The question is what to do about Keynesian economics. Keynesian economics is based on the assumption that people can spend what they have not earned, and consume what they have not produced or for which they have not traded their own production of goods and services. People can, presumably, be absolutely secure with respect to their incomes, with no risk other than the danger that the people who manage to produce will continue to play along.
The answer is . . . nothing. The fact is, Keynesian economics is based on false assumptions and profound misunderstandings of reality, especially the fundamental virtue of justice. No one can justly spend what he or she has not earned (charity is a separate case), nor can anyone justly consume what he or she has not produced or for which he or she has not traded his or her own production of goods and services. There can be no elimination of risk, an urge that is at the heart of usury. The usurer attempts to shift risk completely to the other party in his or her quest for completely risk-free gain.
Further, entitlements and fixed wage and benefits packages (low or high) — the backbone of a Keynesian system — violate distributive justice. As such, they are inherently usurious, if not (in some circumstances) actually usury. High fixed costs that are otherwise avoidable by shifting them to variable costs and spreading the risk violate justice by allowing others to take more than their due, and thereby destroy the basis of a stable social order. Low fixed costs that would otherwise result from a shift to variable costs and risk sharing violate justice by forcing others to take less than their due, and thereby destroy the basis of a stable social order.
Unfortunately, the system is arranged so that unions work tirelessly to achieve a situation where fixed costs for wages and benefits are high, often in excess of what the free market would determine to be fair and just, and there is no risk at all. On the other hand, the relatively few remaining capitalists work with equal dedication to drive fixed costs for wages and benefits below what a free and just market would determine, and eliminate their risk. In neither case is there any acceptance of the need to join together in solidarity and share both risk and rewards equitably. Greed and envy, two of the ugliest "seven deadly sins," are built into the system.
The problem is that many people do not see how things can be arranged differently. Given Keynes' assumptions, Chesterton's "Utopia of the Usurers" is not only here to stay, it must be continually extended, or face disaster. On the other hand, a system based on usury — distribution of production to people who have not earned it and who are not due it in either justice or charity (among which we must include non-dependents receiving wages or benefits in excess of their just due) cannot survive, either. Disaster seems inevitable, no matter what you do. In the next posting in this series, we will look at two unworkable, yet strangely popular solutions that are frequently recommended.