Announcing The Anti-Keynes Collection. J.M. Keynes is like Marx in this sense: everyone keeps announcing the death of his thought, but his ideas keep coming back and back. This is not because they work or because they are good ideas but because the fallacies are framed in a way appeal to the statist impulse.
It was assumed in the 1950s that he was gone. Then again in the 1970s. And so too in the 1980s. Here it is in the new millennium and Keynes is once again riding high as the prophet of the world economy.
And what are the results? Terrible economic policy the world over. The debt, the cycles, the stagnation, the robbery of savers and investors – it can all be traced to this one man’s topsy-turvey worldview.
This collection is designed to go for the heart of Keynes. Each book offers a particular take on his economic thought, showing it for what it is.
Keynes isn’t going away soon. But this collection could help make a welcome departure happen much sooner than otherwise.
Simply put, it is the best collection ever assembled to show what is wrong with Keynesian theory, policy, and legacy!
Away From Freedom, by Orvall Watts
Critics of Keynesian Economics, edited by Henry Hazlitt
Economics of Illusion, by L. Albert Hahn
Failure of the “New Economics” by Henry Hazlitt
Keynesian Episode, by W.H. Hutt
Keynes the Man, by Murray N. Rothbard
Tiger by the Tail, A, by F.A. Hayek
Where Keynes Went Wrong, by Hunter Lewis
{ 37 comments }
Anything that makes sure that his quackery is ‘dead in the long run’ is welcome. Unfortunately the looming worldwide economic collapse probably will be what makes his quackery dead in the short run.
At least some of these books should be available from Mises.org. Why are these titles not hyperlinked to those books?
This is a joke. The reason why ppl think Keynes was wrong is because his theory has been distorted over time:
http://joeseydl.blogspot.com/2011/01/keynes-off-with-his-head.html
Joe – you say in your post
“What Keynes said was that during economic expansions, such as the one that occurred from 2002 to 2007, the government should accumulate reserves (run a budget surplus), and during economic contractions, such as what occurred in the wake of the recent financial crisis, the government should use those excess reserves to support the economy, helping temporarily increase demand—or at least keep demand from falling. ”
What if I said that the very existence of such periods of “expansion” and “contraction” – and therefore the very basis on which you propose government action – was a consequence of the meddling of the government in the monetary system in the first place and that they should get out of the way entirely (no CB, no legal tender laws, no bailouts etc.) and let people trade using whatever medium of exchange they desire?
Let’s put aside the question of whether this is actually true or not. If it is actually true, then would you agree that the “solution” you propose is absurd, in that it aims to solve a problem by doing more of the very act that causes the problem?
Again, to be clear, I presume you disagree with my proposition but I’m asking if you agree that what you say is absurd if what i say were true actually was true – do you?
They cannot tell when it’s booming (“over-performing”) so they could start saving, and also, government is not going to run surpluses since politicians are only temporary care-takers – they focus on short-term and present spending because they may not be in the office next time crises hits and they are not personally liable for any government debts.
Well, obviously I disagree with belief that economic downturns wouldn’t exist without any government / central bank involvement. Nearly every basic macroeconomic model invokes the idea that fluctuations in the business cycle are natural occurrences, regardless of whether any government involvement is present. One of the most basic macroeconomic models is the baby-sitting coop model that Krugman constantly refers to, consisting of only consumers and no central planner. If you understand this model (http://www.slate.com/id/1937/), you’ll learn that economies have tendencies to enter recessions just based on seasonality alone, not to mention any irrationality on the part of consumers that may exist.
What I think we would agree on, however, is that the government / Fed did a poor job of managing economic policy in the years leading up to the recent downturn, thus exacerbating the severity of the downturn itself. But to somehow argue that the downturn would have never existed in the first place if it weren’t for government involvement is ridiculous, especially since every data set ever collected in the study of economics tells otherwise…
Your logic is flawed. Stating that macroeconomic models and data sets gathered to fill said models presuppose boom/bust cycles are natural occurrences and not due to government intervention does not serve as proof of said conclusion.
