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"Perhaps the whole of the General Theory was intended as a huge (400-page) joke, and Keynes was appalled to find disciples who took it all literally."
Over at the Foundation for Economic Education's Anything Peaceful blog, Sheldon Richman highlights libertarian journalist Henry Hazlitt's 1959 book, The Failure of the "New Economcs", which offers a startling take on famed economist John Maynard Keynes:
The more I read the more I thought: Keynes was surely joking. No one in his position could really be that confused, contradictory, and ignorant of economic logic. It had to be a gag on the economics profession, an emperor-with-no-clothes experiment.
Thus I smiled when I got to Hazlitt's statement in chapter XXV, "Did Keynes Recant?" (p. 398):
If it was a joke, Keynes helped inflict much misery and oppression on innocent people just for a laugh. I guess for the elitist Keynes, the well-being of the masses can't be allowed to impede his bold and daring lifestyle. It is for people like him that secularists like me wish there was a place of fire and brimstone.Keynes was a brilliant man. Much of what he wrote he wrote in tongue-in-cheek, for the pleasure of paradox, to épater le bourgois [shock the middle class], in the spirit of Wilde, Shaw, and the Bloomsbury circle. Perhaps the whole of the General Theory was intended as a huge (400-page) joke, and Keynes was appalled to find disciples who took it all literally.
|1.6.09 @ 11:32AM|#
Nigel,
I thought joe was saying he's one of the "follow the gourd"
disciples, and now he's pissed.
|1.6.09 @ 11:37AM|#
No no, Nigel, you don't get it: because Sheldon Richman can find
an economist, he must be right.
Oh, wait. That guy's a "libertarian journalist."
Libertarian journalists do tend to react badly when confronted with
the writings of economists.
|1.6.09 @ 11:54AM|#
Why should one expect Joe to dis a warfare/welfare guy? Don't forget you "conservatives" Churchill, like FDR and like Lincoln, was also a warfare/welfare guy.
Citizen Nothing|1.6.09 @ 12:06PM|#
This explains everything:
"Richard Sheldon has been called "the number one Savoyard now
living in America." Born and raised in England, he has enjoyed a
life-long interest in the works of William Gilbert and Arthur
Sullivan. He quickly became known for his knack with the "Savoy
Operas" - or what we know better as the works of Gilbert and
Sullivan."
Nigel Watt|1.6.09 @ 12:09PM|#
I'm pretty sure all I've drunk today has been water, but this thread is raising doubts.
Citizen Nothing|1.6.09 @ 12:16PM|#
Nigel, tarran,
My excuse is that I'm on prescription cough syrup this morning. (I
wonder whose it is?)
|1.6.09 @ 12:23PM|#
tarran's a closet Gilbert and Sullivan fan! Can you do the entire score to the H.M.S. Pinafore a la Sideshow Bob?
tarran|1.6.09 @ 12:26PM|#
Citizen nothing,
My excuse is that I'm cutting back on the cough syrup and
feeling miserable.
Oh, and I'm a huge Gilbert and Sullivan fan, and I must have had
that name rattling around in my subconscious.
alan|1.6.09 @ 12:35PM|#
So, who plans to hang around this afternoon for joe's periodic diaper changing? Remember, Reason doesn't really pay for babysitting.
Sheldon Richman|1.6.09 @ 12:39PM|#
I am a Savoyard. Is there really a Richard Sheldon who is also a G&S fan? Amazing!
|1.6.09 @ 12:40PM|#
It is for people like him that secularists like me wish
there was a place of fire and brimstone.
What a ridiculously ill-mannered and obnoxious thing to say.
The trouble with Austrian School influence on libertarianism is
that Austrians are completely certain that they have all the
answers, and thus those who deviate are apostates from the One True
Economics. Which is to say that whatever the merits of their ideas,
the advocates tend to be assholes. Wishing that a gentleman like
Keynes could burn in hell because his theories were wrong? I rest
my case.
LurkerBold|1.6.09 @ 12:58PM|#
joe,
Wow, something brilliant from you right out of the chute. Right on
the first thread I noticed you in at any rate.
Keep up the good work.
tarran|1.6.09 @ 1:09PM|#
Tacohead,
If he knew his theories were destructively wrong, but promoted them
anyway then yes, he comitted a monstrous crime.
Imagine a clueless guy who puts gasoline in a jet aircraft because
he doesn't know any better, and the aricraft crashes on take-off
doing millions of dollars of property damage and injuring a couple
of hundred people.
