Understanding Full Investment and the Potential Role of Public Banks

In this paper, we argue that Keynes correctly diagnosed the principles of 'sound finance' as limiting human progress, but did not map out a viable alternate solution of 'full investment', and seems to even warn against it. E.F. Schumacher critiqued Keynes's position that unt...

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Bibliographic Details
Published in:Review of political economy 2022-04, Vol.34 (2), p.340-355
Main Authors: Marshall, Wesley C., Rochon, Louis-Philippe
Format: Article
Language:English
Subjects:
Banking
CODES: B20
Economic activity
Finance
full investment
Humans
Investments
Keynes
Money
Production
public banking
Schumacher
Transformation
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Summary:In this paper, we argue that Keynes correctly diagnosed the principles of 'sound finance' as limiting human progress, but did not map out a viable alternate solution of 'full investment', and seems to even warn against it. E.F. Schumacher critiqued Keynes's position that until the problem of production is solved, only following 'the money motive' could lead humanity out of the tunnel of economic need. Now a half century since Schumacher's critiques, the production problem can be seen in a new light, and the debate surrounding the money motive can be reevaluated with greater context. We build upon the debate and the lessons of recent history, and within the context of other thinkers such as Veblen and Polanyi, to argue that the money motive does not need to be abandoned, but rather placed within a reformed institutional and monetary framework. We argue that full investment can only be properly addressed by shifting the overall objective of economic activity from production to human advancement. We conclude the paper by offering several considerations on why public banks are ideal institutions to shepherd a transformation of mentality into the creation of new markets and activities dedicated to human advancement.
ISSN:0953-8259
1465-3982
DOI:10.1080/09538259.2021.2013633