By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil
In 1936 Keynes wrote a forward to the German edition of his General Theory. Since then it has, as far as I can see, been ignored by his defenders and held up by his most virulent detractors (notably, Austrian School ideologue Henry Hazlitt). Detractors point to what they perceive to be a damning indictment of Keynes’ system in the form of the following quote:
The theory of aggregated 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.
In quoting this sentence we are supposed to be led to believe that Keynes possessed some sort of ulterior and, indeed, nefarious motive. But any such presumed motive tends to melt away when the rest of the passage is read:
This is one of the reasons that justifies the fact that I call my theory a general theory. Since it is based on fewer hypotheses than the orthodox theory, it can accommodate itself all the easier to a wider field of varying conditions. Although I have, after all, worked it out with a view to the conditions prevailing in the Anglo-Saxon countries where a large degree of laissez-faire still prevails, nevertheless it remains applicable to situations in which state management is more pronounced.
And so it turns out that Keynes’ critical point is that his theory, being a truly general theory, can be applied to explain any economy. There’s nothing nefarious here, Keynes is simply making the point that his theory is remarkably robust in that it can explain how production and consumption takes place in pretty much any economy – not just in a market economy.
To indict Keynes on this point would be basically the same thing as to indict a sociologist whose methodology could be applied to both a totalitarian state and a democratic one; or a doctor using the same anatomical descriptions to explain the functioning of the body of a healthy man and a sick one. In fact, it shows that Keynes’ is a theory far more in the spirit of science than, for example, neoclassical theory, which only seeks to describe the functioning of rigidly defined market economies.
Indeed, these indictments tell us more about the motivations of the people who make them rather than of Keynes and his followers. The critics implicitly assume that economics should be a practice based on very specific value judgments. Thus a theory that might explain both the economy of Nazi Germany and that of the democratic US is to be distrusted because it does not contain a serious distinction between the two systems; instead it seeks to explain what they hold in common rather than where they differ.
Of course, if you like your thinking mixed up and muddled with value judgments the criticisms made by the likes of Hazlitt are indeed correct: when counting apples one should always take into account in his arithmetic his own personal opinion of the taste of apples.
But it is not surprising that such an approach has its adherents generally chalked up as cranks and ideologues by their academic colleagues (although there is some irony here given that the mainstream implicitly relies on many of the same value judgments, albeit in softer form). Not to mention the irony of their logical systems containing such strong value judgments that seek to have society organised in a very specific manner while at the same time they chastise their opponents for… telling people what to think and what to do – indeed, the whole theory appears to be written in an imperative tone that would not be out of place in the Old Testament. The sheer level of narcissism that such unreflective assertions must necessitate simply boggles the mind – one would be forgiven for thinking that some sort of psychological ‘splitting’ was at work.
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And, what about the Chicagoan fellow-travellers of Pinochet?
Let’s be clear: Keynes made himself a target for this kind of attack. He knew it. He was a big boy. Stop pretending the man was not a political animal.
Instead of apologizing for your cult, point out what Hayek and Friedman said and did. You win.
Unfortunately, you care more about defending your dogma than you care about winning a point by simply making sense. Keynes could have served us all better by telling us the brutal reality that capitalism has nothing to do with capital. He chose instead to couch his attack on the rentier class in impenetrable terms.
Hugh wrote:
To be honest, I don’t think Keynes had a clue as to what a totalitarian state was. Such states are profoundly uneconomic.
This has to be one of the silliest statements every posted — not just here, but anywhere, ever.
Are totalitarian states also immune to physics? Biology? Do they have their own versions of mathematics? When astronomers in a totalitarian state look up, do they see different stars and constellations? Totalitarian states exist in the real world and, as such, are subject to all the same constraints and physical laws as all other states, whether they be democracies, monarchies, republics, plutocracies, or whatever.
If economics is a science, its basic theories should be as applicable to a totalitarian state as they are to any other. If that’s not the case, it’s a sign of the complete and total failure of economics.
