The 1950's/60's was a time of prosperity within the USA and the developed world. The outlook was highly KEYNESIAN, as the failure of
Communism lead to Capitalism being seen as a more efficient and effective way to
progress. Branding and Advertising, described as the ‘drug of the nation’, was used to appeal to a person’s subconscious
wants and desires, with the rise in Finance Capital paving the way for a more
nihilistic outlook. People became self-indulgent, adopting smoking for example,
and much more materialistic. Classic Economists such as ADAM SMITH and DAVID HUME were now obsolete as the increase in capital became
the height of social worth and the purpose of existence. Bigger organisations were
being set up to accommodate the necessary ‘means
of production’ with America now being viewed as a “Free Market Capitalist Economy”.
JOHN MAYNARD KEYNES (1883-1946)
Assigned reading "Introduction by PAUL KRUGMAN to 'The General Theory of Employment, Interest and Money' by JOHN MAYNARD KEYNES".
"I find it helpful to describe it as a meal that begins with a delectable appetizer and ends with a delightful dessert, but whose main course consists of rather tough meat" [KRUGMAN on "The General Theory"]
We are all Keynesians.
KEYNES was writing during the 1930's when America was going through a "deflationary gap", of which there was more goods than money. Resources appeared to be limitless which led to advancements in mechanised agriculture. With new invention came new investment. "The Money Effect" - Money has the power to affect human behaviour.
His Economic Philosophy was that 'money matters'. The economy should remain in a stable state of "Equilibrium" whereby the amount of money should match the amount of goods. In the event of a recession, for example, the economy goes through a process of "Disequilibrium" A products value increases as the money supply pumped into the economy decreases. This leads to negative economic growth.
Economics
Economics, in this sense is scientific and subjective. Based on fact and according to Karl Popper (1902-1994) cannot be falsified. In his view, policies should be judged as experimental leaving maximum room for self-correction, as stated in his work “The Open Society and its Enemies” (1962). Empiricist John Stuart Mill (1806-1873) claims that it is through falsifying that human nature progresses.
Classical Economist Adam Smith (1723-1790) views people as “calculating machines” designed for maximising pleasure and minimising pain. Otherwise known as Utilitarianism, this moral philosophy is hindered by the State, which is viewed as an obstacle to progress. In “The Wealth of Nations” (1776) he states that richer countries come down to too much state intervention. “The hidden hand of the market” in which all value is derived from trade, when in actuality; people should be allowed to be free.
This is the crisis of Capitalism, claimed by Karl Marx (1818-1883) with which the “Iron Law of Wages” will inevitably lead to the fall of Western Civilisation. There is a constant struggle to survive (Charles Darwin, 1809-1882) as humans use up resources to their maximum limit. A prime example being the Golden Age of the 50’s, 60’s and 70’s, whereby the economic boom lead to high levels of inflation, causing mass unemployment. The rise in monetary value reduced the right of human freedom in the modern world.
