Saturday, October 29, 2011

The Perils of Krugmania

Paul Krugman, check your sources! In his blog post arguing that, "As far as aggregate demand in concerned... spending on bombs is as good as spending on public parks" Professor Krugman cited "the Kalecki point that admitting that the government can create jobs undermines demands that policies be framed to cater to all-important business confidence." Krugman linked to Rortybomb who linked to MRZine for the Kalecki paper.

One thing Krugman may have overlooked. As far as "spending on bombs being as good as spending on public parks" is concerned, Kalecki's OTHER point is particularly germane:
1. One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism. The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed. In a democracy, one does not know what the next government will be like. Under fascism there is no next government.

The dislike of government spending, whether on public investment or consumption, is overcome by concentrating government expenditure on armaments. Finally, 'discipline in the factories' and 'political stability' under full employment are maintained by the 'new order', which ranges from suppression of the trade unions to the concentration camp. Political pressure replaces the economic pressure of unemployment.

So, yes, "spending on bombs is as good as spending on public parks" -- even better (if you're a fascist)! By the way, Professor Krugman. You still haven't replied to my earlier letter.


  1. Most criticisms of Krugman are idiotic diatribes by rabid right-wind ideologues. I've disagreed with him a couple of times on my blog, but I don't recall ever seeing a such well thought-through critique.

    Well done, sir!


  2. The NSDAP (Nazi) party took over the German government in the 1930s.

    The parliamentary battle of the NSDAP had the single purpose of destroying the parliamentary system from within through its own methods. It was necessary above all to make formal use of the possibilities of the party-state system but to refuse real cooperation and thereby to render the parliamentary system, which is by nature dependent upon the responsible cooperation of the opposition, incapable of action.

    Ernst Rudolf Huber (witness) From the Chief Counsel for the Prosecution of Axis Criminality Volume I, Chapter VII 1946

    Makes things a little clearer, doesn't it?

  3. I don't share Kalecki's position that, under bourgeois society, structural and cyclical unemployment can be ended and fully socialized "labour markets" established only by a fascist regime.

  4. I stand corrected. What did he says besides the above?

  5. The link is at MRZine above.

  6. If you get a chance you might be interested in reading my blog entry on the opportunity cost of war.