I note that you did not answer my question. You instead answered the question that I specifcally pointed out that i wasn’t asking. How is it that I knew, in advance, that you would do this? That is why I asked the question again to be double clear – and yet you still answered the one I wasn’t asking and ignored what I specifically asked.
“Nearly every basic macroeconomic model invokes the idea that fluctuations in the business cycle are natural occurrences, regardless of whether any government involvement is present.”
Since when is model correctness a question of voting?
Krugmans’s babysitting model is a joke.
http://blog.mises.org/9699/krugman-and-his-economics-of-keynesian-baby-sitting/
And seasonal fluctuations aren’t business cycles, they’re…seasonal fluctuations.
Oh come on, you’re just playing games with logic and not making a substantive point. Of course IF I agreed with your presupposition than I would disagree with government involvement in the economy….And now your point, please?
I’m not playing games. In another place you say “The key takeaway is that, in the long-run, the government’s budget should be deficit neutral—i.e., saving during good times should offset spending during bad times.” You talk as if these cycles are just bolts from the gods and we can do nothing about them.
I’m just being crystal clear that your case rests entirely on showing that government meddling in the money system does not cause business cycles. Now you’ve said this 100% clearly. Ok.
You also say this in your post linked to below:
“As I read more about economic development (as if I haven’t already read enough in college), I find myself more and more in favor of free markets. Free markets is what makes capitalism work, and it’s the reason we have engendered so progress here in America since the Industrial Revolution.”
So, we seem to have a problem here. You on the one hand say that you are “more and more in favour of free markets” – except, it appears, in the one item which forms one half of almost all transactions.
That is, you accept, from your comment above, that government intervention causes at least some problems, or else why would you find yourself “more and more in favour of free markets”? Yet, you also say that government meddling in the monetary system is advisable and does not cause business cycles.
Ok – let’s say that is true. But what then are the negative consequences of government meddling in the money supply? You agree that government getting involved in voluntary exchanges between people has consequences – in the case of the monetary system, what are they?
Or, maybe you say there are none – that the negative consequences of government meddling that admit definitely exist elsewhere are just not present when they meddle in the monetary and banking system? If so, can you explain why this is please?
@ Kid Salami
Look, we need to be careful about making important distinctions between Gov’t involvement in the economy and CB involvement. I’m sure you take issue with this, but it is possible to have free-markets with CB intervention. And I would even take it one step further and say, it’s possible to have free-markets with Gov’t intervention insofar as such intervention is concentrated only on smoothing out business cycle fluctuations.
When I say: “As I read more about economic development (as if I haven’t already read enough in college), I find myself more and more in favor of free markets.”, I’m referring to the fact that I’m becoming more and more opposed to the other kind of Gov’t intervention; the kind that consists of things like government involvement in mortgage underwriting, jurisdictional development through incentives, and unnecessary war financing. I still feel as though you haven’t provided an adequate response as to why business cycle fluctuations wouldn’t exist if government intervention (fiscal & monetary) were not present in the economy. After all, that was your entire point of commenting on my blog post, no?
“I’m sure you take issue with this, but it is possible to have free-markets with CB intervention.”
First line in the Wikipedia page for free market:
“A free market is a market in which there is no economic intervention and regulation by the state, except to enforce private contracts and the ownership of property.”
Central bank intervention is neither of these. You were talking about Economics in One Lesson (where what free markets are and are not is crystal clear) and saying the you are “more and more in favor of free markets”. This seems pretty clear to me. But now you are saying that CB involvement in the economy is not a government intervention. If you want to disagree then that is fine, but this view is not even wrong, it is incoherent. Unless you have a different definition of “free market” to work with – do you?
“…I’m referring to the fact that I’m becoming more and more opposed to the other kind of Gov’t intervention; the kind that consists of things like government involvement in mortgage underwriting, jurisdictional development through incentives, and unnecessary war financing.”
So, you are going with my second option: that is, you agree that “government involvement in mortgage underwriting” has negative consequences but think that central bank operations don’t have negative consequences. Why is this? As I asked, can you please explain the economic effects of “government involvement in mortgage underwriting” that you agree are not good and, then, explain why these economic effects are cannot be produced by a central bank?
