Comments (6)

• Ralph Raico

• Many thanks to Peter Klein for his contribution of D. E. Moggridge's review of Bruce Caldwell's Hayek's Challenge.

  What I found most informative was Moggridge's mention of the courses at the LSE in the early 30s on collectivist economic planning.

  It turns out that Hayek gave a course starting in 1933/34 on The Problems of the Collectivist Economy. There was also a seminar directed by Robbins, Hayek, and Plant in 1932/33 chiefly devoted to the same topic, where Abba Lerner was a participant. It was a lively topic at the LSE.

  How is it then that Keynes, as late as his radio talk in 1936, praising the fellow-traveling work of Sidney and Beatrice Webb on Soviet Communism, was able to say the following:

  The Russian innovators...are engaged in the vast administrative task of making a completely new set of social and economic institutions work smoothly and successfully over a territory so extensive that it covers one sixth of the land surface of the world....Methods are still changing rapidly in response to experience. The largest scale empiricism and experimentalism which has ever been attempted by disinterested administrators is in operation. Meanwhile the Webbs have enabled us to see the direction in which things appear to be moving and how far they have got.

  "Russian innovators...disinterested administrators." And it goes on in the same vein, recommending the Soviet example to Britain.

  Was Keynes unaware of what was going on at the LSE? Unlikely.

  This is another example of the mystery that Karl Brunner pointed out. Whenever Keynes wrote on his "utopian" vision, he acted like any scatter-brained bohemian littérateur, without any regard for economics. It's as if he'd never heard of any discipline called economics. It was all mush about willingness to "experiment," etc..

  I have not seen Robert Skidelsky's one-volume abridgement, published in the UK, of his vast work on Keynes, so I do not know whether in this latest book he has added any mention of Keynes's 1936 rave review of the Webbs' work (contained in vol. 28 of the Collected Writings). For some reason, Skidelsky never found space to bring it up in the earlier volumes.

• Published: August 1, 2004 5:53 AM

• Richard Ebeling

• Keynes's demagoguery and economic irresponsibility is captured in the following quote that is included in D. E. Moggridge's "Maynard Keynes: An Economist's Biography" (Routledge, 1992) p. 433, from a peice that Keynes wrote in 1925 during the debate over a return to the gold standard:

  "The truth is that we stand mid-way between two theories of economic society. The one theory maintains that wages should be fixed by reference to what is 'fair' and 'reasonable' as between the classes. The other theory -- the theory of the economic juggernaut -- is that wages should be settled by economic pressure, otherwise called 'hard facts', and that our whole machine should crash along, with regard only to its equilibrium as a whole, without attention to the chance consequences of the journey to individual groups.

  "The gold standard, with its dependence on pure chance, its faith in 'automatic adjustments,' and its general regardlessness of social detail, is an essential emblem and idol of those who sit in the top tier of the machine. I think they are immensely rash in their regardlessness, in the vague optimism and comfortable belief that nothing serious ever happens. Nine times out of ten, nothing really serious does happen -- merely a little distress to individuals and groups. But we run the risk of the tenth time (and are stupid in the bargain), if we continue to apply the principles of an economics, which was worked out on the hypothesis of laissez-faire and free competition, to a society which is rapidly abandoning those hypotheses."

  Notice that the logic of supply and demand is ridiculed as the "hard facts" in quote marks. And that adjusting wages and prices to reflect actual, underlying market conditions is the cruel and to be feared "economic juggernaut." The adjustments to restore market-clearly prices is a dangerous "crashing along," that requires indivudals and groups to adapt to changing market conditions; which is viewed not as the reasonable logic of the market to assure continual social cooperation in the system of division of labor, but as "chance consequences" clearly to be considered unfair and unreasonable. Advocacy of the gold standard requires clearly an irrational and logically unjustifible "faith" in market -- "automatic" -- adjustments. And that the resulting outcome of implementing such a policy of "faith" generates a "general regardlessness of social detail" -- which means that the relative income shares have not be determined through political social engineering that would otherwise assure a "fair" and "reasonable" balance "between the classes." Here is the wisdom of the "greatest economist" of the 20th century. Either Keynes knew better and was a purely power-serving demogoge, or Hayek was right when he several times suggested that Keynes was ignorant of the most elementary theorems of economics.

• Published: August 1, 2004 5:57 AM

• Roderick Long

• I love Keynes's phrase "we stand mid-way." It makes it sound as though he's giving a neutral, detached view of both theories. Thus he puts "fair" and "reasonable" in scare-quotes to distance himself from the socialist view, to make it sound like misguided idealism or something. But when you say "here are two views: view A is misguided idealism, and view B is a cold-hearted selfish Moloch-worshipping monstrosity," the obvious effect is to give support to view A.

  On the question of whether Keynes' failings were deficiencies of intellect or perversities of will--probably some of each (or self-deception, which is a kind of hybrid of the two), but his whitewashing of the Soviet Union in the face of Stalin's record has to be due to perversity of will.

  Economic incompetence could explain why someone fails to recognise why some idealised version of central planning can't work; but it doesn't explain why someone fails to see what's wrong with Stalin's system--that doesn't take any subtle economic insight.

  As long as I'm on a rant -- it's worth remembering that Keynes' tolerance for totalitarian dictaorship extended not only to the Soviet Union but also to Nazi Germany. In his preface to the German edition of the General Theory, he says his policy recommendations are more appropriate to Germany than to England and have a better chance of being implemented there, because Germany's government has more centralised control. In effect he was complementing and congratulating his German readers for their superior system of government--during the Hitler era.

• Published: August 1, 2004 6:06 AM

• Stewart White

• Keynes never took a course in economics.So how does one really say he is even a "economist".Most of who followed him revolved around him,and distorted what he said anyway.Keynes was a social gadfly and a pervert anyway,the only reason he even got where he did was because of Alfred Marshall.Most of what was accepted as "Keynesism"
  in American was because of the progressive impulse
  that came to be hitched to his ideas.It strange that a man who wrote "The Consequences of Peace" advocates handing power to a few,then does not even
  see in it the possibility of corruption,power mongering endless deflicits.He needed a good dose of reading Lord Acton.Keynes for someone who as a
  scholar,was undisplined,unethical,amoral a "real fine example" of a Cambridge Don!
  

• Published: August 8, 2004 8:29 AM

• Jason Kauppinen

• "Keynes never took a course in economics."

  That's certainly news to me.

  What was Keynes' academic pedagree?

• Published: April 14, 2005 2:31 PM

• Doyle

• Keynes was a mathematician, not an economist. He did take a course in Economics, though: one semester, as an undergrad. And he said he didn't understand it. Which figures.

• Published: April 15, 2005 12:29 AM