational longer than you can stay solvent" This from a guy who got rich speculating in stocks. Admittedly during the 20's when such was easy, like the 90's.

The markets are totally irrational now. I hold they never are rational. That's another tale.

[FDRrocks]

5. Unreadable... Indeed

This man is not teacher, that is obvious. His paragraphs would probably average at a bout 1.5 sentences, in this book....

It is nuts.

[rapier]

6. notes

I got that impression from JK Galbraith long ago. I seem to remember him commenting on the fact that hardly anyone had read the thing, for good reason. It was impossible. That such an allegedly important book was never read is very very funny.

Which gets back to my Keynesianism comments. There was no such thing. I can supply the shorthand version of what Keynesianism is. To wit: during slow economic periods the government should run a defict. During good times it should run a surplus. This fiscal policy will help smooth the bussiness cycle.

I'm not sure he ever really said this. I suspect he knew governments were incapeable of the second part of the prescription. At any rate government fiscal policy is not the most important determinant of econoic growth and I'm sure Keynes knew it. How his name got hung on this fiscal policy thing as the be all and end all of econoimcs I have no clue. At any rate it is silly.

If you want to read good economics read JK Galbraith's Money: Whence It Came, Where It Went.

[Code_Name_D]

8. But isn't that they whole point of economics?

The entire feild seems to be one giant con after another. "Economic Experts" seem to delibritly make it more and more complex with an ever esculating level logical gymnastics.

A mind numing complexity that even swoons federal regulators, as we saw with the FreadyMac scandel. They actualy saw the coruption up front, but the explenation of the book keeping was so complicated that teh CEO's are able to turn theft, into fiscal genuses.

Greenspan has got to be the worlds record holder for saying the most words in a row, with the least meaning behind them. And still some how managing to be all things to all sides of the issue.

[FDRrocks]

9. Greenspan is an Ayn Rand cult member.

In short, anything he ever, ever, ever says, you know it is coming from a "laissez-faire rocks, the market will self-regulate" point of view.

Since this view is such obvious bullshit, you can listen to what he's saying, not understand the way he states it, and basically conclude whatever the hell he was saying is nothing but bullshit.

[Don Galt]

19. Uh, no.

First off, there is no such thing as an "Ayn Rand cult". Cults are religious in nature, what Ayn Rand wrote about is a philosophy based on reason and logic.

Yes, its true that Greenspan knew Rand and they were friends.

On the other hand, Greenspans actions over the last 20 years go %100 against what Rand taught.

This means either Greenspan has decided he disagrees... or he has decided to ignore his philosophy and pursue the economic policies (eg: Keynsian economics aka marxism) that are popular in the country (And thus, keep his job.)

Its unfortunate that liberalism has taken such a diversion in the economics realm... for me liberalism has always been about not being persecuted for being black, gay, or whatever-- the basic idea being, you are free to live your life without being singled out and punished. Now punishment and bigotry are too common among liberals-- such as your smear job on Greenspan, ill informed as it is, being typical.

Maybe I'm just too old, being from the progressive era for todays "liberalism".

[cprise]

23. Neo-conservatism is absolutely religious

...including its 'Objectivist' economic beliefs and instincts. They say you can create anything(!) as long as you put a suitable price on it. (The nasty, lingering realities of "market interference" prevent this effect from actually happening, of course...)

It is in the same vein of extremism as the selfless Communist ideal. The rapid, self-interested exchange of currency cannot create anything but more self-interest. Why anyone would want society to be consumed by one or the other seems completely irrational to me.


The Magic of the Market:
(a religious primer)

1. Every man and country-clubber for himself

2. Build private monopolies

3. Profit!

4. ...

5. Kinder, Gentler Compassion (You've got a friend a McDonald's)

[cprise]

24. This post is just too rich

Smearing Greenspan about his economic beliefs is bigotry? "Oh please, spare us from the economic bigots, St. Rand!"

No, it's not "or whatever". Sorry, but that is a classic neocon tactic using postmodern argument to elevate their own greed and arbitrary morality to the level of well-justified causes. Job discrimination because of sex or religion are wrong because homosexuality and being female and religions we're familiar with do not prevent people from working.