“I still feel as though you haven’t provided an adequate response as to why business cycle fluctuations wouldn’t exist if government intervention (fiscal & monetary) were not present in the economy. After all, that was your entire point of commenting on my blog post, no?”
If you have a specific question that you think that someone holding this belief can’t answer then ask me and I’ll be sure to answer. But no, that wasn’t the point of my post – I was posting to point out that you are holding contradictory positions.
Again, I can’t help but feel like you’re playing silly games. You’re merely arguing semantics and failing to make a point. Fine, maybe I should have said, “I’m more and more in favor of free markets with limited intervention, where limited intervention is monetary and fiscal policies intended to smooth out business cycle fluctuations”, but you already knew that’s what I meant. So you’re effectively wasting my time.
In terms of government involvement in mortgage markets vs. monetary policy, the anticipated outcome is very different for each intervention. Intervening in mortgage markets is intended to stimulate demand in a certain part of the economy (think subprime), perhaps even during times of expansion, whereas monetary policy is intended to support falling demand across the entire economy during times of recession. In other words, the former has the potential to lead to excesses in specific parts of the economy, while the latter hopes to rebalance deficits that exist across the entire economy all at once—because, after all, these deficits occur naturally. But of course you don’t believe any of this because you don’t believe in aggregate demand. So go ahead and provide your whimsical response about how monetary policy is what has lead to imbalances in the first place and about how both mortgage market and monetary policy intervention are equally destructive to the economy. But for god sakes, if you nitpick semantics once more, I’m out of this debate.
And lastly, how about I ask you a question for once? If CB intervention / regulation is bad, then why was our financial system incredibly unstable in the years prior to the creation of the Fed in 1913? In other words, pre-1913, why did we have severe banking panics regularly? Why were saving thrifts taking on exorbitant risks? Why was the flow of money so slow and inefficient with every bank issuing independent bank notes of which nobody knew the value? And the list goes on and on… Your time to provide some answers, my friend.
>>>If CB intervention / regulation is bad, then why was our financial system incredibly unstable in the years prior to the creation of the Fed in 1913? In other words, pre-1913, why did we have severe banking panics regularly? Why were saving thrifts taking on exorbitant risks? Why was the flow of money so slow and inefficient with every bank issuing independent bank notes of which nobody knew the value? And the list goes on and on… Your time to provide some answers, my friend.
Read this, for starters.
Then this.
Time for you to do your homework before asking rudimentary questions, my friend.
I also recommend this, particularly Chapters III and IV on the various forms of credit expansion that were inflicted on people about 100 years before 1913.
“Fine, maybe I should have said, “I’m more and more in favor of free markets with limited intervention, where limited intervention is monetary and fiscal policies intended to smooth out business cycle fluctuations”
You insult me again by accusing me of arguing “semantics”. Yet then in the very next sentence you admit that what you said wasn’t actually exactly what you meant and rephrase it by expanding on the term whose meaning was under discussion.
Ok, so you are for “free markets” except in the cases where you’re not ie. with money/banking – very illuminating. So in the next paragraph, you’re going to explain to me how you arrive at this position.
Remember the question? I asked “can you please explain the economic effects of “government involvement in mortgage underwriting” that you agree are not good and, then, explain why these economic effects are cannot be produced by a central bank?”, all with the ultimate aim of determining whether or not business cycles are caused by central bank intervention. You justified CB intervention in two phrases:
“whereas monetary policy is intended to support falling demand across the entire economy during times of recession….while the latter hopes to rebalance deficits that exist across the entire economy all at once—because, after all, these deficits occur naturally.”
Both of these justifications are descriptions of the stated INTENTION of the central bank (I’m not disputing what they say they’re doing), not of the economic effects of its actions which is what I very specifically asked. You are seemingly unable to separate these two and use words like “intended” and “hopes” to describe their actions. “hopes”! Are you joking? What kind of analysis is this?
Also, these both relied on the fact that business cycles are “natural” – “falling demand across the entire economy during times of recession” and “rebalance deficits…deficits occur naturally.” In order to determine whether or not CBs cause business cycles or not, we would need to establish their economic effect on the economy. But you are simply telling me their effect on the economy is…..to smooth business cycles by aiming to “support falling demand” and “rebalance deficits”. You are assuming your conclusion.
