Tuesday, February 10, 2009

Selwyn R. Cudjoe is professor of Africana studies at Wellesley College. He is the author of UPM's Caribbean Visionary: A. R. F. Webber and the Making of the Guyanese Nation. Below, Cudjoe has an interesting take on the paralells between Webber, John Maynard Keynes and President Barack Obama.

• • •

Faced with one of the most severe economic crises to grip the United States since the Great Depression, President Barack Obama and his economic team have drawn on the ideas of John Maynard Keynes, a British economist who died more than sixty years ago, to assist them in solving this problem. Although Keynes is reputed to have come up with the theory that a government can pull itself out of a deep recession or a depression by spending lots of money, there is evidence that Keynes was not the first theorist to come up with this idea.

A. R. F. Webber, a politician and journalist from Guyana, first articulated this idea when he wrote “I am an Economic Heretic,” a path-breaking article, in 1930. Seeing the misery of the Guyanese people caused by the Great Depression, Webber called upon the British government to put more money into the Guyanese economy, cut taxes and run a deficit to relieve the suffering of his people.

Webber was a Keynesian without a Keynes. He began his short article by decrying the argument of his day that said “Government expenditure must be reduced.” Webber responded with the following observation: “It is generally believed that if Government were forced to reduce expenditure, dock salaries, and dismiss a swarm of officials, the Colony [Guyana] would be placed upon the high road to prosperity. I do not share those views. If that be orthodox [economic] faith, then I am an economic heretic.”

Webber believed that such drastic cuts in government expenditure would aggravate “the evils” from which the country was suffering. He argued that once government cuts were made “it forthwith constricted the spending power of the community by that sum [of the cuts]. Trade was depressed, and commerce employees who were dismissed all round went to swell the ranks of the unemployed, and compete for what jobs were going with the small army of retainers who were thrown out of Government employment.”

Webber realized that if the private sector would not spend enough to maintain full employment then the public sector would have to take up the slack. He noted that “What is required in British Guiana is increased earning power in the community rather than restricting buying capacity. Arthur J. Cook [secretary of the Miners Union] said to me in London, ‘Webber, my boy, the world is not suffering from over production. It is suffering from underconsumption.’ This might sound like foolish euphonism [sic]; but it is as sound as a bell. The present sugar situation is due to restricted consumption, dating to the shilling and pounds days, which sent the stocks accumulating. So [too] in other communities.”

Six years later Keynes worked out this theory with greater precision in his General Theory of Employment, Interest and Money. However, it is interesting that a colonial man from Guyana, seeing the harmful effects the Depression was having upon his people called upon the British government to adopt a policy of deficit spending to relieve his people of their suffering.

Karl Case, professor of economics at Wellesley College and author of the Case-Schiller Home Price Index, was correct when he asserted: “Webber clearly spent some time in London. If he was writing this stuff, my bet is that he had contact with Keynes or his friends. He either anticipated Keynes or he was one of the first practitioners.” At this moment of our second Great Depression, it is propitious that we realized that Webber anticipated what Lord Keynes arrived at eventually.

No comments:

Share

Related Posts

Related Posts Plugin for WordPress, Blogger...