
30 Dec 2013, 11:10
Why do some communists love the economic theories of Keynes? For starters Keynes was a supporter of capitalism and his economic theories had one purpose; to strengthen and not weaken the capitalism system.
So what did Keynes think of Marx?
Marxism "was founded upon nothing better than a misunderstanding of Ricardo", and, given time, he, Keynes, "would deal thoroughly with the Marxists" and other economists to solve the economic problems their theories "threatened to cause.” Yeah right!
In 1931 Keynes went on to write the following on Marxisism
How can I accept the Communist doctrine, which sets up as its bible, above and beyond criticism, an obsolete textbook which I know not only to be scientifically erroneous but without interest or application to the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeoisie and the intelligentsia, who with all their faults, are the quality of life and surely carry the seeds of all human achievement? Even if we need a religion, how can we find it in the turbid rubbish of the red bookshop? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values.
Scratch him of your Xmas card list eh?
But what of Keynes and his economic theories? How successful were they are solving the problems caused by capitalism and how do they aim to do this?
When capitalism is in crisis the Keynesians believe that they have the answers to solve the crises. They have two key policies. The first is to cure unemployment and the second is to cure inflation.
The cure for unemployment is for the government to spend a lot more money, without an increase in taxation. The Government raises the rest by borrowing from investors which increases the national debt. It is called running a budget deficit.
The other policy is to cure inflation. This requires the government to do the opposite by running a budget surplus. This surplus is then used to reduce the national debt.
Regarding the 2nd policy that would mean cuts! What, you mean you didn’t know that? Yes, when the time is right the Keynesians are in favour of cuts.
Keynesians do not face up to the fact that the government cannot increase government expenditure (which Keynes advocated as a means of causing an expansion of the economy) without getting the money from somewhere.
But where does this extra money come from?
Taxation? The problem with this is that if you raise more money by taxation it enables the government to spend more but it reduces the spending power of the people who have to pay the increased taxes. Strike one!
Bonds & Securities? Well, yes you can raise the revenue could be obtained by selling government securities to investors. But this also reduces the ability of investors to spend just like increased taxation. As if they are buying government securities they cannot spend that money twice! Strike two!
Government borrowing? Selling treasury bills? But to pay for these Treasury Bills the banks have to call in loans they have made in the money market. The money market then has a traditional “right” to go to Threadneedle Street and to borrow from the Bank of England. So you call in loans you made to other investors and hand that out to a new set of investors. Strike three! Keynes is out!
But of course we know from history that none of this works, in the end you still end up with inflation and unemployment, the very things that the Keynesians claim they solve.
As in 1976 after years of Keynesism in the UK, James Callaghan finally admitted this stating:
"We used to think you could spend your way out of recession and increase employment by boosting government spending I tell you, in all candour, that that option no longer exists. And in so far as it ever did exist, it only worked on each occasion… by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step…”
So we don’t owe Keynes any favours. Even Milton Friedman is on record as saying “I find myself in almost total agreement with Keynes”. So for those on the left that dig Keynes, why not go the hog and become a monetarist? What is it about Keynes that they admire so much? His bankrupt ideas? His hatred of Marx & Marxism? His support of the capitalist system? Any ideas?

31 Dec 2013, 08:53
What Communists praise Keynes?

16 Jan 2016, 16:59
We must tax the rich. We must spend surplus on welfare. There should be 50% capital gains tax like what they do in Scandinavian countries. They always have budget surpluses which means Keynesian theory works.