You might give the guy a pass because he sincerely believed that
the plane would run on gasoline.
However, if the guy wasn't clueless, and did it on purpose, knowing
that the plane's engines would put out only a fraction of the power
needed for flight if fed gasoline instead of jet fuel, then one
could only view the action as being malicious, or of evil
intent.
I find Keynes' famous riposte to the question of the long term
effects of his policy prescriptions, namely that "in the long run
we're all dead" to be very telling. It's not the answer of someone
who is convinced of the long term efficacy of his ideas.
And his ideas have been disastrous. The attempt of governments to
control wages and prices invariably lead to shortages and waste. In
extreme cases they lead to privation and even famines. Since the
General Theory came out, it has been among the justifications used
for governments to exercise those disastrous interventions. If he
wrote it, knowing that it was bunkum, then one can condemn him just
as surely as one can condemn someone for producing propaganda
movies for Adolf Hitler.
Elemenope|1.6.09 @ 1:16PM|#
And his ideas have been disastrous. The attempt of
governments to control wages and prices invariably lead to
shortages and waste. In extreme cases they lead to privation and
even famines.
Americans have been using some form of Keynesian policies for the
better part of seventy years. And I'm still looking for all the
dead, emaciated bodies. Do you know where they are buried?
Since the General Theory came out, it has been among the
justifications used for governments to exercise those disastrous
interventions.
OMFG, a malefactor taking an ideology and using at an excuse to
oppress and destroy?! Say it ain't so! That's NEVER happened
before.
If he wrote it, knowing that it was bunkum, then one can
condemn him just as surely as one can condemn someone for producing
propaganda movies for Adolf Hitler.
I'm familiar with the argumentum ad Hitleram. But, wow, you just
invented the argumentum ad Goebbelsam.
|1.6.09 @ 1:24PM|#
Ele,
I think it would be more properly named argumentum ad
riefenstahlia.
Keynes is to libertarians
as _________ is to liberals
|1.6.09 @ 1:28PM|#
joe, Wow, something brilliant from you right out of the
chute.
This proves that Joe is LurkerBold. I never saw that coming. So
who's the mark? :)
The Angry Optimist|1.6.09 @ 1:31PM|#
Keynes is to libertarians
as _________ is to liberals
"Milton Friedman"
Reinmoose|1.6.09 @ 1:41PM|#
where's NM?
Shouldn't he be around here about now to tell us all how useful
every study of economics is, and that we should all just accept
Keynesian Economics as the default?
Sheldon Richman|1.6.09 @ 1:42PM|#
Lord Tacohead, not because his theories are wrong, but because of the misery he and his theories helped inflict. If he knew his theories were absurd, then he deserved to suffer himself.
tarran|1.6.09 @ 1:54PM|#
Sugarfree has it right.
BTW, Elemonope, nice strawmen.
Price controls don't always lead to death (although I'm sure we
could dig up statistical evidence of an increase of deaths as a
result of Tricky Dick "We're all Keynesians now" Nixon's economic
policies.
Secondly, if he wrote the book knowing it was bunk, then it implies
he intended it to be used. Certainly, as his preface to the 1936
German edition shows, he wanted his policy prescriptions adopted.
In his book, he asserts that his ideas will bring an end to war,
poverty, and wealth inequality. If he is being maliciously false
(and note the if, I don't know whether he is being malicious) then
yes, his notions for using inflation to set wage rates and his
attempts to redistribute the "unjust" returns incurred by investors
are as vile as any syndicalist agitator who encourages mobs to pry
open a warehouse doors to help themselves to the contents.
Again, I think Keynes' theory is bunk, and that Hazlitt has his
number. I think Keynes was a sloppy thinker and a bit of a
confidence man who pretended understanding he lacked (I remember
reading some eye opening things about his conduct as an undergrad
the details of which escape me now). He wrote an earlier book that
was demolished by Hayek and is little remembered. A few years
latter he came out with this turkey that told people this is how
you manage an economy and bring prosperity. I find it hard to
credit someone with such a dramatic insight in so short of time.
Particularly in light of the fact his brilliant insights are
written in what even his fans admit is such impenetrable and
difficult to parse prose, which while entertaining in literature is
a bad sign in a text book.
