Neo-Keynesianism

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Neo-Keynesianism

 

a bourgeois theory of state-monopoly regulation of the capitalist economy. Neo-Keynesianism is a modification of Keynesian economics to suit the historical conditions that took shape after World War II. Among the theory’s most prominent advocates are R. Harrod, N. Kaldor, J. Robinson, E. Domar, and A. Hansen.

Neo-Keynesianism developed in the first half of the 1950’s under the influence of the deepening general crisis of capitalism and the related transition from monopoly to state-monopoly capitalism, the scientific and technological revolution, the economic competition between the two world systems, and the collapse of imperialism’s colonial system. Faced with new historical conditions that made the rate of economic growth a matter of life and death for capitalism, neo-Keynesianism could not limit itself, as had J. M. Keynes’ theories, to a consideration of the problems of anticrisis economic policy. Therefore, neo-Keynesianism focuses on the quantitative relationships of extended capitalist reproduction or, in neo-Keynsian terms—the problems of economic dynamics and economic growth, which serve as the chief theoretical foundation for the economic policy of state-monopoly capitalism.

Neo-Keynesianism’s point of departure is the chief premise of Keynesian economics: that capitalism has lost its spontaneous mechanism for restoring economic equilibrium and that, consequently, state regulation of the capitalist economy is necessary. However, neo-Keynesianism calls for systematic, direct influence by the bourgeois state on the capitalist economy, whereas Keynesian theory advocates periodic, indirect influence on the economy. In this respect, neo-Keynesianism reflects a more mature level in the development of state-monopoly capitalism. The maturation of state-monopoly capitalism has been accompanied by changes in the fundamental problems confronting the bourgeois conception of state regulation of the economy. The emphasis has shifted from the theory of employment, which is oriented toward anticrisis regulation of the economy, to theories of economic growth, whose goal is to find ways to ensure stable rates of economic development for the capitalist system.

Methodologically, neo-Keynesianism is characterized by a macroeconomic, national economic approach to problems of capital reproduction, using aggregate categories (for example, national income, aggregate social product, aggregate supply and demand, and aggregate investment). These categories make it possible to grasp the most general quantitative relationships of capitalist reproduction and to avoid consideration of its class essence and antagonistic character. Like Keynesian theory, neo-Keynesianism emphasizes the concrete, economic quantitative relationships of the simple process of labor in its national economic aspect, making inferences from capitalist production relationships or interpreting them on a crude, apologetic level.

Under the conditions created by the scientific and technological revolution, neo-Keynesian economics has been forced to reject the method of making inferences from change in the productive forces of capitalist society, which was characteristic of Keynesian theory, and introduce indexes of technological development into its analysis. Thus, Harrod developed the concept of the capital coefficient, which he defines as the ratio between the total capital stock and the national income, for a certain period of time. In other words, the capital coefficient is an index of the “capital-intensity” of a unit of national income.

Neo-Keynesianism also poses the question of different types of technological progress, distinguishing technological progress that results in savings of human labor from progress that ensures savings of labor embodied in the means of production (“capital,” in neo-Keynesian terminology). “Neutral” technological progress, which is considered a typical phenomenon, is defined as the type of technological development in which the trends toward savings of labor and savings of capital are balanced, so that the numerical ratio of labor and capital and, consequently, the organic structure of capital do not change. At the same time, analysis shows that, owing to the contradictory character of the factors influencing the dynamics of the organic structure of capital, that structure’s basic tendency is toward growth, especially under the conditions created by the present scientific and technological revolution.

Neo-Keynesianism supplemented Keynes’ theory of capitalist reproduction, including his multiplier theory, with the accelerator principle. On the basis of a combination of the multiplier and accelerator theories, neo-Keynesianism interprets the expansion of capitalist reproduction not as a socioeconomic process but as a technological and economic one. The adherents of neo-Keynesian theory have worked out specific formulas for extended capitalist reproduction—models of economic growth, which generally do not represent the aggregate movement of the components of the total social product and capital, considered from the point of view of their physical and cost structure. The neo-Keynesian models of economic growth usually grasp only a few of the quantitative relationships of the reproduction of capital, particularly those related to its concrete economic aspect.

The neo-Keynesian conception of “economic growth” (measures to restructure the economy, and the acceleration of capital investment in scientific research, in new technology, and in the infrastructure by means of state financing) encounters the limitation inherent in the objective of capitalist production. That is, it runs into state-monopoly capitalism’s policy of limiting and sometimes even lowering the standard of living of the working masses. (This policy includes the “wage freeze,” tax increases affecting workers’ incomes, and state price controls, which raise the cost of living.) As a result, neo-Keynesian measures for regulation of the economy have not eliminated and cannot eliminate the contradictions inherent in capitalism. Moreover, the policy of economic growth has led to deficit financing of the economy, inflation, the intensification of the trade war among the capitalist countries, the currency crisis, and destruction of the natural environment.

REFERENCES

Harrod, R. F. K teorii ekonomicheskoi dinamiki. Moscow, 1959. (Translated from English.)
Hansen, A. Ekonomicheskie tsikly i natsional’nyi dokhod. Moscow, 1959. (Translated from English.)
Tinbergen, J., and H. Bos. Matematicheskie modeli ekonomicheskogo rosta. Moscow, 1967. (Translated from English.)
Osadchaia, I. M. Sovremennoe keinsianstvo. Moscow, 1971.
Burzhuaznye ekonomicheskie teorii i ekonomicheskaia politika imperialisticheskikh stran. Edited by A. G. Mileikovskii. Moscow, 1971.

V. S. AFANAS’EV

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