Disparaging an economist because of his economic principles is par for the course.

Liberalism adopted many necessary aspects of socialism in the 1930s. They beat the conservatives to it (thank goodness- It was either that, or Hello Communism). In an era when industry can create extremely rapid and abrupt differences in wealth, mass genocide, starvation and other calamities, a large measure of collective responsibility becomes necessary. This is the basic idea of democratic socialism and it's not a public relations tool... it's an essential and effective way to tackle the many issues that self-interest fails to (or it creates).

It's beyond amusing to see people such as yourself, wearing a Che avatar, come in here and tell us that true liberals have to keep their hands off the economy. American liberalism is about individual egalitarianism, not about liberty and abdication of responsibility for pretend "persons" (corporations).

[rogerashton]

26. "How to pay for the war"

was the book in which Keynes argued for surpluses in inflationary times.

There IS a coherent theory in Keynes, although there is enogh latitude for interpreting some of it that several quite different versions of "Keynesian" theory exist, and that contributes to the impression of incoherence in the founding book. Keynes can be accused of vagueness, but the standards for economic theory were different then, and Keynes' philosophy -- British "common sense" philosophy -- contributed to his disdain for mathematical precision. Also, he was trying hard not to be a Marxist. He went around several bushes to avoid using a labor theory of value.

[stevebreeze]

7. A good online sorce for economic is

Economic reporting review. You can sign up for it at http://www.tompaine.com
:kick:

[cprise]

11. Economics is unhinged from reality

Today it is essentially a lot of justifications for doing stuff using energy that is virtually free.

Of course, there is a physical cost or deficit being incurred: natural resources and the environment. We must find a way to make the environment the common denominator in all our economic exchanges and expressions; Otherwise, consumerism will eat itself and all of us.

[FDRrocks]

12. That is one of my main deals...

I think we (Americans) first need to find a sustainable way to carry on our lives. Start honest effort towards curing diseases, and then spread peace amongst this earth.

The current system of economics is craps. I am willing to give Keynes a shot. Any guy that wrote "The Economic Consequence of the Peace", cannot be that bad.

[cprise]

14. Try this...

The Skeptical Economist

snip

And Farley has also learned to dole out his own advice to anyone interested in economics: Study something else as well. "It's a vaccine against accepting mainstream economics," he says. "If you've been inoculated with biology, or ecology, or even physics, and you start looking at mainstream economics, you say, 'Wait a minute, this just can't be, this doesn't make sense, these things aren't true.'"

The Trouble with Econ 101
Among the assumptions of traditional economic theory are a few that are nothing short of baffling: that people are perfectly rational, that they have free access to all information, that they seek to consume as much as possible. (In a famous essay, Thorstein Veblen called the economist's improbable individual a "homogenous globule of desire.") Although economists concede that human behavior doesn't always match their assumptions, the models they use tend to assume that deviations from the ideal are just so much random noise.

More troubling still is the assumption free-market economics makes about nature: that we don't need it. Because everything is theoretically substitutable for everything else, when we run out of nature, we'll just substitute technology. That, says Farley, is a religious belief, not a scientific one.

more!
http://www.gristmagazine.com/maindish/harris040903.asp

[FDRrocks]

13. Does anyone understand Keynes idea?

I was perusing the Amazon reviews and people kept repeating how wrong Keynes was and how his ideas have caused such chaos.

I can only assume they are talking about the first part of the New Deal. Keynes actually openly denounced some of FDR's measures, most notably his devaluing of the dollar. Maybe they or ignorant? Or am I?

[TrogL]

15. Trudeau was heavily influenced by Keynes

and for better or worse, implemented a great deal of Keynesian economics. All in all, it sorta worked.

Keynes does NOT work well with corrupt governments - payola does nothing for the common good.

