Keynes And The Future Of Capitalism (The Age Of Keynes by Robert Lekachman. The Limits Of American Capitalism by Robert Heilbroner. THE MYTHS OF AUTOMATION, by Charles E. Silberman)
Seligman, Ben B.
THE AGE OF KEYNES, by Robert Lekachman. New York: Random House. 324 pp. $6.00. THE LIMITS OF AMERICAN CAPITALISM, by Robert L. Heilbroner. New York: Harper & Row. 148 pp. $4.95. THE MYTHS OF...
...Whether or not we move toward a more liberal or perhaps democratic socialist intervention depends on the exigencies of political power...
...Because, says Heilbroner, technology and organized knowledge promise to perform a like function in the years to come...
...employment offices were opened...
...the prospective rate of profit was a function of expectations and the cost of capital...
...The liberal Keynesian thinks of the specific unmet needs of the society—the alleviation, or even eradication, of poverty...
...the provision of adequate urban transportation...
...While so engaged, the private sector extracts privileges for itself that are enormous...
...Furthermore, one would never know from Silberman's analysis of employment data that a little affair in Southeast Asia might have had some impact on the heated economy we now enjoy...
...It was back in the 1930's that capitalism seemed to have come to a dead end: the great productive system of the West had ground to a virtual halt, leaving millions stranded in unemployment and abject poverty with no prospect for a decent livelihood ,either for themselves or their children...
...In fact, both books, by two of the most lucid economists of our time, complement each other quite well: while Lekachman sketches the theory of modern capitalism and both discuss how it actually behaves, it is Heil102 broner who compels us to look beyond the horizon, to try to discern, given present fact, what the future will bring...
...Yet it is clear that we are moving toward a new kind of social organization...
...the resuscitation of our cities...
...In contrast to Silberman, Lekachman and Heilbroner offer perceptive and profound observations that merit close reading...
...Without eschewing essential detail, he enables us to peer into the future with a clarity unusual for so short a work...
...A sample of his expertise: the packinghouse workers and coal miners of the late 1950's were not victims of automation, but rather of competition...
...the improvement of education...
...Although business men at first disliked the theory, it became the only useful philosophy of business since laissez faire had ceased to be a call to battle...
...they know their economics and their politics...
...For the fact is that fiscal and monetary policy by itself has no political content: it depends on who benefits from increased or reduced taxes, since a tax cut is a tax cut so far as the total economy is concerned...
...Industrialists, always captives of some defunct economist, cut wages in a vain effort to hold on to disappearing markets...
...As Lekachman says, commercial Keynesianism still favors the prosperous and it still holds suspect the public sector, where most of our problems lie unresolved...
...Needless to say, there had to be some response on the part of government...
...Wage poverty for Negroes and unskilled workers, Harlems and Appalachias, tax loopholes for the rich, a continuation of lopsided income distribution with some grotesque consequences at either end, the substitution of ostentation for efficiency and function in consumer goods, and a continued rejection of rational planning in production—all constitute the costs of continued privilege...
...THE MYTHS OF AUTOMATION, by Charles E. Silberman...
...No amount of fiscal tinkering will necessarily provide these specific needs...
...No crystal ball gazer, hel The hard facts are what Silberman deals with—increased jobs, prosperity, and "the enlarged sphere of human action provided by technology...
...Work camps for youth were established by the incoming Roosevelt Administration...
...Thus, if the willingness to hold on to liquid assets fell, interest rates would drop, encouraging businessmen to undertake investment, while income would be stimulated by virtue of the investment multiplier...
...We know now that GNP does nothing of the sort, for it takes a specific effort directed toward a specific goal to achieve what needs to be done...
...It is really three books in one: a biography, gracefully written and drawing mainly on Sir Roy Harrod's monu100 mental study...
...When he got around in the 1930's to writing his major opus, The General Theory of Employment, Interest, and Money, the world was ready to listen, even if some of his colleagues were not...
...The capitalism we have hitherto known enjoys no sacrosanct status, and there have been, and will continue to be, inexorable economic and political pressures causing it to alter its shape...
...His theory became an elaborate rationalization of desirable social action, and it has been now embodied into the economic folklore of the times...
