History of Economic Thought. American Neo-Keynesianism (most important)

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History of Economic Thought. American Neo-Keynesianism (most important)

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73. AMERICAN NEO-Keynesianism

The most detailed exposition of the American version of Keynesianism is given by professors at Harvard University:

1) E. Hansen (1887-1975) in writings: "Business Cycles and National Income", "Guide to Keynes' Theory";

2) S. Harris (1897-1974) in work "J. Keynes. Economist and politician".

Their developments are called "neo-Keynesianism", and subsequently "orthodox Keynesianism".

American Keynesians accepted Keynes' main points - his explanations of the causes of unemployment and the crisis, conclusions about the decisive role of state regulation of the capitalist economy, and the multiplier.

However, American Keynesianism has a number of specific features, due to the peculiarities of state-monopoly capitalism in the United States.

E. Hansen, in particular, supplemented Keynes' explanations of the causes of the crises of the so-called theory of stagnation, which was widespread in the United States in the late 1930s. and the years of World War II.

According to this theory the slowdown in the development of capitalism is explained by the weakening of its driving factors:

1) slowdown in population growth rates;

2) lack of free land;

3) slowdown in technical progress.

As practical measures of economic policy, the American Keynesians propose the introduction of government orders, an increase in taxes from the population, an increase in government loans, and moderate inflation.

American Keynesians supplemented the idea of the Keynesian multiplier the principle of acceleration. E. Hansen writes: "The numerical multiplier by which each dollar of incremental income increases investment is called the acceleration factor or simply the accelerator."

To justify this conclusion, they usually refer to the length of the equipment manufacturing period, due to which unsatisfied demand for it accumulates, which stimulates an excessive expansion of equipment production. If the multiplier reflects the increase in employment and income growth as a result of capital investment, then the accelerator reflects the upward impact of income growth (through increased demand) on capital investment.

American Keynesians based on the multiplier and accelerator developed scheme for continuous economic growth, the starting point of which is public investment.

They declared the state budget the main mechanism for regulating the capitalist economy and called it a built-in stabilizer, recognized as automatically responding to cyclical fluctuations, softening them.

К "built-in stabilizers" include income tax, social security payments, unemployment benefits, etc. According to E. Hansen, the total amount of taxes increases during booms and decreases during recessions. State payments, on the contrary, increase during a crisis and decrease during a recovery. In this way, the size of effective demand is automatically stabilized.

Along with "built-in stabilizers," American Keynesians advocate "compensatory countermeasures" method, which consist in regulating private investment and maneuvering government spending.

Author: Tatarnikov E.A.

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