Keynesian Economists Even Worse Than Keynes’ Economics

Posted: Sep 30, 2019 10:09 AM

Even though I have discredited many of Keynes arguments in the past several articles, he must be given credit on his own acknowledgement of the purpose of this book, as he certainly does hold true to his purpose.  And I support Keynes in his effort of this endeavor.  The criticism I review in this article, while directed at Keynes in this writing, is really directed, not to Mr. Keynes, but to the many that have followed since his work on General Theory and constructed an economic system based on many flawed assumptions and a system assembled from aspects of Keynes work, not a system defined, articulated, and purported by Keynes himself.  In this regard, I absolutely agree with Friedrich Hayek when in 1978 he stated that:

Keynes was very capable of rapidly changing his opinion.  In fact, he was already, when I talked to him last time [1946], very critical of his pupils who in the post-war period were still agitating for inflation.  And assured me if his ideas ever became dangerous he would turn public opinion around in a moment…I am sure he would disapprove of what his pupils made of his doctrine.[1]

Hayek also revealed that Keynes, while a brilliant man, was “not a great economist” and “was not a consistent or logical thinker,” [2] as examples of this will be reviewed.  Keynes was British so his thoughts and ideas are directed, for the most part, to the British economy, not the economy of the United States; another distortion of those who have constructed and executed the Keynesian economic system in the United States over decades – to the point where this realization is long lost.  In fact, Keynes praised Hayek’s Road to Serfdom writing “In my opinion it is a grand book….Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement.”[3]

Keynes continually contradicted himself in his writings, as will be discussed below, but also in his discussions and actions.  He would promote the gold standard as sound then refer to it as a “barbarous relic;” he would demean the wealthy, but longed to be rich; and degrade speculation, but was a speculator himself.[4]

As with any system which is incorporated into human activity, there is no definitive or absolute cause and effect – the variables are too many and too dynamic.  But patterns of principles can hold true while the details will vary, even often greatly.  So complete empirical data is not found, but empirical patterns based on principles can be found, as was discuss throughout this writing.  As George Santayana famously said, “Those who cannot remember the past are condemned to repeat it;”[5] or, in many cases, foolish not to repeat it as in the actions of 1920 and 1946 Depressions.  As Murray Rothbard shrewdly explained, “There cannot be controlled experiments when we confront the real world of human activity.”[6]  Thus the Great Experiment of America is not a controlled experiment, as the collectivists would like, or the Keynesians would have you believe, but an experiment of principles.

The great British jurist, Sir William Blackstone, warned, in a similar fashion, that if those who legislate and adjudicate laws do not understand the history and historical context of the law, they will fail in their endeavor.  Blackstone wrote that they must be “the guardians of the English constitution; the makers, repealers, and interpreters of the English laws; delegated to watch, to check, and to avert every dangerous innovation, to propose, to adopt, and to cherish any solid and well-weighed improvement; bound by every tie of nature, of honour, and of religion, to transmit that constitution and those laws to posterity, amended if possible, at least without any derogation.  And how unbecoming must it appear in a member of the legislature to vote for a new law, who is utterly ignorant of the old! what kind of interpretation can he be enabled to give, who is a stranger to the text upon which he comments!”[7]

Law schools and the judiciary today are focused on case law, not the history or sources and foundations of law on which the United States was founded.  Blackstone continues stating, “The mischiefs that have arisen to the public from inconsiderate alterations in our laws, are too obvious to be called in question; and how far they have been owing to the defective education of our senators, is a point well worth the public attention.”[8]  This narrow focus has proven tragic.

[1] Friedrich A. Hayek, November 12, 1978, “Interview by Thomas Hazlett,” (The Hayek Interviews), [].  This commentary is also referenced at Thomas W. Hazlett, July 1992, “The Road from Serfdom: Foreseeing the Fall,”, [] and Jonathon P. Ellis, 2010, “On the Reconciliation of Economic and Political Perspectives on Policy: An Examination of the Relationship between Past Policies and the American Reinvestment and Recovery Act of 2009,” (Politics, Bureaucracy and Justice, Vol. 2, Issue 1, West Texas A&M University: Canyon, TX)

[2] Friedrich A. Hayek, November 12, 1978, “Interview by Thomas Hazlett,” (The Hayek Interviews), [].

[3] Thomas W. Hazlett, July 1992, “The Road from Serfdom: Foreseeing the Fall,”, [].

[4] Hunter Lewis, January 2013, “Two Sides of the Same Debased Coin,” The Free Market, Vol. 31, No. 1, (Auburn, AL: Ludwig von Mises Institute), pp. 1-3.

[5] George Santayana, 1905, The Life of Reason: the Phases of Human Progress, Vol. I, Reason in Common Sense, (New York, NY: Charles Scribner’s Son), p. 284.  Santayana’s quote is a slight modification of Edmund Burke’s (1729 – 1797) quote, “Those who don’t know history are destined to repeat it.”

[6] Murray N. Rothbard, 2011 (originally published as Logic of Action (2 Vol.) in 1997), Economic Controversies, (Auburn, AL: Ludwig von Mises Institute), p. 31.

[7] Sir William Blackstone, 1753, Commentaries on the Laws of England: Of the Nature of Laws in General, Vol. 1, “Section I: Of the Study, Nature, and Extent of the Laws of England,” (Indianapolis, IN: Liberty Fund), [].

[8] Sir William Blackstone, 1753, Commentaries on the Laws of England: Of the Nature of Laws in General, Vol. 1, “Section I: Of the Study of the Law,” (Indianapolis, IN: Liberty Fund), [].