Book Review ...

Marx Against Keynes

Various theories from sunspots to psychology were invoked to explain the recurring cycles of boom and slump. With the onset of the severe depression in the '30s however, it was obvious that there was a chronic [unclear: d quilibrum] between production and purchasing power. The economic, witch doctors were at their wits ends when J. M. Keynes came forward to save the day with his "Geperal Theory of Interest Money and Employment," wherein the blame is laid on the disequilibrium between savings and investment. To remedy this, all that is necessary is that the Government stimulate demand by spending money and encouraging business if demand begins to flag. In other words, if the boom stage of the cycle can be maintained the slump will not follow.

Many people have hailed Keynes as the saviour of the "Western way of life" and there seems to be a tendency by many people who call themselves socialists to think that State economic planning is synomymous with socialism and that it can achieve the same results. A recent book by John Eaton. "Marx Against Keynes," answers this challenge and compares the approach of both Keynes and Marx to the economic problem. He shows that in laying emphasis on liquidity preference, prosperity to consume and inducement to invest, Keynes mistakes symptoms for causes and fails to see that the inherent inability lies in the nature of production for profit and the consequent antagonism of different forms of income.

The author points out the insufficiency of Keynes' which assume that stimulating home demand can somehow affect losses of export markets but overlooks the need to find foreign exchange to import raw materials; the bland assumption that businessmen can be made to undertake investment even if they sec no immediate profit from it; the inability to deal with structural maladjustments which normally occur during a boom. The result is that the direct investment needed to be undertaken by the Government would be enormous and would meet with strong opposition from private business.

In fact, the only expenditure which would be acceptable to business would be armaments expenditure (which is ideally suited to stimulate business activity without-impinging upon the Interests of private enterprise).

This seems to be the line it has taken today for we read in U.S. News and World Report of July 6, 1951, that "Armaments is the great pump—primary mechanism of the future which can be expanded readily in periods when deflation threatens, contracted in periods of possible inflation."

Keyne's policy which was to [unclear: have] ended unemployment turns out to [unclear: be] instead the precursor of war. Was Keynes saviour or sinner? I leave it to you the reader to Judge.

C.H.T.