Economic recovery has begun, but, as this week's primary
elections in Connecticut showed, voters are still anxious over the
state of the economy and are looking for a president who can change
Knowing this, all the candidates are promising to deliver
in one form or other. President Bush, after more than 11 years
of Republican control of the White House, blames the Democrats in
Congress for the economic plight and for blocking his own proposals
to cure the economy.
In effect, he is saying, like President Reagan before him, "We
are the change."
Pat Buchanan, his Republican challenger, would move his party
toward the "America First" right. Jerry Brown, the Democratic
victor in Connecticut by a nose, is anti-establishment and would
change policy toward the left, but occasionally toward the right,
as in his flat tax.
And Bill Clinton, still the Democratic front-runner, proposes
change toward the middle _ with tax cuts for the middle class, to
be made up by tax increases on the rich.
But does anyone, politician or economist, really know how to
change what's dragging the economy?
Not long ago, most economists would have said, "Of course we
sure that John Maynard Keynes had provided the answer in his
1936 book, "The General Theory of Interest and Money." It
prescribed higher government spending, tax cuts and lower interest
rates for economies with idle capacity and unemployment.
But today, says Robert Heilbroner of the New School for Social
Research, "Keynesian economics is dead and American capitalism is
suffering from the consequences." He doubts that we will "regain
our economic momentum or achieve international competitiveness
until we find a successor to it."
If Keynesianism is dead, what killed it? Heilbroner attributes
its demise to change in the structure of the economy, especially
the labor force. Back in the 1930s, he says, most workers were
"unskilled or semiskilled heads of households, largely unorganized
and without a public support system of any kind."
So labor played a passive role in capitalism, gratefully taking
whatever wages they could get. Governments could apply fiscal
stimulus without worrying that it would kick off inflation while
there were still workers looking for jobs.
That state of affairs changed when union membership in the
United States rose from 6 percent in the 1930s to almost one-third
of the labor force in the 1960s, with even greater unionization in
But the share of organized workers has actually been declining
throughout the industrial world in recent decades, most of all in
the United States. …