This isn’t even Newton’s perfect sphere moving through a vacuum; it’s a complete denial of real conditions that exist in the real world.
As Arendt wrote in Origins of Totalitarianism:
“It is precisely because the utilitarian core of ideologies was taken for granted that the anti-utilitarian behavior of totalitarian governments, their complete indifference to mass interest, has been such a shock.”
Arendt goes to some length to distinguish totalitarianism from authoritarianism, military dictatorship, and tyranny with which it shares superficial similarities, such as what SteveA quotes below. As she writes,
“”A hierarchically organized chain of command means that the commander’s power is dependent on the whole hierarchic system in which he operates. Every hierarchy, no matter how authoritarian in its direction, and every chain of command, no matter how arbitrary or dictatorial the content of orders, tends to stabilize and would have restricted the total power of the leader of a totalitarian movement. In the language of the Nazis, the never-resting, dynamic “will of the Fuehrer”—and not his orders, a phrase that might imply a fixed and circumscribed authority—becomes the “supreme law” in a totalitarian state.”
As Arendt notes, totalitarianism is not directed against restricting freedom but to abolishing it altogether. It is about creating a totalitarian fiction, what Arendt calls a “fictitious world” based on scientificality, that is untestable predictions wrapped in scientific jargon. It is about erasing all fixed points since no matter how absurd these might serve as anchors for any opposition. It is precisely the conceit of totalitarianism that the use of science is irrelevant. The totalitarianism fiction is itself the embodiment of science. It can do this because of its belief that anything is possible and it can enforce it through total terror.
Arendt also discusses how the normal world, and I would include Keynes in this, views the totalitarian ones through the prism of its normality. Totalitarianism’s crimes and excesses must spring from misapplications of real world norms. But nothing could be further from the truth. They are a playing out of the totalitarian fiction. This fiction has no use for laws or general theories. It is its own law and general theory.
As I said, I do not think Keynes even began to grasp this. If he had, he would never have made the from a totalitarian point of view incredibly stupid statement Pilkington quotes, and he would have seen the translation of his general theory into German in 1936 as pointless.
Outcomes often contradict theory.
Consider Singapore, accurately described by Koolhaas as a Confucian Dictatorship (and before you dismiss Rem as an architect, not a writer, note that Bruno Latour called him the best living sociological writer after reading his Singaporean critique).
Contained within (but not central to) Rem’s argument was the observation that well being and happiness are high while true self determination is non-existent.
In fact, Singapore is a fully managed Democracy, where a single party parliament rubber-stamps the personal decree, and re-elects in perpetuity, a Prime Minister’s office that looks and smells like a hereditary monarchy. The power of the electorate is completely neutralized by social planning, where sub-groups are gerrymandered into housing blocks with strict racial and demographic quotas so that no political minorities can gain the slightest foothold in parliament (recently a single opposition seat was won for the first time in what are undeniably free elections. He was shortly arrested and convicted for speech crimes, and subsequently removed). The city state responds to lightning quick micro-management from the top down, to the point where laws have been effected within a matter of days to restrict specific persons’ behavior in their own homes, when those behaviors come under the slightest public scrutiny.
My point is that Singapore effectively implements Keynesian policies (examples include sliding scale and/or subsidized housing for everyone and a guaranteed job program) under a de facto totalitarian model, albeit one that falls short of the Platonic “will of the Fuhrer” standard, which I would argue is not realizable and therefore of little use to the discussion.
I hated it there because happy authoritarianism rubs me the wrong way, but that’s an issue of personal taste. Singaporeans are content, self sufficient and well lived, for the most part (but like every one else, facing wide spread reduction of personal wealth with trepidation).
No economic model performs under foolish or unreasonably self-serving leadership, no matter the political organizational structure. But the facts that (1) the occasional benevolent dictatorship does emerge, and (2) that one is currently using Keynesian measures domestically to good effect, support Keynes’ assertion that his (and I would assume others’) economic theories are cross-platform.
