Keynesianism, Social Conflict and Political Economy [Hardcover]

De Angelis takes the insights of that period into the often dry world of macroeconomic theory and in doing so unravels some of the most important debates of the last fifty years. He makes clear that the key to understanding figures like Keynes and Friedman is their political impact. Economic theory that is not viewed through that lens often remains impenetrable. De Angelis argues that Keynes solved a crucial political problem for capitalism: namely the potentially problematic impact that the creation of a large industrial working class had on the workings of the free market. Powerful workers organizations, which Keynes witnessed first hand during the 1926 General Strike in the United Kingdom, could upset the natural tendency towards equilibrium. De Angelis argues that the post WWII institution of collective bargaining helped break what Keynes and others called the "wage rigidity" caused by trade unions by linking wage increase to productivity increases through long term contracts with "no strike" clauses and arbitration built in.

The framework lasted, more or less, for several decades, only to break down as rank and file workers in the late 60s began to chafe under the authoritarian rule of the employers and the apparent bureaucratic lethargy of their unions. Productivity began to slow as employers lost the ability to introduce innovations. In the US, a nascent revolt emerged in large industrial sectors like auto, where militant black workers were influenced by and influencing outside activity in the civil rights movement. And a near revolutionary situation broke out in Paris, Prague, northern Italy and elsewhere.

But a new ideal type for capitalism emerged with the rise in influence of Milton Friedman and monetarism. These were the early days of what we now call "globalization," as Friedman advocated liberalized exchange rates and tight control on the creation of credit by a non-political central bank. These new disciplinary devices at the macro level were linked to a union-busting effort at the micro level that continues to characterize political economy to this day.

While de Angelis brilliantly adapts the direct experience of Italian workers in the late 60s and early 70s to develop this more global theory, his work shows the limits of this tradition as well. Certainly there were constraints on the power of trade unions that resulted, at least partially, in what he calls their "institutionalization" into capitalism, but every worker knows that it is often necessary to accept certain compromises in order to live to fight another day. It is in this sense that his Italian experience is a drawback. He is not alone in this limited view of American trade unions. Very few European commentators seem to quite understand the harsh terrain upon which trade unions were forced to grow in this country. Their "legitimation" in the upheavals of the Great Depression and WW II were a singular social achievement rather than simply a conservatizing integration with the employers.

Nonetheless, this book's achievement stands apart from that complaint. My only regret is that the publishers have not yet made a paperback edition available so that this work could find the larger audience that it deserves.