evil magicians
Who's more dangerous, a Marxist or a Keynesian?When asked if he had anything positive to say about Marx, Murray Rothbard replied, "At least he wasn't a Keynesian!"
When challenged by pro-war "libertarians" for collaborating with Marxists, Justin Raimondo of AntiWar.com apparently replied that Marxists aren't dangerous anymore because no one believes them.
By that standard, I'd have to say that Keynesians are very dangerous indeed because everyone seems to believe them -- despite the fact that 1970s "stagflation" utterly disproved the inflation/unemployment "trade-off" at the heart of Keynesian economics.
However infrequently I watch or listen to the news, I almost always encounter Keynesian fallacies about the importance of consumer demand, the dangers of saving, the emphasis on "jobs" -- and never on productivity (except when it's presented as the evil behind the "soft recovery" and the lack of jobs).
I often claim that economic education is critically important to undoing the damage of coercive government. Usually I take this to mean the teaching of basic concepts and the undoing of the most pervasive fallacies. But recently, I've started to think that an all-out attack on the entire complex tangle of fallacies known as Keynesianism is more important than the creative teaching of the basics. Or maybe one requires the other.
In addition to his great book, Economics In One Lesson, Henry Hazlitt wrote The Failure of the New Economics: An Analysis of the Keynesian Fallacies. I haven't read it, but I want to. Too bad it's out of print and a used copy costs about sixty bucks.
Meanwhile, we have the lectures I linked to in a previous post on Keynes, and also the writings of Frank Shostak. I recommend in particular yesterday's "Myth of the Magical Multiplier" and some similar debunking from a few years ago: "Is Velocity Like Magic?"
These two Keynsian canards -- Velocity and the Multiplier -- have baffled me for a while now. Shostak first explains what the concepts mean, what the Keynsians claim for them, and shows why they might seem to make sense at first. He then goes on to show why they have no causal power in the economy and no explanatory power in economic science.
3 Comments:
I think there's something to Keynesian demand-management *given* the existence of state capitalism. It's state intervention that creates the maldistribution of income described by J.A. Hobson, and as a result the state is forced to intervene increasingly to absorb surplus output.
I'm not sure I follow, Kevin.
The economic class -- those who produce -- are hurt by what you call state capitalism and what I call political capitalism (and by political everything else, too).
The political class -- those who steal either directly or indirectly from the economic class -- benefit from political capitalism.
So you're saying that "demand management" reduces the damage done by political capitalism, but reduces it for whom -- the producers or the parasites?
A Google/Froogle search reveals copies of Hazlit's book on Keynesian fallacy readily available at $25.00. I checked eBay and found a hardcover edition going for $9.93, so I grabbed it! Thanks for stimulating my interest.
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