...I have already had a go at Silberman in these pages (DISSENT, Spring, 1965) , and while I might want to alter the details of my argument somewhat if I were to rewrite that article now, the substance would remain quite the same...
...The effect may be Keynesian, and no one objects to that...
...But aside from the details of Silberman's shortsightedness, his book is an awkward paste-pot job, representing little more than a slap-dash arrangement of several articles out of Fortune...
...And, of course, these privileges constitute a source of resistance to change and adaptation...
...Lekachman and Heilbroner are vastly superior...
...But for Silberman this is of no great moment: he has a jolly time with Don Michael, Alice Mary Hilton, John Snyder, and others who have dared to discuss what is coming toward us...
...Liberal or "socialistic" Keynesianism was conspicuous by its absence...
...The issue, though, is somewhat more involved than Heilbroner can explore in his short survey...
...For the fact is, argues Heilbroner, that technology creates social problems that require non-market controls, administrative controls—if you will, government controls...
...from the standpoint of long-range analysis it has everything to commend it, and there is little to refute it...
...This, in effect, is what Fortune editor Charles Silberman does in his book, and with rather silly consequences...
...That we have now substituted the supposed automaticity of the tax cut for the automaticity of the market does not mean that we are all so much better off for it...
...Banks, the central institution of capitalist society, were closing their doors with frightening frequency...
...There are some writers who are so fascinated by GNP numbers that they allow this important distinction to go right over their heads (vide D. Bell, in The American Scholar, Autumn, 1966, p. 713...
...In any case, the capitalism we have hitherto known, with all the neo-Keynesian modifications, is apt to be eroded still further, and mainly because of technological change...
...The various measures suggested by the theory could be used to stimulate national income without regard to the quality of goods that a society provided: digging holes in the ground and filling them with $100 bills would serve just as well as clearing a slum and building new homes...
...Of course, one can always look at employment figures for the last two or three years and on the basis of a momentary trend try to make a case against the Heilbroner view...
...For the present, says Heilbroner, that is, for the last third of the 20th century, it is more than likely that the private market will continue to be a major arena of economic effort, bending technology to its own uses...
...This is the "perception [of] intelligent businessmen that private activity can be aided by a government sympathetic both to busi101 ness and to high employment...
...Read singly, in their original place of publication, the articles were interesting, even if one disagreed violently...
...The cost of present privilege is great, as Heibroner reveals...
...It is to Lekachman's credit that he states these issues plainly...
...He believed in the power of reason and in the innate willingness of people to listen to logic...
...They represent forces "sufficiently overwhelming to render impotent the citadel of capitalism...
...Yet privilege, or perhaps more accurately, the right to enjoy the usufruct of society, can have other roots and given alternative social and economic arrangements, it is conceivable that such enjoyment might be distributed in ways not imagined by reactionary Keynesians...
...The purview adopted by Heilbroner is wide-ranging, portraying the modern capitalist economy in broad strokes...
...Furthermore, the size of the GNP today would appear to have some connection with what is going on in Southeast Asia—at least to the tune of perhaps $60 billion ($20 billion direct outlays on Vietnam, with a multiplier of three) . The present GNP level is not all a matter of tax cuts...
...While Lekachman does provide some hint of the problems at hand in the last third of his book, the reader must turn to Heilbroner for a thoroughgoing exploration of capitalism's present-day motion...
...For there is always the fundamental political query—quis custodiet ipsos custodes...
...He ought to try telling the workers in those industries that they were solely victims of supply and demand...
...an explication of the theory adumbrated by Keynes...
...Yet the methods for resuscitating an expiring economy had been described with great persuasiveness some years earlier...
...Keynes's economics was another matter— this time he was heeded...
...Who holds political 103 power and directs the course of national policy...
...The theory was based on a few closely related elements...
...I find it difficult to quarrel with this view...
...And for the latter Keynesian doctrine provides no guidelines...
...the cleansing of the air...
...By 1938 Roosevelt's forward motion had ceased and the American economy was still bogged down in massive unemployment...
...Though Keynes's life story is now well known, one supposes that it is useful to have his felicitous career described again...