What you are describing in Singapore is authoritarianism. Totalitarianism is something completely different. Again to refer back to Hannah Arendt, its aim is to obliterate the individual in some vast, vague enterprise which (supposedly) can only be realized in some indefinite future. The pursuit of this goal is the only rule. No other rules exist since these would stabilize the individual and provide points from which they could challenge a system which is meant to be unchallengeable.
Totalitarianism is not synonymous with “repressive government.” Many governments are repressive to one degree or another. Almost none of them are totalitarian in nature. As its name suggests, totalitarianism is directed against the totality of the individual and the relations between individuals in society. It uses pervasive random terror to isolate the individual and destroy individuality resulting in a stable, zombified society of the living dead.
Arendt was using Hitler’s Nazism and Stalin’s Communism as her case studies. Nowadays we talk of inverted totalitarianism and kleptocracy. These share many characteristics with the classical totalitarianism of Arendt. They are for one thing total systems. I think the major difference, at least so far, is that the use of terror is of a different kind. We have drone strikes abroad but mostly what we have is the isolation of the individual through a process of numbing and distraction. Millions are thrown out of work, lose their homes, their healthcare, their pensions, and we as a people sit numbly by and just watch it happen. We do not react. We do not pour out into the street. We just sit there and change the channel.
Among other things, Hugh wrote:
As Arendt notes, totalitarianism is not directed against restricting freedom but to abolishing it altogether. It is about creating a totalitarian fiction, what Arendt calls a “fictitious world” based on scientificality, that is untestable predictions wrapped in scientific jargon. It is about erasing all fixed points since no matter how absurd these might serve as anchors for any opposition. It is precisely the conceit of totalitarianism that the use of science is irrelevant. The totalitarianism fiction is itself the embodiment of science. It can do this because of its belief that anything is possible and it can enforce it through total terror.
Wow, talk about completely avoiding the issue. Lots of verbiage, no actual response to the point.
In the Soviet Union, Stalin promoted the biological theories of Trofim Lysenko because they agreed with the Soviet Union’s official ideology. But, despite Stalin’s erasing of personal freedom, despite “erasing all fixed points”, despite “the conceit of totalitarianism that the use of science is irrelevant”, despite all that, it didn’t work.
Hitler’s Germany promoted all manner of strange theories — hollow earth, universal ice, various mystical energy sources and, of course, their notorious racial ideas — and you know what? None of those worked either.
The universe doesn’t care about ideology. Things work the way they work and it doesn’t matter how much political power and determination is brought to bear, things continue to work they way they work. That can’t be changed.
If economics is the study of how an aspect of reality works, then it should be able to explain how things work in a totalitarian state, in feudal Europe, in ancient Babylon, in Han era China, among tribes in the Amazon, and in modern capitalism. It should be able to explain how things work in a hypothetical alien culture with hive minds and the ability to manipulate individual atoms using telekinesis.
If economics can’t do that, then it’s a failure. It’s an ideology dressed up in mathematical drag, trying to pass it self off as a actual field of investigation rather than something like Lysenkoism trying to impose itself on reality.
When a real science encounters conditions in which its principles don’t seem to hold, it investigates and expands those principles to account for the conditions. Thus, Newtonian mechanics becomes a subset of Relativity, explaining how things work with masses, temperatures and velocities such as those found around Earth. Quantum mechanics explains how things work at a subatomic level. And so on.
You don’t find physicists — or biologists, astronomers, chemists, geologists, metallurgists, etc. — whining that their theories don’t work because totalitarian states are different. If economics has to engage in this sort of special pleading, that’s more of a comment on economics than on totalitarianism.
So, rather than telling us about totalitarianism, why don’t you address why you think economics is completely incapable of dealing with such a relatively slight change in conditions.