I think his intentions were good, but he knew his ideas were built
on a weak foundation. He sincerely thought he would make the world
a better place. In that regard he was much like Marx, as Hazlitt
points out:
After discussing Keynes insistence that unemployment was the result
of a mismatch between the going interest rate and the actual
capital investment taking place, Hazlitt wrote:
It is more instructive to inquire why Keynes put forward this extremely complicated and implausible theory. And here we may have to answer that, siding as he did with the immemorial labor-union insistence that employment is not caused by excessive wage-rates, he had to come up with some theory as to what does cause it. And as he couldn't blame the labor-union leaders, what more natural (and politically convenient) than to blame the moneylenders, the creditors, the rich? Like Marxism, this is a class theory of the business cycle, a class theory of unemployment. As in Marxism, the capitalists become the scapegoats, with the sole difference that the chief villains are the moneylenders rather than the employers.
And that, I suspect, rather than any new discoveries of technical analysis, is the real secret of the tremendous vogue of the General Theory. It is the twentieth century's Das Kapital.
hamilton|1.6.09 @ 1:57PM|#
Slightly off-topic, but can someone out there recommend a good Keynesian-slanted book specifically attacking / refuting the Austrian school or Hazlitt? I'm trying to self-educate and I'd like to find a reasonable respectable opposing worldview so I can get a sense of the counter-arguments.
Elemenope|1.6.09 @ 2:12PM|#
BTW, Elemenope, nice strawmen.
[Ahem]
tarran | January 6, 2009, 1:09pm | # posted:
And his ideas have been disastrous. The attempt of governments
to control wages and prices invariably lead to shortages and waste.
In extreme cases they lead to privation and even
famines.
I didn't write that. That was what I was responding
to. So, not a strawman, but actually the opponent's
argument. In fact, *your* argument. Sorry that that argument is
embarrassing and ridiculous, but that's not my fault.
tarran|1.6.09 @ 2:30PM|#
So, elemonope, where did I say that "some form of Keynesian
policies" caused starvation?
I said that in extreme cases attempts to control wages and prices
lead to famine, as they did in in the Ukraine in the 1930's.
Your attempt to equate the U.S. flirtation with command and control
of some aspects of the economy with "extreme cases" is a
strawman.
Sorry.
Elemenope|1.6.09 @ 3:02PM|#
"And his ideas have been disastrous."
And so where the are applied, we should expect to see disaster. The
US has used and continues to use those ideas, and so we should
expect the history of the US to be replete with disaster when those
ideas are implemented.
It is not. Hence, your argument is without evidential foundation.
You seek to take what is *at best* a weak correlation, and go whole
hog for causation. Naughty, naughty.
Erm|1.6.09 @ 3:15PM|#
The Ukranian famines of the 1920s and 1930s weren't a result of
JMK's policies. Rather, Stalin was deliberately attempting to
starve the Ukrainian people as a way to punish their
insubordination. He had the NKVD plunder (ahem ... "requisition")
as much food as possible from the bountiful and prosperous
Ukraine.
Then again, some historians disagree on that point.
|1.6.09 @ 3:41PM|#
I wouldn't expect Keynes ideas to result in outright disaster of
Zimbabwean proportions, just a good deal of wasted
opportunity.
For instance, consider this quote:
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
And thus Obama's top advisors today think the way out of recession
is new spending on "green jobs". It's the same theory.
Gilbert Martin|1.6.09 @ 3:54PM|#
"The more I read the more I thought: Keynes was surely joking.
No one in his position could really be that confused,
contradictory, and ignorant of economic logic."
Indeed, if he were all that smart, he should know that transfer
payments are a zero sum game.
one minus one always equals zero
|1.6.09 @ 4:07PM|#
Joe
No no, Nigel, you don't get it: because Sheldon Richman can
find an economist, he must be right.
Actually, he did not have to "find" an economist, Joe - there are
them a'plenty at FEE.org and all say that Keynes wrote bunk.
Also, you misunderstand: Keynes did not simply write a simple essay
on a "spend now, place your children in hock" motif. He wrote a
whole book on it and on top of that, unreadable. That's quite an
achievement. He new that unreadable drivel tends to wow the
illiterate.
|1.6.09 @ 4:09PM|#
He [k]new that unreadable drivel tends to wow the illiterate.
And career economists.
