I knew the quote, of course. What I didn’t know was how out of context it was. Putting into context makes it even worse. what seems to be the problem here is that Keynes thinks capital grows on trees or something and will accumulate no matter what. Well, you’d have to be a government employed statist to believe that.
I don’t know anybody from the private sector who doesn’t understand that capital is the value that is left over from a value added activity.
And the more value that you add, the more you can share with your employees. That’s why Henry Ford was able to pay his men $5 a day which enabled them to buy their products, they added a lot of value to the pile of parts in the warehouse when they put them together into a Model T. But the greeter at Wal-Mart makes minimum wage because he adds essentially nothing to the value of any of the products sold by Wal-Mart. That’s why manufacturing jobs are valued so highly, or at least used to be. And it would be wise to remember that government jobs, except defense and law enforcement add no value at all, they are a pure cost on economic activity.
From the Manchester Liberal
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Clik here to view.John Maynard Keynes, 1883 – 1946
“In the long run we are all dead”. So said John Maynard Keynes, born 120 years ago on Wednesday, in one of the most misquoted phrases in economics.
It comes from Keynes’s Tract on Monetary Reform, from 1923, in a discussion about the economic long and short run. If a factory closes you can say that in the long run its workers will find jobs somewhere else but in the short run there may be considerable unemployment and it was this that Keynes was concerned to tackle. Thus, the full quote is: “But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.”
Indeed, Keynes thought much about the long run. One of his most celebrated pieces of writing was an essay titled The Economic Possibilities for Our Grandchildren (1930) and he was one of the architects of the post-World War II Bretton Woods monetary system.
But this isn’t to say that Keynes had any coherent idea about the long run. He didn’t. In The Economic Possibilities for Our Grandchildren he observed that, since the Industrial Revolution, “the average standard of life in Europe and the United States has been raised, I think, about fourfold” and predicted that “the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is today”. In large part he attributed this, correctly, to “the accumulation of capital which began in the sixteenth century”.
Continue reading John Maynard Keynes, in the long run.
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Image may be NSFW.
Clik here to view.
Image may be NSFW.Clik here to view.
