keynes and pscyhology

donna jones djones at
Wed Aug 24 11:51:13 MDT 1994

The following passage from John Eaton is developed by Mario Cogoy, Geoffrey
Pilling and Paul Mattick, Sr:

"The gist of the Keynesian theory is that, with given wage rates and a
given financial policy, the level of economic activity is determined by
"the propensity to consume," "the inducement to invest," and "liquidity
preference" (desire to hold wealth in money form). On the Keynesian view,
well-timed government action can control these economic forces.
"On the Marxist view crisis results from the contradiction in production
for profit itself.  When crisis violently asserts itself and markets
collapse, nothing will induce investment, capital will be held in money
form, and will turn over more slowly and a lower level involving a samller
total of wage payments (which means smaller incomes for the masses and
lower "propensity to consume.")  The contradiction between social
production and capitalist appropriation, which involves at the same time
expansio of productive forces and restriction of purchasing power of the
masses, brings the turnover periodically  against a barrier; this becomes
manifest in a crisis, the symptoms of which (low "propensity to consume,"
low "inducement to invest" and high "liquidity preference") Keynes mistakes
for causes." (Marx Against Keynes, 1950; Eaton extends the critique in
Socialism in the Nuclear Age--Eaton's books are quite good for us

For example, Eaton argues that even if the state attempted via subsidies to
re-induce investment, the pscyhology of private businessmen would still not
be affected if they see no profit in re-equipping themselves.  Just as
proletarian emancipation is something more than consciousness-raising, so
is renewed accumulation more than a Robert Bly pep talk for capitalists to
become real men again.   Eaton also points out the limits to increasing
consuming power (not much help for overproduction in the capital goods
industry, capitalist control of the state) and the limits of public
expenditure (in the International Journal of Political Economy 1987, Mario
Cogoy has explored this Keynesian policy quite thoroughly). The Keynesian
multiplier is discussed by Carchedi 1991.

The point of all this is that all capitalist problems and solutions
ultimately are matters of the relations of production--crises are resolved
in the value-determined production process, e.g., devaluation of constant
capital (which heal capital of its liquidity preference and restore its
inducement to invest especially as the strong can buy off the weak real
cheap--centralization) and  rehiring of labor at a higher rate of
exploitation made possible by the growth in the reserve army of labor
(which then makes effective the propensity to consume).  What role
technical innovation plays in all this I would still like to talk about.

I am attempting to defend here a capital logic, or better, as Daniel Little
has put it, a logic of institutions. Which is not to say that capital is an
alien objectivity   But this is a complex philosophical problem,
well-tackled by Kevin Brien.
d jones


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