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Posts Tagged ‘Keynes

“Economic theory is the art of pulling a rabbit out of a hat right after you’ve stuffed it into the hat in full view of the audience”*…



Many critics were disappointed the 2008 crisis did not lead to an intellectual revolution on the scale of the 1930s. But the image of stasis you’d get from looking at the top journals and textbooks isn’t the whole picture — the most interesting conversations are happening somewhere else. For a generation, leftists in economics have struggled to change the profession, some by launching attacks (often well aimed, but ignored) from the outside, others by trying to make radical ideas parseable in the orthodox language. One lesson of the past decade is that both groups got it backward. Keynes famously wrote that “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” But in recent years the relationship seems to have been more the other way round. If we want to change the economics profession, we need to start changing the world. Economics will follow.

From J.W. Mason‘s helpful survey of economic thought since the Crash of 2008: “How a Decade of Crisis Changed Economics.”

* Joan Robinson


As we contemplate counting, we might send revolutionary birthday greetings to Alexander Hamilton; he was born on this date in 1755 (or 1757, there is some scholarly debate about the year, but not the date).  A Founding Father of the United States, Hamilton created the Federalist Party (proponent of stronger national government than provided by the Articles of Confederation), the United States Coast Guard, and the New York Post newspaper.  But he was probably most notably the creator of the new nation’s financial system.  The main author of the economic policies of George Washington’s administration, he took the lead in the Federal government’s funding of states’ debts, and established a national bank, a system of tariffs, and friendly trade relations with Britain.  His vision included a strong central government led by a vigorous executive branch, a strong commercial economy, a national bank supporting manufacturing, and a strong military…. in all of which he stood most frequently opposed to Thomas Jefferson, who favored agrarian and small government policies.

220px-alexander_hamilton_portrait_by_john_trumbull_1806 source


“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it”*…


As you grow up and experience more of the ups and downs of the economy, you will notice a piece of mindbending hypocrisy: during the good times, bankers, entrepreneurs—rich people in general—tend to be against government. They criticize it as a “brake on development,” a “parasite” feeding on the private sector through taxation, an “enemy of freedom and entrepreneurship.” The cleverer among them even go so far as to deny that government has any moral right, or duty, to serve society, by claiming that “there is no such thing as society—there are just individuals and families,” or “society is not well defined enough for the state to be able to serve it.” And yet, when a crash occurs that is brought on by their actions, those who have delivered the fieriest of speeches vehemently opposing substantial government intervention in the economy suddenly demand the state’s aid. “Where is the government when we need it?” they yelp.

This is not a new contradiction[**]…

Yannis Varoufakis, the motorcycle-riding economist who served as Greece’s Minister of Finance through the depths of their recent financial crisis, offers some plain speaking on economics in general and banking in particular: “A letter to my daughter about the black magic of banking.”

See also this.

* John Kenneth Galbraith, Money: Whence it came, where it went

** Indeed: “Since those who rule in the city do so because they own a lot, I suppose they’re unwilling to enact laws to prevent young people who’ve had no discipline from spending and wasting their wealth, so that by making loans to them, secured by the young people’s property, and then calling those loans in, they themselves become even richer and more honored.”   – Plato, The Republic


As we contemplate capital, we might send neoliberal birthday greetings to Maurice Félix Charles Allais; he was born on this date in 1911.  He won the 1988 Nobel Prize in Economics “for his pioneering contributions to the theory of markets and efficient utilization of resources.”  Indeed, the Nobel Committee suggested that Allais might be considered (with Paul Samuelson and John Hicks) ” the principal architect of the neoclassical synthesis” (in large measure because they formalized the notion of self-regulating markets).

Samuelson said “had Allais earliest writings been in English, a generation of economic theory would have taken a different course” and the Nobel Prize should have been awarded to him much earlier.  John Maynard Keynes, whose ideas the trio very selectively used, thought that Allais and the emerging neo-liberal idea were dangerously wrong.




Written by LW

May 31, 2018 at 1:01 am

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist”*…


The tenth anniversary of the start of the Great Recession was the occasion for an elegant essay by the Nobel laureate economist Paul Krugman, who noted how little the debate about the causes and consequences of the crisis have changed over the last decade. Whereas the Great Depression of the 1930s produced Keynesian economics, and the stagflation of the 1970s produced Milton Friedman’s monetarism, the Great Recession has produced no similar intellectual shift…

Robert Skidelsky explains why at: “How Economics Survived the Economic Crisis.”

* John Maynard Keynes


As we delve into the dismal, we might spare a thought for Robert Burton; he died on this date in 1640.  An Oxford scholar, he is best known for his classic The Anatomy of Melancholy, an odd mix of wide-ranging scholarship, humor, linguistic skill, and creative (if highly approximate) insights– a favorite of scholars and authors from Samuel Johnson to Anthony Burgess.



Written by LW

January 25, 2018 at 1:01 am

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