Your argument has a big problem: physicists, biologists and astronomers don’t have their object of study affected by totalitarianism. Economics is all about human relations. If the nature of the human relations change, some aspects of the the economics may change as well. The economy in the Roman Empire is NOT the same as the US economy in the post-war years. The keynesian theory (as Keynes said)is a general theory of the modern capitalism, it doesn’t explains the Genghis Khan Empire macroeconomic stability, neither the full employment of Feudal French. This is a completely a-historical aproach,that doesn’t make sense at all. Read “The Great Transformation” of Karl Polanyi and you’re going to understand me better.
Your concept of science is completely old-fashioned. Social sciences are different from the Hard Sciences. Deal with it!
You’re kidding me, right? I’m not even sure Keynes works in a post-industrial economy, never mind anything else.
Actually, Keynes works under New Deal-like conditions in an industrial economy. Anything else leaves it shot through with bullet holes.
“If the nature of the human relations change, some aspects of the the economics may change as well. ”
Of course. Keynes, however, had a theory which worked as long as you had (ahem) “Employment, Interest, and Money”, the three topics of the General Theory.
If your culture is missing one of those three, or if it is not an important part of social relations, his theory indeed does not work. So if there’s no employment, no interest, or no money, his theory doesn’t work.
Most totalitarian states have had employment and money, though I suppose interest is questionable.
Daniel Souza wrote:
Your argument has a big problem: physicists, biologists and astronomers don’t have their object of study affected by totalitarianism.
Bollocks.
Economics is the study of how limited resources are distributed to meet potentially unlimited needs and desires. Unless you believe that totalitarian states have managed to solve the problem of limited resources (and the existence of rationing in the Third Reich and Soviet Union is strong evidence that they didn’t), then they had mechanisms for deciding how to allocate the resources they did have among their various needs and desires. Economics should be capable of describing what those mechanisms were.
The same is true of all the other examples mentioned; all those societies and civilisations had limited resources and potentially unlimited needs and desires and they all needed ways of expanding or extending those resources, reducing or eliminating those needs and desires, and allocating what resources they did have among their needs and desires.
Claiming that such a situation exists only in modern capitalism and only as a consequence of modern interpersonal relationships is nonsense on a stick.
Totalitarian states had factories and stores, warehouses and ports, roads and rails, hospitals and clinics, ships and cities — just the same as non-totalitarian states. The difference between the two in non-political terms — and we’re not talking politics, we’re talking economics — is almost non-existant. And what differences did (and do) exist are almost entirely the product of history, geography and culture, not passing political movements.
Modern economics should be capable of studying those various mechanisms, noting commonalities and differences and developing theories to explain how they work. If it can’t, then it’s a complete and utter failure as a field of study.
Your concept of science is completely old-fashioned. Social sciences are different from the Hard Sciences.
And theology is different again. However, economics claims to be one of the hard sciences; it’s got mathematical equations and everything. If wants to be regarded as a hard science, then I think it’s only valid that it be judged by those standards.
Hugh, you’re simply wrong; totalitarian states end up following the same rules of economics as every other.
Most of economics is entirely non-utilitarian anyway, and leads to disturbing anti-utilitarian conclusions. Utilitarianism is a value system and scientific economics, such as Keynes attempted to practice, isn’t.
Daniel Souza wrote:
This is a completely a-historical aproach,that doesn’t make sense at all. Read “The Great Transformation” of Karl Polanyi and you’re going to understand me better.
I must admit that I found you recommending this book quite bizarre, since it supports my point much more than it does Hugh’s claims that totalitarian states are profoundly uneconomic.
Polanyi describes one set of economic mechanisms that prevailed in mostly English society prior to the industrial revolution and birth of the modern nation-state and another set that prevailed after and explores some of the processes involved in moving from one to the other. This suggests economics – or, at least, Polani’s version of economics — can indeed deal with how different states, cultures and ideologies address the problem of limited resources and unlimited wants. I honestly don’t recall any special pleading from Polanyi trying to excuse economics inability to deal with situations different to those existing in the modern world.
As such, I must admit that whatever point you were trying to make has gone completely over my head.
Care to highlight for me?
