In his General Theory of Employment, Interest and Money (1936) John Maynard Keynes made some astonishing, even bizarre statements, many of which boggle the imagination. We have addressed a few of them on this blog, and if this were an “anti-Keynesian” venue instead of a “pro-Economic Personalism” platform, we would have enough to keep us going for quite some time, years, in fact.
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| Unky Keynes |
Not that the General Theory has a monopoly on strange statements. One of our favorites (no, really; it’s so weird we love to quote it) is the one in which Keynes declared we must lie to ourselves for a century (at least) to make his system work after getting rid of all that artificial and icky morality that has burdened the human race from the beginning:
For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight. (John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” Essays in Persuasion, New York: W. W. Norton & Co., 1963, 358-373.)
Pretty bad, huh? The one we’ll focus on today, however, is this extract from Book I, Chapter 10, Section vi of Keynes’s General Theory:
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 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.
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| I wonder what "F.S." means . . . |
Translating this into English from Keynes’s gobbledygook, in His Lordship’s Fabian framework, human labor — a “job” — is the only factor of production. Capital only enhances or provides the environment within which human labor can produce.
That being the case — it’s not, but it was a fundamental Keynesian assumption, and his entire theory of economics integrates this astounding falsehood as a dogma not to be questioned — then unemployment is an economic (and thus political) disaster. “Job creation,” even if it consists of “jobs” that result in nothing in the way of marketable goods and services, becomes a priority.
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| Yup. It was Keynes's idea . . . |
Anticipating the crypto-currency phenomenon, Keynes even suggested creating “money” and burying it, “creating wealth” by allowing people to dig or mine for the currency, wasting tremendous resources to do so. He also cited cathedral-building to say nothing of the above-mentioned pyramid-building and earthquakes — anything that would create employment without increasing the supply of marketable goods and services.
The downside, of course, is that wasting resources creating “jobs” that do nothing to provide marketable goods and services eventually leads to running out of marketable goods and services as resources have been used producing useless things or goods intended for destruction, as in war. War can give a boost to the personal wealth of those providing war matériel or the politicians lining their pockets, but not to other people or society in general.
That is why Vladimir Putin, dictator of Russia, is a Keynesian dream come true. Or nightmare, if you are not a member of the small but diminishing group of Putin’s admirers and sycophants. Commentators insist on relating how the Russian economy is booming . . . for the few oligarchs and of course Putin himself.
Others more in touch with reality claim Putin can afford neither to continue the war against Ukraine nor stop it. That’s problematical, as that analysis assumes as a given Russia can tolerate Putin continuing in power. Putin cannot afford neither to continue nor stop; Russia must stop or face self-induced destruction. Russia is not Putin, and Putin is (contrary to his own and others’ delusions) not Russia.
What’s the solution?
We know what you’re going to say. We’re using this to badmouth Keynes or Putin and recommend Ukraine, even Russia and the United States adopt the Economic Democracy Act. Well,
YOU’RE WRONG!!!!
We’re using this to badmouth Keynes AND Putin and recommend Ukraine, even Russia and the United States adopt the Economic Democracy Act.
#30#