I simply can’t answer because this is incoherent gibberish again and this time is circular also – you might want to do some thinking about “semantics” yourself. I think this paragraph can bring our discussion to an end – people reading can see whether your “rebalancing deficits” argument is one which you’ve arrived at by careful logical analysis or is just you bullshitting with buzzwords and jargon to hide your confusion.
“And lastly, how about I ask you a question for once? If CB intervention / regulation is bad, then why was our financial system incredibly unstable in the years prior to the creation of the Fed in 1913? In other words, pre-1913, why did we have severe banking panics regularly? Why were saving thrifts taking on exorbitant risks? Why was the flow of money so slow and inefficient with every bank issuing independent bank notes of which nobody knew the value? And the list goes on and on… Your time to provide some answers, my friend.”
I could with more justifcation ask you how 16 years after the fed was created – specifically you say to smooth these business cycles that happen naturally – the worst and longest Depression in history happened (although that won’t remain true for too much longer). But read the links from Phinn above if you actually care.
Joe,
Although it sounds compelling, the babysitting coop analogy is useless as a description of the real world, for reasons that are clearly explained by commenters on the very website you linked. Unlike the fixed value “coupons” from your example, real money does not have a fixed value. The entire example falls apart when you realize that prices can change to take demand for money into account. The market is perfectly capable of dealing with seasonality IF the government leaves it alone.
The whole “Keynes wasn’t a Keynesian” counter-argument gets old.
Yeah let’s just stick to the original.
Read “General Theory” and listen to Keynes wax poetically about how there is a conspiracy amongst all the owners of means of production to keep capital scarce and maintain a positive interest rate on loans.
Keynes said he could save the day by government takeover of means of production (socialism) which would reduce the interest rate to zero and result in abundance of capital goods in just a single generation!
There’s no need to look to Keynes’ followers to know how crazy Keynes was. Just look at what the guy wrote himself.
http://2.bp.blogspot.com/_vcErwDW9VHs/TURAAFk1P2I/AAAAAAAAAGI/X-prSp0y_UA/s1600/output+gap.gif
“The blue shading means our economy is outperforming its potential, the red shading means its underperforming.”
We just need that “missing” demand, stupid people are not spending enough, damn those rascals. Amazing how simple economics is! (not)
Wow… great timing, two days after my post about Anti-Keynes books at AlexMerced.com I’ll make sure to make a post about this collection in an upcoming post, this is a great stuff. This is now being added to my birthday wish list.
Any chance for a new paperback publishing of Man, Economy, and State like you guys did with Human Action? If I can buy both books for $20 bucks that’d be pretty powerful.
Sincerely,
Alex Merced
http://www.alexmerced.com
youtube.com/alexmerced
http://www.10minuteaustrian.com
@ Joe
Have you read Hazlitt’s line by line refutation of The General Theory?
I doubt you have.
Keynes theory is nonsense, whether or not it has been ‘applied properly’ is moot.
It’s also in many ways a mere resurgence in mercantilism.
“New Economics” isn’t really all that new.
I’m actually about half way through Hazlitts Book, and I’ve read “Where Keynes Went Wrong” both are not only great at learning about how Keynes was good at masking his fallacies but also a great exercise in learning how to critique work.
No, but I have read Economics in One Lesson, and wrote a review of it a while back:
http://joeseydl.blogspot.com/2010/02/economics-in-one-lesson.html
Though after re-reading what I wrote back then it kind of runs contrary to what I wrote this morning. But I still think my earlier point is valid: that is, Keynesian economics has been distorted over time and what exists today in practice is far from what Keynes actually intended…
See → Keynes, Digger of Holes
Is this why I always make sure I give a postal address rather than email. Hopefully keeping the postMAN gainfully employed
“No one should trust a theory that predicts greater prosperity from digging holes.”
Ha – indeed.