To be honest, I don’t think Keynes had a clue as to what a totalitarian state was. Such states are profoundly uneconomic. That happens if you can purge anyone, send them off to a slave labor camp or exterminate them, or if you intend to augment your production by conquering and looting your neighbors. Aggregate production as well as theory, any theory, is irrelevant because as Hannah Arendt noted the foundational idea of totalitarianism is that anything is possible. So you don’t need theory. If the maximal leader wants something done, then it is done regardless of the consequences. And if it doesn’t get done, a lot of people are shot and the job is given to others. And if these others manage to get the job done, then a lot of them will be shot as well.
Another thing Arendt talked about was the myth of normalcy that totalitarian regimes projected to the rest of the world, that is until circumstances allowed them to dispense with it. Perhaps it is to this myth that Keynes is addressing himself.
“Stalin has eliminated every independent, critical mind, even those sympathetic in general outlook. He has produced an environment in which the processes of mind are atrophied. The soft convolutions of the brain are turned to wood. The multiplied bray of the loud-speaker replaces the soft inflections of the human voice. The bleat of propaganda bores even the birds and the beasts of the field into stupefaction. Let Stalin be a terrifying example to all who seek to make experiments.”
–Keynes, 1933
Ours was an experiment too. It’s no coincidence that bubble finance was expanded by control-freak ideologues (that would be us). If finance can replace politics, as our Western experiment tried to show (however temporary), then Capitalism is no longer necessary as the favorite method of spreading the wealth (thicker on some than others). And since all material value is fiat, who cares? All that is needed is an organizational cooperative system. That’s all. I don’t think we are there yet.
Southern US pre-Civil War had an economy based on a very few number of people owning all physical assets. These assets were known as slaves, and the economy functioned – the GDP was suboptimal, but an economy did exist.
Hugh has no clue what economics is, and therefore his criticisms of Keynes are utterly worthless.
Also, Hugh has no numbers to back up his claims.
When Hugh provides databases showing multiple examples of his idea and explains the general principles behind his unfounded and bizarre assertion, then his thought should be considered.
Until that moment, he’s just another FoxNews troll living in his mom’s basement.
I would invite you to read Hannah Arendt’s Origins of Totalitarianism, specifically its third section. I have no problem with dealing with ideas in their own terms. But Pilkington is bringing up their intellectual history, and in that context it is important to know what that history is. I am reminded how DownSouth who is now sadly gone from this site ran into similar hostility when he discussed the common intellectual origins, and flaws, of capitalism and liberalism or when he discussed “scientificality”.
I also detect a certain amount of Keynes worship, a kneejerk defense of him. It is interesting that Keynes’ general theory was not a general theory even at the time because of its failure to understand totalitarianism. But it is equally true today that it is not general in that it does not take into account kleptocracy. Keynesianism presupposes, falsely, that the foundations of political economy are rational, that they are normal. Both past and current events show that this is not the case.
Hugh,
It’s obvious the two commenters criticizing you above have no idea what you’re talking about. I doubt they’ve even heard of Hannah Arendt, and if DownSouth were still around, and tried to discuss some subject such as the history of liberalism or the cultural rationalization of the West, then I’m sure they’d be hostile to him as well, and would have no idea what he was talking about either.
This reminds me of a quote from Arthur Schopenhauer:
“No man can see over his own height. Let me explain what I mean.
You cannot see in another man any more than you have in yourself; and your own intelligence strictly determines the extent to which he comes within its grasp. If your intelligence is of a very low order, mental qualities in another, even though they be of the highest kind, will have no effect at all upon you; you will see nothing in their possessor except the meanest side of his individuality — in other words, just those parts of his character and disposition which are weak and defective. Your whole estimate of the man will be confined to his defects, and his higher mental qualities will no more exist for you than colors exist for those who cannot see.”
SR6719 wrote:
I doubt they’ve even heard of Hannah Arendt,
Or, more likely, have both heard and read Arendt and recognise that what she wrote is not relevant to the discussion. Bringing up her work is just an attempt to avoid the question by changing the subject.