[papau]

16. The devil is in the details - a poor design blows the stimulus effect

As in tax cuts for the rich not getting spent in the US while the newly projected deficits as far as the eye can see cause long term rates to tick up a bit (agreed the 95% of the long term rate is just current conditions - but there is a small uptick - see Lester Thurow of MIT in Globe newspaper) causing reduced from where it would otherwise have been investment (because of the higher hurdle rate to get the investment approved) resulting in a decrease in economic activity - even after whatever stimulus the rich provide with their newly retained after tax income.

Twice we have had tax cuts for the rich - Reagan and Bush - and both times they were disasters - a 14 month recession under Reagan, and a 6 month recession under Bush with a jobless recovery.

Tax loophole adjustments - along with rate adjustments - so as to effect a change in after tax income- can help the economy (see JFK)but not when they are focused on forever deficits and 90% of cuts to the rich despite the rather flat income tax we pay (albeit the income tax is paid in two taxes - a recessive payroll tax and a progressive FIT - both adding to a rather flat %).

The lack of knowledge in this administration - compared to the folks in the Clinton administration - is costing us a lot. But we got the President folks would rather drink a beer with - and the media does like that!

[rapier]

18. notes

As I said in the posts above. Keynesianism is a 'school' of economic policy based on government fiscal policy to tweak the economy. While Keynes was a proponent during the depression that is hardly a sliver of his thoughts about economics or policy. he didn't found this school. The school was founded by politicians seeking legitimacy for their deficit policies. (Yes, that would be FDR in the beginnin, and I'm not attacking it, just pointing it out)

THe die was cast long ago on this. The Amazon reviewers, most of who probably never read the unreadable book, smash Keynes over this fiscal policy thing, even though that bears little if anyhing to do with the broad scope of his ideas. He didn't found some school of economics. He was a passive bystander as his name was attached to something he only sort of agreed with. (he was well aware that the spending in bad times was easy but the savings in good times was almost impossible, politicians and citizens, being what they are)

[Don Galt]

20. Economics is rather easy, actually.

The thing is, economics is so important that many people pursue political agendas thru it.

Economics is not actually all that complicated. Proving specific stuff may be, but the general principles are obvious and intuitive.

When you find someone going thru belabored explanations trying to reconcile contradictions, etc, as Keynes is in the book you're reasding, its a clear sign that they are trying to make reality fit their theory.

Keynes is pushing warmed over marxism, and we all know marxism is discredited. Even by the standards Marx used to check his predictions. Unfortunately, Keynes gets too much play because he offers really easy answers that modern politicians-- from Carter, thru Reagan, Bush, Clinton and Bush really like.

I sugges the Australian school. You can get free books from the Mises institute at Auburn University-- www.mises.org. Rothbard- a classical liberal-- has many good, easy to read and practical books on economics. Mises is not bad, but I'm partial to Rothbard.

Or, if you want to learn economics painlessly, check out Harry Hazlitts "Economics in one lesson".

Its amazing how much you can predict, and how much things make sense when you have this knowledge... you can watch the president saying he doesnt' know when the economy will improve, or propose a foolish plan, and KNOW its foolish, and KNOW the economy is not goign to get better any time soon... because you have basic economics that you read in a 100 page book, and he doesn't.

Its shocking the level of ignorance of this science that exists in the world... it lets those in power manipulate people and keep them poor.

[rapier]

21. notes

Economics isn't a science and only Marxism is Marxism. Keynes was a captialist after all and while I don't know where he stood on the labor theory of value I am certain it was far far away from Marx.

Economics is social science, not science. NOTHING has an absolute value. NOTHING. Even gold. The worth of anything is a product of the human mind, not of nature. We make it all up.

I suppose I shouldn't humor trolls but what the hell. I'll discuss this with you again after you have 200 posts perhaps, none of which mentions Marxism.

[cprise]

22. Food, shelter, etc. have absolute value

...when it comes to subsistence living. They relate to the physical process of human survival, and their effects can be measured in objective terms; they gain a subjective aspect when people move beyond just surviving. The fact that money in a heavily capitalist society cannot reliably guage their worth does not change those basic facts.

Gold? Whatever. This is something that gains prominence when a class insulates themselves from the subsistence problems of their countrymen.