LurkerBold|1.6.09 @ 4:10PM|#
Elemenope,
The US is a disaster, but not because of Keynes. We would eb much
better off if the Keynsans were not repressed by the
capitalists.
|1.6.09 @ 4:14PM|#
And so where the are applied, we should expect to see
disaster. The US has used and continues to use those ideas, and so
we should expect the history of the US to be replete with disaster
when those ideas are implemented. It is not [sic]
You don't go out much, do you? One of the things the Keynesians
promised would not happen, happened: Inflation with high
unemployment or stagflation, in the 1970s. The Keynesians were
defeated in the realm of reality, but in the realm of politics they
still thrive.
And our current crisis has Keynes written all over it. The US Gov.
has not learned, or worse - it callously ignores the lessons.
Invisible Finger|1.6.09 @ 4:18PM|#
And I'm still looking for all the dead, emaciated bodies. Do
you know where they are buried?
Somewhere in Normandy.
|1.6.09 @ 4:19PM|#
The multiplier relies on the tendency of people to save a part
of their incomes. Keynes advocated transfers from savers to
spenders, because he believed consumption to be the foundation of
incomes.
This is lunacy, but what it looks like in your example is:
1*(some mutiplier>1)-1>0
The first "one" is the transfer spent, and the second "one" is the
transfer taxed/borrowed. The magically produced residual comes from
an assumed virtuous cycle of consumption.
Gilbert Martin|1.6.09 @ 4:46PM|#
" Keynes advocated transfers from savers to spenders, because he
believed consumption to be the foundation of incomes."
Yes, because those who spent every last cent they made as fast as
they could have obviously wound up as the most prosperous and
succesfull people down through history.
|1.6.09 @ 4:57PM|#
You can certainly argue that, and I sincerely agree with
you.
Unfortunately, the dangerous thing about Keynes's ideas as that
they provide a seemingly subtle justification for a lot of existing
prejudices. You're up against Jesus, for Pete's sake:
I tell you the truth, it is hard for a rich man to enter the
kingdom of heaven. Again I tell you, it is easier for a camel to go
through the eye of a needle than for a rich man to enter the
kingdom of God.
alan|1.6.09 @ 5:26PM|#
I doubt if Keynes was being a fabulously cynical Fabian when he
wrote the General Theory because it is consistent with what was in
the air of the 'Cambridge School'.
BTW, Hazlitt's book is available in pdf here.
Back in college I had to hunt used bookstores in quite a few
college towns to find this one.
Go ahead Krugminions, you have nothing to lose except faith in your
god.
tarran|1.6.09 @ 5:30PM|#
And so where the are applied, we should expect to see disaster.
What, you think the 1970's weren't a disaster? Granted, our
definitions of what constitutes disaster may be different, but much
of the rioting and high crime of the 70's had, as a major cause,
the economic stagnation that had been justified along Keynesian
lines.
Do I think that if Keynesianism was rigorously applied, it would
lead to famine? No. While that would have been true as recently as
150 years ago or so, at this point, agricultural technology is
advanced enough that that probably wouldn't happen. I think
rigorous Keynesianism would probably lead one to pre-Thatcher
Britain. You would see an increase in mortality because people
would have less leisure time and would therefore take worse care of
themselves, but it would be hard to pinpoint any group of deaths
and say that these heart attack victims are the result of the
poverty caused by an inflationary policy.
On the other hand, interventions do begate interventions, and if
you follow that road long enough, one starts seeing the problems of
Somalia or Ethiopia in the 1980's.
cuernimus|1.6.09 @ 6:40PM|#
@some fed
Most everything Jesus said required the listener to analyze for
hidden meanings. There are no rich people after death, only dead
people.
One of my favorite things about my Catholic schooling was the
deeper, non-fundamentalist readings of the Bible that went counter
to all the grade-school brainwashing that I had, like the miracle
of the loaves and fishes was less about *poof* more food and more
about getting Jews to share (lol stereotypes).
Elemenope|1.6.09 @ 7:09PM|#
He new that unreadable drivel tends to wow the
illiterate.
Now, this sentence made me laugh for a good long time.
Paul|1.6.09 @ 8:08PM|#
He new that unreadable drivel tends to wow the
illiterate.
Now, this sentence made me laugh for a good long time.
You were wowed by it, huh?
Keynes|1.7.09 @ 12:59AM|#
State action enters in ... to provide that the growth of
capital
equipment shall be such as to approach saturation point
at a rate which does not put a disproportionate burden on the
standard of life of the present generation .. . I should
guess
that a properly run community equipped with modern technical
resources, of which the population is not increasing
rapidly, ought to be able to bring down the marginal
efficiency
of capital in equilibrium approximately to zero within a single
generation.
