The visible hand in economics

Quote: 7) John Maynard Keynes – on self-sufficiency

Posted on: November 2, 2008

John Maynard Keynes:

I see three outstanding dangers in economic nationalism and in the movements towards national self-sufficiency, imperilling their success. The first is Silliness–the silliness of the doctrinaire. It is nothing strange to discover this in movements which have passed somewhat suddenly from the phase of midnight high-flown talk into the field of action. We do not distinguish, at first, between the color of the rhetoric with which we have won a people’s assent and the dull substance of the truth of our message. There is nothing insincere in the transition. Words ought to be a little wild–for they are the assault of thoughts upon the unthinking. But when the seats of power and authority have been attained, there should be no more poetic license.

I found this quote on Paul Krugman’s blog. In the paper it comes from “National Self-Sufficiency” Keynes states that self-sufficiency in some things is a luxury society may be willing to pay for – this makes sense given that people inherently value goods made domestically by more, even if there is no difference in the quality or prices. Stats NZ 2008 year book took a survey that recorded 90% of people felt this way.

However, this article was merely a critique of economists that felt that “free-trade” in itself is the goal – in this quote he turns the argument back onto the “economic nationalists” when try to push self-sufficiency as the goal.

Ultimately, the goal of any policy should be to increase the happiness of society. The language of economics allows us to describe situations at this level in a fairly “objective fashion” – a tool that allows us to assault the thoughts of the unthinking and hopefully put these issues in their proper context.

9 Responses to "Quote: 7) John Maynard Keynes – on self-sufficiency"

[…] Quote: 7) John Maynard Keynes – on self-sufficiency « The visible … […]

I’m not suggesting it’s happened here, Keynes’s 1933 paper on national self-sufficiency can easily be misunderstood, both because it is hard to be absolutely sure what Keynes was getting at on some points (he did not regard it as being as important a paper as it has sometimes been treated), and because it is clear that he later changed his mind on some of the key points – returning in large measure to the free trade views on which he had grown up, so long as there were Keynesian economic policies and an international economic governance framework that supported this. This is discussed by Keynes’s various biographers, but most especially (so far as I can tell) by Donald Markwell in his 2006 book on “John Maynard Keynes and International Relations: Economic Paths to War and Peace”. It would be terrible and a travesty of his views (as markwell sets them out) if Keynes came to be used today as a supporter of protectionism.

[Greens want foreigners banned from buying NZ property…….
Have you blogged on this issue Matt?

http://www.nbr.co.nz/article/greens-want-foreigners-banned-buying-nz-property-34329%5D

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Life Monetized Energy, that Fuels Culture, That Drives Evolution.
Evolution Of All Matter Is Fueled By Energy.
What About Keynesian Notes In Economy?

A. At the serendipitous genesis of Earth life

The serendipitous genesis of Earth life, the up-phase of RNA-conformation oligomers into self- replicating genes – constrained energy polymers – was driven and effected by the sun’s radiation.
This is evidenced by the Circadian rhythm, an innate genes characteristic, inborn due to the energetic conditions during their genesis, when direct sunlight was their only source of energy, available at different times of day in accordance with their location on Earth…

B. Life monetized energy

Genesis was a set-up of a matrix-field of energy with a potential extended between its source, the sun radiation, and the precipitated organisms. Thus started the ongoing formation and maintenance of Earth’s biosphere.

And since the genes were thus born they could evolve only along more favorable energetic directions, towards ever higher constrained energy capacitance and stabler components. Survival was the direction, and survival is propagation. After all, Life’s genesis was the start of Darwin’s evolution. An ever more favorable energetic direction have included, most probably, energetic advantage of homochirality. And chiral homogeneity furnished, most probably, stable self-replication of biopolymers.

Thus Life monetized energy since life’s day one.

C. Energy, capacity of acting or being active, fuels culture

Culture is a basic biological entity. It is the ubiquitous elaboration-extension of the sensing of and reactions, by genes-genome, to the goings-on in and beyond the outermost membrane of their housing, the cell, and of multicelled organisms, to the totality of their outer and inner environments.

These sensings and reactions are enabled by energy, the capacity of acting or being active.

D. Culture drives evolution of all constrained energy items

By plain common sense it is culture, the ubiqitous biological entity, that imprints genetics and drives evolution of Earth life.

And it is culture, the ubiqitous cosmic entity, that imprints the constitution of all matter in the universe.

E. Life, culture, matter and evolution are fueled by energy

And energy, the capacity of acting or being active, is REAL. It is not a virtual reality, an artificial image-environment experienced through human sensory stimuli.

F. What about Keynesian notes in economy?

In the present return to Keynesian steering out of the catastrophic world economy crisis the government is called to stimulate demand through fiscal measures, to effect a balancing act, ‘creating’ just enough money to cover a ‘natural’ amount of economic activity, without gliding either towards inflation or unemployment.

This is, in effect, assigning to money and credit in the economy the functional attributes of energy in life’s evolution.

However whereas energy, the capacity of acting or being active, is real, money and credit are virtual reality. Their functionality depends on the image-environment experienced through human sensory-imagination stimuli. This smacks of psychology or faith-religion.

So what are the odds that a Keynesian course will steady the rocking boat? The odds are like odds of other things that depend on human reactions-attitudes. This steadying course will be as effective as the conformation of the ‘people’ with the ‘hopeful’ reactions-attitudes on which the
Keynesian assumption is based…

Dov Henis

(A DH Comment From The 22nd Century)
http://blog.360.yahoo.com/blog-P81pQcU1dLBbHgtjQjxG_Q–?cq=1

“It would be terrible and a travesty of his views (as markwell sets them out) if Keynes came to be used today as a supporter of protectionism”

As far as I can tell Keynes is only supporting protectionism insofar as there is an implicit social preference for it – he isn’t saying it is “efficient” or even “fair”. If this is the case then he is providing a valid defense of protectionism – however, it relies on the belief that such protectionism has intrinsic value, a value judgment most people (including I think Keynes himself) would dispute.

“[Greens want foreigners banned from buying NZ property…….
Have you blogged on this issue Matt?

http://www.nbr.co.nz/article/greens-want-foreigners-banned-buying-nz-p

Maybe in time😛

“So what are the odds that a Keynesian course will steady the rocking boat? The odds are like odds of other things that depend on human reactions-attitudes. This steadying course will be as effective as the conformation of the ‘people’ with the ‘hopeful’ reactions-attitudes on which the
Keynesian assumption is based”

That is exactly the point of Keynesian policies – they are to help improve “animal spirits” when they have “irrationally” been beaten down. Outside of this possibility Keynesian policies make no sense.

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