...John Maynard Keyns had publishd in 1936 a work on theoretical economics which demonstrated that governmental action was precisely necessary to meet the needs of the day...
...For the age of Keynes is still one dominated by politics, and on this level the major decisions of our society are made...
...That the implactions of this article clash with the conclusions of others has not occurred to the author...
...Sooner or later someone was apt to characterize the contemporary era as the age of Keynes...
...Why can one draw a historical parallel of this sort...
...in retrospect, it is now possible to say that he helped rescue capitalism by showing how government planning could maintain a reasonable balance and remove some of the defects of private enterprise while allowing it to prosper...
...and the rate of interest depended on peoples' willingness to surrender liquid assets and on the available stock of money...
...For it is a depersonalized future and we ought to face up to the social and political system that will administer it...
...The thrust of technology is indeed toward a society that cries out for administration...
...But it was also quite neutral, as Lekachman acknowledges, since it was simply a mechanism devoid of political values...
...Some critics unfairly compared the Keynesian system to a Rube Goldberg contraption, but it seemed to work...
...Yet there is no doubt in Heilbroner's mind that such privilege will be undermined, just as special status for the feudal barons was undermined and eventually destroyed by a capitalism that flowered in the interstices of a cracking medieval order...
...There were several points of penetration—lower interest rates, lower taxes, or budgetary deficits, all intended to provide a fillip to income or aggregate demand...
...Investment, said Keynes, depended on the capitalists' prospective rate of profit and the rate of interest...
...they know their way through the labyrinthine paths of history...
...It was not until 1940, with the coming of World War II, that America discovered a way to bring about prosperity —massive state intervention and massive government expenditure...
...Hence, it now becomes quite possible to speak of commercial Keynesianism, as Lekachman so aptly puts it, or of reactionary Keynesianism, as some others would have it...
...emergency relief was provided...
...Son of a Cambridge economist, Keynes came to maturity in a climate of Victorian utilitarianism dedicated to reform as an instrument of perfectability...
...and a review of recent economic history set in a Keynesian context...
...A close friend of the Bloomsbury circle, he was also a college bursar, banker, mathematician, polemicist, and patron of the arts...
...but particular ills still require particular treatments...
...But slapped together, they make a poor excuse for a book...
...What I have tried to say is that Silberman suffers from historical myopia and consequently is a poor guide for readers anxious to know what the underlying turbulence of our society means...
...And when he was frustrated at Versailles in 1919, where he had been a member of the British delegation, he resigned to write a blistering attack on the Paris Treaty and all its works...
...they do not owe their existence directly to the captains of industry and they will "profoundly alter the nature of the existing [social and political] terrain...
...and the million and one other tasks that face us if we are to have a liveable environment in our time...
...the building of decent housing...
...The "reactionary" Keynesians, among them some trade unionists, believe that a huge GNP automatically solves most of these problems...
...employment stemmed from income and investment...
...Who guards the guardians...
...The New Deal initiated experiments in social reform, but unfortunately, all these were limited and short lived...
...The theory generated a heated debate...
...The historical problem is to try to discern the limits of that transformation, an exciting task to which Robert Heilbroner turns in his fascinating and powerful analysis...
...Technology and knowledge are independent of capitalist institutions...
...Both Hitler's and Adenauer's Germany could be Keynesian...
...In addition to the one on automation, which was the subject of my earlier criticism, he has tossed in pieces on teenagers, early retirement, the war on poverty, Jacques Ellul, Marshall McLuhan, and one which purports to show that there is no labor shortage in the U.S...
...And it is a future dominated by one fundamental feature—technology...
...And a vast internal migration was set in motion as workers and their kin drifted across the land in ancient autos in search of jobs...
...It is good, therefore, to have Robert Lekachman's serviceable book at hand...
...and public works were started...
...As Heilbroner has said elsewhere, what is at issue is not so much the changing hardware, or the alarms of those who note what technology is doing and can do, but rather the ongoing phenomenon of contemporary change rushing us into the future...
...In essence, this characterization may be applied to the economic policies of the Kennedy Administration which placed all its bets on a fiscal policy that helped corporations and the rich, relying on income to trickle down somehow to those who needed it most...
...the purification of water...
Vol. 14 • January 1967 • No. 1