USE PRIVATE DISCOUNT CODE 2now5off on CUMS2CAM. C O M
JOE SEDYI: First I want to congratulate you on your youthful enthusiasm for economics, which is manifest by the creation of your blog and its content. I note from your bio that thus far you have merely an undergraduate degree in economics plus a couple of business-college internships that may have included a little further exposure to economics. I also notice you do not yet have any published-writing credentials. On the basis of your limited economic education and particularly your lack of any published-writing experience, I fear you risk becoming known as a hypocrite or a fool when you criticize Henry Hazlitt on the grounds that you did in your blog:
Joe, you wrote this: “In regards to our hero Henry Hazlitt, I found it quite interesting that a book entitled ECONOMICS IN ONE LESSON is not actually written by an economist—or, at least, not by someone holding a PhD claiming he is an economist. Fact is, Henry Hazlitt was a journalist/political writer during the 1920s and then began writing on the topic of economics during the Great Depression and through the WWII era. The interesting part is that not only did Hazlitt not have a PhD, he didn’t have any degree at all; he dropped out of college after a little over a year.”
Here, young man, are a just a very few facts about Mr. Hazlitt that a whippersnapperXXX, er, youngster like you would be well advised to know before shootingXXX, er, before committing your thoughts to print where others might come across them and think the less of you. The following is an excerpt from a Hazlitt bio available right here at Mises. (http://mises.org/about/3233)
“Hazlitt was not trained as an economist, although few scholars are as familiar with the relevant literature…At an early age, he lacked in formal education but ended in knowing more than most learned men of any age; and he certainly was more principled than most…He wrote in every important public forum of his day, most prominently the Nation, the Wall Street Journal, the New York Times (frequently headlining the powerful book review section), the American Mercury, Century, the Freeman, National Review, Newsweek, and many more. His every article is unfailingly poignant, provocative, and learned…[H]is other contributions, which include a novel, a trialogue on literary criticism, two large treaties on economics and moral philosophy, several edited volumes, some sixteen other books, and countless chapters in books, articles, commentaries, reviews. He once estimated that he had written 10 million words and that his collected works would run to 150 volumes…At the age of 20, when he finally got a job at the Wall Street Journal as a stenographer, he had already finished his first book, THINKING AS A SCIENCE, which was published by E.P. Dutton in 1915, reprinted one year later, and reissued again in 1969 with a new introduction.” (I wont go on, Joe, because you can read and learn more by clicking the above link.)
Joe, you also wrote the following in your blog in praise of the economic theories–if you can call them that, and if you do call them that then you are not, IMHO, an economist–of JM Keynes: ”
What Keynes said was that during economic expansions, such as the one that occurred from 2002 to 2007, the government should accumulate reserves (run a budget surplus), and during economic contractions, such as what occurred in the wake of the recent financial crisis, the government should use those excess reserves to support the economy, helping temporarily increase demand—or at least keep demand from falling.”
Joe, have you ever read Keynes? In the first place, no economy that has been subjected to Keynesian-economics management has ever been able to run budget surpluses sufficient to cover even the smallest fractions of the accumulated deficits that such economies do in fact mustered. If you have read Keynes GT, and there are some indications in your blog that you have not, I would strongly suggest reading it in tandem, chapter by chapter, with Hazlitt’s THE FAILURE OF THE NEW ECONOMICS. If you will do that, I think you will come away with a much greater appreciation of Mr. Hazlitt and Austrian economics, and a different, less admiring view of Mr. Keynes.
This debate must have been a field day for all of you Austrian economic intellectuals, huh? It must not be everyday that a young, naive and slightly ignorant Keynesian, such as myself, comes on here willing to debate
But I’m glad to be here. And Ned, thank you for responding. Read some of your stuff and you seem very well-versed in the subject at hand, indeed.
First off, however, you are taking what I wrote about Hazlitt completely out of context. The point I was actually making was that even though Hazlitt did not have the credentials of your typical economic pundit, he did in fact seem to know a heck of a lot about the subject. After all, you may have failed to notice this, but my post about Economics in One Lesson was mostly praise for the book, not bashing.
