What is basically wrong with Keynesian economic systems?

Dear prof. Wolf, I have watched many of your lectures online, and really moved by your insights. Today, we see many Scandinavian countries that do well with regards to public welfare and people are happy with them. Keynesianism seems to compensate the weak points of Capitalism. So one may ask why are you a Marxist rather than a Keynesianist? What do you think is wrong with that system?

Official response from submitted

Keynsian economics - as its originator, JM Keynes himself understood and said - represents an effort to save the capitalist system from those of its defenders and champions who believe in laissez-faire, namely the idea that minimal government interference is what makes capitalism work best. Keynesians point to the Great Depression of the 1930s, to the Great Recession since 2008, and to the countless cyclical downturns of capitalism over the last 200-300 years as evidence that left to itself, private capitalism undermines itself (a point Marx made). So Keynesians believe that appropriate government interventions (especially what has come to be called monetary and fiscal policies) are necessary to (a) save capitalism from its conservative laissez-faire advocates, and (b) to deliver what they see as capitalism's benefits while minimizing its flaws, faults and failures. My problem with Keynesians follows: capitalism is not the absolute be all and end all, the ultimate achievement of human society, the end of history. Quite the contrary, I see economic history as a sequence of economic systems (e.g. slavery, feudalism, capitalism and so on) that are born, arise, evolve and eventually die to be replaced by others. I see no reason to think that capitalism somehow escapes this pattern. Thus I am always open to the question: can we do better than capitalism, is capitalism dying, what might emerge from it and so on. Moreover, since I see capitalism as having inherent tendencies toward endless cyclical wastes and inefficiencies and deepening inequality (see Piketty's work) - tendencies which Keynesianism has never overcome in any settled, permanent way - I see the need as well as possibility for moving beyond capitalism. Hence Marx's critical approach and analytics are useful since he wanted to go beyond capitalism rather than save it as Keynes wanted. Lastly, Marx sees exploitation of labor as an inherent definition of capitalism and as morally reprehensible as well as socially unnecessary and deeply anti-democratic. That perspective fuels his economics, Keynes is oblivious to the analysis of exploitation and thus his work misses that entire dimension. For these basic reasons, Keynesian economics is inadequate from my perspective and building on Marx's work is the better way to proceed. For a much fuller discussion of these questions, let me recommend the following book: R.D. Wolff and S. Resnick, Contending Economic Theories: Neoclassical, Keynesian and Marxian, Cambridge and London: MIT Press, 2012.

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  • dara ghz
    commented 2017-01-02 12:29:40 -0500
    Thank you very much dear professor for your insightful and mind-opening answer. I hope the world become a better place to live by sincere efforts of people like you.
  • dara ghz
    tagged this with Important 2017-01-02 12:29:40 -0500
  • dara ghz
    tagged this with good 2017-01-02 12:29:39 -0500
  • Richard Wolff
    responded with submitted 2017-01-01 17:59:41 -0500
  • dara ghz
    published this page in Ask Prof. Wolff 2017-01-01 15:59:05 -0500