Re: GLOBAL KEYNESIANISM

It seems like this essay is making the faulty assumption of the existence of
national economies.  As well as confusing nation-states with societies.
-Billy Novotny
Sociology Major
Univ. of Science and Arts of Oklahoma
http://ablyss.homestead.com

----- Original Message -----
From: Paul Riesz <priesz@itn.cl>
To: WORLD SYSTEMS NETWORK <wsn@csf.colorado.edu>
Sent: Friday, January 04, 1980 2:37 PM
Subject: GLOBAL KEYNESIANISM


> Hi everybody:
> So far mey postings apparently did not interest the members of this group.
> Hopefully this time they will comment on my ideas
> Regards P. Riesz
>
> PART 1: THE PAST HISTORY OF KEYNESIANISM
> Lord Keynes' basic principles were formulated in order to address the
great
> depression of the thirties and to dampen the business cycle. They were
> logical and straightforward and can be expressed in the following short
> summary:
> 1. BOTH the private and the public sectors must cooperate to keep a
> country's economy flourishing.
> 2. During recessions MORE investment from government is needed to
> compensate for reductions in the private sector. Such measures do not only
> benefit workers, who lost their jobs in the private sector, but also most
> small and medium-sized private companies.
> 3. In boom-times governments should reduce their outlay and accumulate
such
> savings for later use during recessions.
>
> To make his principles clear to anyone, one could compare them with the
> principles of achieving an abundant harvest in agriculture, where BOTH
> natural rainfall and artificial irrigation are needed. Logically during
dry
> spells one needs MORE irrigation and to have such water available, one
must
> accumulate reserves behind dams during periods of abundant rainfall.
>
> During several decades after WorldWar2 such ideas were practiced by almost
> all developed countries, leading to an enormous and unprecedented economic
> progress and a reasonably satisfied citizenry. They were then abandoned
> during the seventies for a variety of reasons; most of them due to bad
> management, such as
> 1. overambitious goals, needing more funds than were available, which led
> to a vicious circle of tax and spend.
> 2. Inefficient and sometimes corrupt personnel.
> 3. In developing countries, where even prudent public spending and
> investment could not be financed from tax receipts, governments started to
> simply print money, leading to hyperinflation and loss of investment from
> local and/or foreign capital.
>
>
>
> Such evident shortcomings led to an overreaction, with the tendency to
rely
> on market forces alone to solve all of Society's problems. Worldwide
> results are not encouraging, if one considers them from the viewpoint,
that
> the real goal of any society should be the greatest good for the greatest
> number or maybe a reasonably happy population, without too much anger and
> resentment from minorities.
>
> To confirm this view one can observe the following facts:
> 1. Automation, technological progress and a globalizing economy take away
> the jobs of more and more factory workers in the developed world, who have
> little or no chance for finding some equally rewarding employment. Such
> people cannot but feel a growing resentment and anger towards their
society.
> 2. In most middle-class families both parents must work in order to
> maintain their living standard, forcing them to neglect their children,
who
> all too often express their resentment with extremely violent or even
> criminal behavior.
>
> On the other hand the competing system of Marxist Socialism has not done
> any better, since even in their most benevolent Society (Cuba), thousands
> of citizens risk death on the Ocean in order to escape from their
> collectivist paradise.
>
> In spite of such problems of their own, Marxists and fellow travelers in
> Capitalist countries are only too eager to point out the mentioned
problems
> of neoliberal democracies and confidently predict a complete breakdown of
> our present world order within at most another 25-30 years. Similar views
> are expressed by at least one prominent member of the opposite camp (one
> Lord Rothchild) who feels that the anger and resentment of the millions
> left behind could lead to a new revolution, that might be bloodier and
more
> violent than the French or Russian one.
>
> PART 2: HOW TO REVIVE KEYNESINISM GLOBALLY.
> Therefore, looking for a better alternative, one might try to combine the
> best features of both systems, which brings us back to the basic ideas of
> Lord Keynes, that BOTH the private and the public sectors must cooperate
to
> keep a country's economy flourishing and its citizens reasonably
contented.
>
> To be able to carry out such a program, one must first try to find ways to
> avoid the human errors committed in he past, which would mean to adjust
> goals to available means WITHOUT trying to increase the tax load beyond
> reasonable limits and to find ways of attracting and keeping efficient and
> honest people in the public service. New checks and balances and some kind
> of cooperation and control from the private sector might be necessary.
> Furthermore Keynesian principles should be applied globally, since in the
> meantime a GLOBAL economy has been at least partially developed and some
> fresh ideas are urgently needed. Hoping that the members of this
discussion
> group shall start contributing with such ideas. I shall now try to give
you
> a summary of what I feel ought to be considered:
>
> 1. A group of countries suffering from rising unemployment and/or periodic
> deep recessions and therefore interested in applying Keynesian policies,
> would form a cooperative around a central entity. It could be a new one or
> something affiliated to existing organization such as the IMF or the
> World-bank. This central entity would serve as a combined bank, insurance
> company and evaluation office, where participating countries could
> accumulate savings to be used for antycyclical public works when
> unemployment would rise above a critical point. Contributions to such
> saving accounts should be calculated according to projected needs (see
> point "c") and to the time estimated until the expected next recessions.
> Governments to poor to save any relevant amounts during normal times,
could
> contribute some nominal yearly fees, which would entitle them to receive
> loans when recessions strike. Such loans would have to be repaid after
> unemployment again falls below the critical point. Any means provided by
> the entity should NOT be used for pure "make work" projects, but for
public
> works needed by the respective country anyhow, but which are not of the
> first priority and can therefore wait until their positive impact would be
> greatest and their cost lowest. Such projects should be studied and
planned
> beforehand by each country, with estimates of costs and benefits worked
out
> as accurately as possible and then be presented to the evaluation office,
> which might recommend changes and would finally have to give their
approval.
>
> If such activities turn out to be as successful as anticipated, GLOBAL
> KEYNESIANISM should go beyond such antycyclical measures and promote
> structural improvements in participating countries. With such objectives
in
> mind, the central entity would have to take on additional tasks and at its
> most ambitious level could become the UNITED KEYNESIAN NATIONS. They would
> need a permanent executive board, with the capacity to study the economies
> and social organizations of their poorest members, in order to recommend
> needed changes. Such recommendations and the needed special financial help
> would have to be approved by periodic full meetings of all members.
> Countries acting on such recommendations could then count on receiving
some
> organizational help from other, more fortunate members, over and beyond
the
> mentioned financial contributions.
>
> Here are some of the many tasks to be contemplated by such an executive
board:
> 1. Priorities for investment in education, health care and infrastructure.
> 2. Special incentives needed to attract more foreign investment.
> 3. Eliminating barriers to intergroup trade to almost zero, but
stipulating
> that if the trade between any 2 individual countries becomes too
> unbalanced, both sides should negotiate measures for achieving a rough
> balance; otherwise the country with the trade deficit would be entitled to
> take onesided defensive measures.
> 4. A gradual rise of the minimum wage in the countries with the lowest
> level, until such wages become roughly equal among all member countries
> etc. etc.
>
>
>