In fact, it shows that Keynes’ is a theory far more in the spirit of science than, for example, neoclassical theory, which only seeks to describe the functioning of rigidly defined market economies.
How can anything Keynes wrote be in the spirit of science when he never explained the basis for his assertions or often the logic based on those premisis. His assertions came from his imagination or were pulled out of his rear end and were based on nothing else, but we are simply to believe. Nothing scientific there!
And free market proponents do not seek to “have society organized in a very specific manner”. When societies are left alone free markets happen spontaneously and the economy and society find their own order.
“When societies are left alone free markets happen spontaneously ”
Do you have evidence for that. I thought free markets were very dependent on the rule of law, or something equivalent.
Exchange between individuals has sprung up naturally in most societies going back to ancient times. If it doesn’t happen it is because it is suppressed within an authoritarian framework.It doesn’t require the rule of law to spawn but can happen within a completely caveat emptor framework. That does not mean that the rule of law or some minimal refereeing would not be helpful.
That does not mean that the rule of law or some minimal refereeing would not be helpful. Ray Warkentin
Such as enforcing a gold standard?
I agree with you Beard because gold has no intrinsic value, but I could always go with a Green Standard where the worth of production is measured by how environmentally sound it is.
This is a fantasy. Please see David Graeber’s work, he has had several posts on this site.
You have also not read Keynes if you think his assertions came from nowhere. If you have, please tell me exactly which part of TGT you disagree with and I will debate you on it.
Furthermore, there is no such thing as a free market. You ignore hidden laws like limited liability, immigration restrictions, ones that protect shareholders and so forth. See Ha-Joon Chang on this, he has a video on youtube.
Wrong on sponteanous free markets. A great piece on that concept from this site earlier:
http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html
I actually just wrote a post about your imaginary ‘free market’ and how it causes your ilk to contradict themselves:
http://unlearningeconomics.wordpress.com/2012/05/18/free-market-double-standards-5-0/
Most of the Austrians are hypocrites when it comes to liberty since they insist that the government use gold as money because supposedly the free market has chosen it. But any money the government uses will no longer be a purely free market money! Thus government money MUST be inexpensive fiat to enable a true free market in private money.
Of course the Keynesians have problems too. Like Paul Krugman, they insist that government deficits must be financed with borrowing and have thus endangered everyone with National Debt scares.
Hitler would have been an extreme Republican. The first thing he did was to give the big industrialists the benefit of the Nazi government guaranteeing their loans and debts. Hitler was a dictator who was financed by major German industrialists just like Romney is financed by American ‘industrialists’and both hated a truly “free” anything including a “free market”. Henry Ford and Hitler were very good buddies, and Ford did a lot of business with Hitler’s Germany.
The connections between big American industrialists and bankers and Hitler’s Nazi regime was extensive. Fascism is a state controlled by the wealthiest industrialists and bankers mixed with a nasty combination of historical fables, militarism, and repression of the majority through fear of violence and complete oppression of opponents. This almost exactly mirrors the Republican fixation with total accommodation of the wealthy and the violent repression of opponents through the construction of vastly more violently oppressive judicial and prison systems.
To attempt to compare Keynes with Hitler or Nazis is a ludicrous self serving manipulation of facts and reality. Von Hayek is a soul-mate to Nazi fascism, which Keynes could never be.
Hitler would be just as comfortable being a Democrat as a Republican. Both are equally fascist parties. The Democrats simply market the soft side of fascism more than the hard side (there’s a little of both in both parties though). Plus, the 30’s Germany was a different time and the Democrats have honed Nazi propaganda for their time and improved upon it so its victims don’t recognize it as such.
Plus, the victors write the history . . . most of what we know is the heavily influence by war propaganda. And even under the official history Democrats like Joe Kennedy were pro Nazi and Democrats and Republicans alike used Nazi policies before, during, and after the war. Who else created concentration camps and had racist imperial policies and firebombed and nuclear bombed hundreds of thousands of civilians? Both Democrat and Republicans snuck Nazis into this country and created a secret government much like the Nazis. Much of our current state resembles Nazi Germany. The U.S. probably has exceeded the crimes of Nazi Germany by now. It’s just that most of its citizens remain brainwashed into thinking they are exceptional–especially Democrats.