Secondly, so Keynes didn’t say that deficits could be offset by surpluses? It took only one Google search to find a scholarly paper claiming that Keynes did indeed say this (http://books.google.com/books?id=krc-Tf9JfY0C&pg=PA243&lpg=PA243&dq=keynes+surpluses+offset+deficits&source=bl&ots=5YjNwnNx6C&sig=a1TG6OoCRbgfVmtF1E5R_hTmUrE&hl=en&ei=J8JFTaLgAoSdlgfbisHoDw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CCIQ6AEwAg#v=onepage&q=keynes%20surpluses%20offset%20deficits&f=false), and I speculate that there are tons of other papers out there echoing the same thing. You are right, however, on one point; that is, I haven’t read the GT from cover to cover. I’ve read bits and pieces, but I trust that my professors / mentors have adequately summarized the text for me through the years—after all, that’s what college is for, is it not?
But I will give THE FAILURE OF THE NEW ECONOMICS a shot. Look, again, I never said that Keynesian economics is the best path to prosperity. As most macroeconomic models show, there are often many different points of optimality. Keynesian, Classical and Austrian economics may all provide clear paths to prosperity if implemented correctly. But the whole point of my blog post was that it’s when we incorrectly implement academic theory, in general, that we run into problems.
Except for politicians, bureaucrats and the many other beneficiaries of government tax revenues both in and out of government, who have a vested personal interest in government spending, it is hard to believe that any intelligent being would cling to the totally ludicrous economic theories of John Maynard Keynes. In addition to a forced (metaphorically speaking) reading of the books listed here, these poor deluded souls who continue to embrace Keynesianism should be physically tortured by making them actually read Keynes magnum opus, his GENERAL THEORY, from cover to cover. That should cure anyone of Keynesianism except the severely demented.
Three months after John Maynard Keynes’ GENERAL THEORY was published, a German translation was published in Germany in the Spring of 1936 with a special foreword written by Mr. Keynes, which sounded like Keynes was appealing personally to Adolph Hitler, who at the time was consolidating Nazi control of the German economy. Here is what Keynes wrote in that German foreword: (I am not making this up.)
“The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory.”
The question is: Why would anyone wanting to live free endorse economic policies best suited for totalitarianism according to Keynes himself? Hitler in fact adopted many Keynesian-economic policies aimed at Keynes’ full-employment Nirvana, with some macabre adaptations of his own demented mind. One of Hitler’s adapted policies was World War II, which enabled Germany to achieve total employment of its Aryan work force. Of course WWII also had the “beneficial” effect of drastically reducing unemployment in FDR’s America, which Keynesian Paul Krugman referred to in a NYT column as an “enormous public-works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.” (see http://jesus-on-taxes.com/ON_PAUL_KRUGMAN.html)
Keynesian economics is unquestionably the best choice for those who favor totalitarianism and war.
Joe, If I was a little harsh in my response to you I apologize. I was upset that you referred to the announcements of the sale of anti-Keynesian books as “a joke.” Then in a subsequent post you said, “If you understand this model (http://www.slate.com/id/1937/), you’ll learn that economies have tendencies to enter recessions just based on seasonality alone.” If we understand??? To me your words sounded like those of someone who felt he was talking to dunces. To cap it off, you went on to say this: “But to somehow argue that the downturn would have never existed in the first place if it weren’t for government involvement is ridiculous, especially since every data set ever collected in the study of economics tells otherwise…”
Now I realize that you are not familiar with what is known among economists as the Austrian Business-Cycle Theory, or ABCT, which would help to explain how and why you would make such (to any Austrian-school economist) an absurd claim as you do in the remark I just quoted. If you ever do learn ABCT you will realize that what you have referred to as “ridiculous” is an apodictic certainty, and that no “data set ever collected in the study of economics” has ever or can possibly refute the validity and truth of ABCT. (Btw, if you doubt this, produce the “data set” showing otherwise.)
So, if I was sarcastic in my response to you, I offer this, not as a justification but an explanation. As you say about yourself, you are a “young, naive and slightly ignorant Keynesian.” That description fit me (well, not Keynesian so much as a Samuelsonian, which is almost the same thing) when I graduated from college with a degree in English but many more hours in my preferred electives, economics and finance. As far as I’m concerned now, it wasn’t until I read von Mises’ HUMAN ACTION almost 20 years later that I could realistically say I was an economist. Age wise, you’re way ahead of me and you are obviously open to learning more on what I consider a mighty important subject.