If I am right in supposing it to be comparatively easy to make
capital-
goods so abundant that the marginal efficiency of capital is zero,
this may be the most sensible way of gradually getting
rid of many of the objectionable features of capitalism.
Not only are my detractors jealous of my erudite style of writing,
but they are also envious that it was I who solved the problem of
scarcity once and for all and not them. If they were not so
burdened with a bias against the wisdom of government and those
whose operate its machinery, they may have seen the truth before I
did.
|1.7.09 @ 1:58AM|#
Not only are my detractors jealous of my erudite style of
writing, but they are also envious that it was I who solved
the problem of scarcity once and for all and not
them.
That was really funny! Probably unintentionally, but funny
nevertheless.
[You can't "solve" the problem of scarcity - a human's time is
scarce to begin with]
Elemenope|1.7.09 @ 7:29AM|#
You can't "solve" the problem of scarcity - a human's time
is scarce to begin with
If you were as bad-ass an economist as you claimed, you would know
that the "Problem of Scarcity" refers to *material scarcity*.
Actually you'd know that after a few basic classes.
But you already knew that, right?
|1.7.09 @ 9:35AM|#
you would know that the "Problem of Scarcity" refers to
*material scarcity*
Wrong.
You never paid money to save time? Put another way, do you not mind
delays?
Elemenope|1.7.09 @ 10:01AM|#
You never paid money to save time? Put another way, do you
not mind delays?
Resources may be spent to alleviate the problem of limited time,
but time itself is not generally thought of as capital. And since
we try to restrict ourselves to problems which do not require the
warping of the time-space continuum to solve, economics is about
solving the problems of material scarcity. That that material may
be used to make a person's time more efficient is simply one of the
many uses capital can be put to.
|1.7.09 @ 10:20AM|#
First to be clear, generally speaking, it is not capital with
which economics is concerned when speaking of scarcity, but goods.
Production of goods is the purpose of capital, and goods are simply
things demanded by at least one person.
Let's try another variation on the concept of time as a scarce
good. How about leisure? Leisure is just time unallocated
toward obligations.
Leisure surely is a good. Employment, for example, is not just the
rendering of services for compensation, but the rendering of
services and the sacrifice of leisure.
fan_of_HH|1.7.09 @ 2:44PM|#
[ State action enters in ... features of capitalism. ]
The quote from above points out the silliness of Keynes.
From Hazlitt's critique of that very paragraph.
Nonsense could hardly be carried further. The central
problem with which economics deals, the problem with
which mankind has been struggling since the beginning of
time, is the problem of scarcity, and this problem is assumed
away in a few blithe words. It is "comparatively easy to
make capital-goods so abundant that the marginal efficiency
of capital is zero."
Did Keynes stop to think for a moment what this would
imply? It would imply that capital goods were so abundant
that they had no exchange value! And if they had no value,
they would be as free as air or (most) water or other goods
without scarcity. It would be worth nobody's while to keep
such capital goods in repair (unless it cost nothing, not
even anybody's labor, to keep them in repair). There would
be no problem even of replacement. For as soon as there
were a problem of replacement, it would mean that capital
goods once more had a value and cost something to produce:
therefore, presumably, capital goods would cost nothing
to produce.
Moreover, if the marginal efficiency of capital were zero,
it would also mean that no consumer goods would have any
scarcity, price, or exchange value. For as long as any
consumer
goods anywhere failed to reach the point of satiation,
and had a price or a value, then capital to help produce
these consumer goods would have some marginal yield
above zero.
A marginal efficiency of zero for capital would mean, in
brief, such an abundance of everything that neither capital
goods nor consumers goods would have any scarcity, any
price, or any exchange value. In such circumstances the
rate of interest, of course, would also fall to zero-not only
because the rate of interest and the marginal yield of
capital
tend toward equality, but because it is one of the
implications
of a zero marginal yield for capital that no one would
CONFUSIONS ABOUT CAPITAL
want to borrow money for investment. If someone did want
to borrow money for investment (enough to pay anything
for the privilege), it would imply that to this borrower, at
least, capital did have a marginal yield above zero.
Capital will continue to have a marginal yield above zero,
in brief, as long as it continues to help in the production
of
consumer goods that have a price above zero. And if these
consumer goods have a price above zero, it will be not only
because they fill human wants, but because their supply is
not unlimited and because they cost something to produce.
And it is this cost of production (and not some wicked
conspiracy
of the capitalists) that keeps them scarce.
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