You say Hitler guranteed the debts of industrialist, eh? (including American industrialists too–right?!)
Well, Obama did the same by going along with the multi trillion dollar bail out the banks, and GM, and a few other favored firms.
Oh, and don’t forget Solyndra, where Obama literally did what you accused Hitler of doing.
Obama won’t gurantee worker pensions and companies can walk away from pension obligations in bankruptcy and the federal government usually doesn’t step in to backstop this obligatoin . . . . but when it’s Obama’s banker friends he has the federal government gurantee payment! Hell, Obama’s going to cut our Social Security payments . .. . . .but he’ll make sure to gurantee banker loans so they are the only sacred bonds our society has.
Free markets naturally spring up?
Maybe, but then human nature takes over and those with power use that power to fix the markets in their favor. Without the rule of law free markets no more exist than socialist utopias. both are fictions.
Philip should have emphasized that Keynes was talking about a monetary economy, not how “production and consumption takes place in pretty much any economy”. Monetary economies include modern totalitarian economies, and what are called “market economies” or “capitalism”, and their similarities are more important than their differences.
Ray has it completely wrong: When societies are left alone free markets happen spontaneously .. Exchange between individuals has sprung up naturally in most societies going back to ancient times. ..It doesn’t require the rule of law to spawn but can happen within a completely caveat emptor framework. This is the Austrian / textbook /commodity / mainstream theory. Money & markets arose from individuals bartering commodities in spot transactions. Money is the most tradeable commodity, and arose without government, without agreement in society at large, but only on the basis of individual barter transactions. And then the eebil gubmint comes in & ruins things for everyone by its purely destructive “interventions”.
It is utterly false. So false that there is not one known instance. It is entirely made up, on the basis of no evidence. The free markets Ray considers come about only in monetary economies. And money is a creature of the state. The historical sequence is government–> money –> markets. Yes there are subtleties, nuances and precursors but that is basically it. “Free markets” where commodities are priced and sold in return for a monetary unit are very unspontaneous things.
The Hippocrates are the Keynesians and Marxist.
Keynesians are kind of next generation socialists. They love government spending, the more reckless the better. The government can always tag the people for the costs either via higher taxes or prices.
Marxists are pure cowards. They don’t give two shits about anyone. Ask them if they are willing to pay and they will curse you. But when Austrians ask for free markets, no government intervention, they will pull out the “you will let the poor die” card.
Devaluation of a currency is theft whether you are a Keynesian, Austrian, or a Marxist.
hippocrates was an ancient greek physician, no? or was he macedonian? eh i can’t remember! i think you meant hypocrites?
ideologues are pure cowards… etc… currency is a convenient illusion…
but ideologues won’t let inconvenient facts get in the way of banging whatever (golden) drum is at hand… but i agree.. we should ‘let the poor die’ along with everyone else…there really is no choice in the matter, after all
Descriptions and prescriptions are two different beasts.
As a descriptive work, The General Theory, is about as good as any other theory, including neoclassicism. If people get scared and lose their “animal spirits”, it causes as drop in activity. Sound the presses. That’s descriptive economics as much as any other discipline.
As with any other school, there are prescriptions or better known as “fixes”. This is the editorial aspect of the work. Good theorists that don’t give directions on how to fix the problem are understandably forgotten. Who cares? That’s not going to get you a job in Washington.
Whether or not the statement that Keynes made is indicative of his idea of how things actually work, or indicative of the best system under which he can execute actions is of debate.
The fact the author of this article cannot differentiate between descriptive and prescriptive economics is not. He holds tight to the former and assumes that justifies the latter. It’s either lazy or a directed attempt at simplifying the underlying content so the layman accepts it as truth.
Having read the general theory, I doubt its descriptive qualities are all that special. I’m a moron though.