Btw, the book to which you referred by Peter Kennedy does not support your contention that Keynes proposed using the funds from surplus years to pay for deficits. What Kennedy says is that Keynes “implied that.” However, if you ever do read Keynes GT, to which Kennedy is referring, you will discover that Keynes “implied” many things that he did not logically support. Then you might ask: “Whence his great popularity among such learned men as Paul Krugman?” The best answer I can give you is that Karl Marx also fooled generations of academicians and their remain many who are deceived today.
No worries. I was going to reply to your “Keynes = War” comment, but got side-tracked with work. But you hit the nail on the head: I know nothing about ABCT. I’m sure you know this, but Austrian economics is not widely taught at American universities today; Keynesian economics is. So while Phinn criticized my above questions as being “rudimentary”, the fact is you can’t expect a fresh college grad to be fluent in the basics of Austrian economics. I am somewhat disappointed that I couldn’t get a quick 2 or 3 sentence answer to the questions I posed, but I will read the links Phinn provided and see if I can figure it out myself. Thanks to all who commented.
Ned
‘Then you might ask: “Whence his great popularity among such learned men as Paul Krugman?” The best answer I can give you is that Karl Marx also fooled generations of academicians and their remain many who are deceived today.’
Stalin referred to such people as “useful idiots.”
Sione
Stone, indeed. I guess I should let it go at that, as Stalin no doubt did, if he didn’t kill a few just for fun. But I still find it hard to believe that so many “scholars” with graduate degrees in economics could be duped into calling themselves Keynesians. For gosh sakes, didn’t they bother to read Keynes’ poorly written, logically inconsistent, easily dismissed magnum opus, his GENERAL THEORY OF EMPLOYMENT INTEREST AND MONEY? I honestly don’t know how anyone could read that book and remain a Keynesian thereafter.
JOE SEYDI: I do not want to rest my case, because I see in you a young, fertile and inquisitive mind and future economist who may be persuaded to desert Lord Keynes’ specious theories on behalf of spending OPM (sounds like opium, is equally addicting, stands for other peoples’ money) and perhaps embrace the profound wisdom of Ludwig von Mises and the other Austrian luminaries. Because I note from your bio that you are now working in the investment industry, which is what I did for the first decade after college graduation, I want to call your attention to Chapter 12 of Keynes’ GT, particularly Sections IV, V and VI. There you will find K at his rhetorical best describing what folks like you (investment professionals) do. His specific reference is the equities market in New York–the New York Stock Exchange. Here is one two paragraph quote therefrom:
“This battle of wits to anticipate the basis of conventional valuation a few months hence, rather than the prospective yield of an investment over a long term of years, does not even require gulls amongst the public to feed the maws of the professional; — it can be played by professionals amongst themselves. Nor is it necessary that anyone should keep his simple faith in the conventional basis of valuation having any genuine long-term validity. For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs — a pastime in which he is victor who says Snap neither too soon nor too late, who passes the Old Maid to his neighbour before the game is over, who secures a chair for himself when the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will find themselves unseated.
“Or, to change the metaphor slightly, professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.”–http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch12.htm
So you see, Joe, Lord Keynes considered people in your business, to paraphrase Joe Stalin’s comment that Stone introduced above, “Useless fools.” If you read just that one chapter knowing what you know by now of the private investment industry, I think you will concur in my assessment of Keynes as a useless economist and his GT as just plain stupid. You will also notice that the link on the Web I provided to find K’s GT is a Marxist website that seeks to keep Marx’s socialist/communist economic nonsense alive, and one of the ways it does so is by publishing Keynes’ GT. Keynes, I believe, denied that he was a communist, socialist or fascist, but the economic theories he proclaimed and the policies he proposed have all been adopted by communists, socialist and fascist government regimes and are designed, whether intentionally or not does not matter, to produce a communist, socialist or fascist economic regime.
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