Michael Emmett Brady — J K Keynes On The Enemies Of Capitalism: The Internal, Endogenous Threat To The Macro Economic Scheme From Wall Street Stock Marketplace Set Speculators Together With Rentiers

Abstract

J K Keynes carefully read Adam Smith’s The Wealth of Nations (1776) earlier he was 28. Of extreme importance to Keynes was Smith’s categorization of a grouping of upper income shape citizens, whose speculative together with fiscal interactions amongst the private banking manufacture created a really severe danger to the social club every bit a whole, every bit beingness projectors, imprudent peril takers, together with prodigals. Keynes’s description of Smith’s projectors, imprudent peril takers, together with prodigals inward the General Theory, likewise every bit Keynes’s extremely important, early on 1937 papers inward the Eugenics Review together with Quarterly Journal of Economics, is that Smith’s projectors, imprudent peril takers, together with prodigals are Keynes’s Wall Street speculators together with rentiers. It is the speculators together with rentiers who are mainly responsible for the problems of inflation together with deflation inward the macro economy. Keynes realized that this destructive, casino-gambling type conduct that is together with then damaging to the macro economic scheme is facilitated together with financed past times the “…forces of banking together with finance”.

Keynes’s Chapter Twelve analysis on pages 147-162 inward the General Theory of the speculative dangers resulting from the fiscal conduct of Wall Street speculators together with rentiers is identical to Smith’s pages 114-115, 279-341 discussions inward the Wealth of Nations of the dangers from projectors, imprudent peril takers, together with prodigals.

Both Smith’s together with Keynes’s analysis complements each other. Both Smith together with Keynes could cause got given the exact, same, vastly superior analysis together with policy advice to authorities officials facing the 2007-2009 Great Recession that would cause got been greatly superior to the type of really pitiable policy analysis provided past times DSGE macroeconomists inward the stream 2006-2010.

Both Smith together with Keynes explicitly indicate out together with analyze the malign impacts(see Kennedy, 2008) on the macro economic scheme perpetrated past times either Smithian projectors, imprudent peril takers, or prodigals or Keynesian speculators together with rentiers. The constituent of authorities is to impose constraints on these categories of upper income shape members together with then every bit to forestall them from harming the sober people past times proactive laws, rules, together with regulations.

The obvious argue that DSGE macro models failed together with then egregiously is that at that topographic point are no variables inward their models representing the impacts of these types of determination makers on the macro economic scheme over time. The argue for this misspecification modeling fault past times DSGE proponents is that they bring Bentham’s critique of Smith that at that topographic point are no such individuals inward the economic scheme every bit Smith’s projectors, imprudent peril takers, or prodigals.

SSRN
J K Keynes on the Enemies of Capitalism: The Internal, Endogenous Threat to the Macro Economy from Wall Street Stock Market Speculators together with Rentiers
Michael Emmett Brady, California State University, Dominguez Hills
Written: May 18, 2018