Friday, July 16, 2010

Some Defunct Economist - 7/16/2010

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist" - JMK

- I've always been disappointed that there aren't a lot of videos or recordings of Keynes online. I had never come across one before, but recently I did here. It's very short. Keynes begins speaking at 00:31. The rest of the video is some nice music and pictures. I can't tell what it's from, but he's talking about Britain as the center of a new currency system, so I imagine it is early to mid-forties. Pretty neat. If anyone else knows of any videos or recordings of Keynes please let me know!

- And speaking of videos, SlowTV has four lectures on Keynes from 2009 from prominent Keynes scholars that aren't named "Skidelsky" or "Krugman", which is kind of nice. I've only listened to the first one so far by Don Markwell - it's very good. He starts by discussing how hard it is to pin down Keynes - the many variants of "Keynesianism" that there are out there. He relates a story of Keynes coming back from a conference in America and remarking "I was the only non-Keynesian there". This is reminiscent, of course, of Marx's declaration that he was not a Marxist. I think that kind of reaction is part wittiness and part frustration that theories tend to develop a life of their own that may be somewhat different than what you intended. Markwell goes on to talk about Keynes's views on international relations, which is also the subject of Markwell's book.

- Joan Bakewell has a very short paean to Keynes in The Guardian entitled simply "My Hero John Maynard Keynes". What I like about her piece is that she tries to round out what Murray Rothbard once described as "Keynes, The Man". She emphasizes his personality, his interest in the arts, etc., and concludes with Hayek's observation that Keynes was "the only really great man I ever knew".

- In the same vein of more rounded appreciations of "Keynes, The Man", the Austrian blog "Natural Order" favorably reviews two important Keynesian insights: "five minutes is a very long time", and "I wish I had drunk more champagne". It seems to me that anyone who, on his deathbed, can only complain that he did not drink enough champagne has lead quite a good life.

- Getting back to Don Markwell's interest in Keynes and international relations, Russ Roberts is put off by Keynes's essay "National Self-Sufficiency". I confess it's been about two years since I've read the essay, so my memory may be hazy - but I frame how I think it should be understood in the comment section here.

- Finally, two articles that don't exactly mention Keynes but are quite relevant to his project. First, the Washington Post reports that "Companies pile up cash but remain hesitant to add jobs". They might have well gone with the title "There's an awful lot of liquidity preference out there". And in The Nation, German philosopher Jürgen Habermas discusses Germany and the Euro-crisis, and grapples with the very Keynesian question of the inter-relationship of fiscal policy and exchange rates. Which raises an interesting question - what would Keynes have thought of the European monetary union? I honestly don't know. Krugman was skeptical of it, and feels vindicated by Greece, but that's not necessarily the end of the discussion. I honestly don't know enough about open economy macro and the international monetary system to say decisively either way.


  1. What Hayek said about Keynes:

  2. I wonder if anyone has ever written a book on Hayek and Keynes's friendship. I'm sure it would be a fascinating read.

    As for the Treatise on Money thing, I know you're not necessarily using it this way, but I've always found Hayek's line on this odd and people's use of his line on this episode even odder. There's always an undertone of criticism of Keynes there. I understand how that situation could be frustrating for Hayek personally, but what precisely did he expect from Keynes? Keynes was in the thick of the policy making community in a very scary period for the economy in Britain. He put a tremendous amount of thought and effort into his economics and figuring out what the hell was going on. He struck on a solution that seemed to work, and many others agreed - it dazzled economists, first in Cambridge and then throughout the world. It may be modified throughout the years, and legitimately so. It may be in part a synthesis of earlier ideas (what intellectual advance isn't?), but it truly was a breakthrough and it was a breakthrough that Keynes had struggled for for a very long time.

    What are you supposed to do at a time like that? Should Einstein have just figured he'd play the Newtonian for a while after relativity? Of course not.

    Again - I can see how that would be frustrating for Hayek, but the anecdote is often pulled out to frame Keynes as fickle, as insensitive, perhaps as dodging criticism, etc. etc. I've always thought it was bad to interpret it that way. And I'm not saying you're using it that way (you're just sharing the link after all) but a lot of people do. It's an interesting anecdote about a frustrating interlude for Hayek, but again - what exactly did he expect from Keynes?

    It also seems like it might be a little bit contrived on Hayek's part. It was in these years - '31, '32, etc. - that Keynes was getting a termendous amount of feedback from other Cambridge economists - particularly from Richard Kahn (another young economist in Keynes's shadow who certainly didn't shrink away from him). Keynes was devouring critiques of the Treatise throughout his preparation of the General Theory. Perhaps he said "oh I don't believe any of that any more" to Hayek - I'd definitely believe that. But I'm guessing it was more light-hearted than it was dismissive.

  3. Actually, I was looking for the context of the quote used in the article. I couldn't find it (well, in an admittedly short period of web surfing), but I did find that.

    What I found more interesting - because, you know, it is perfectly acceptable for someone to change their mind - was Hayek's discussion of Keynes' depth of knowledge.

  4. Ya - I've always found that passage hard to believe and a little contrived too. The fact that Hayek could write something like:

    "But he could have found any number of antecedents of his inflationary ideas in the 1820s and 1830s."

    Makes me wonder how much he really understood his subject. It's a vague statement, clearly. I would have guessed Hayek of all people would have understood Keynes quite well, and perhaps he did. But it's a statement that's suggestive of an extremely superficial understanding of Keynes.

    We also have to remember that these interviews took place in the late 1970s, and ask ourselves - is Hayek really reflecting on the Keynes he knew in the 30s and 40s, or is Hayek channelling a counter-revolution against Keynes characteristic of the 1970s and afterwards. After 30 or more years have passed, you have to critically think about what Hayek is really expressing here. The reconstruction of memory is a very complicated thing.

    Hayek also talks about the "trick about the peace treaty", and how it shaped Keynes's view of himself to be able to mold public opinion. Hayek's reception by the Nobel committee, though, can be seen in the same light. Hayek was clearly gifted at pointing out "fatal conceits" in others - that "trick with the Road to Serfdom" probably furnished him with (as he calls it) "the supreme conceit of his power" to always see through things and tell everyone when the emperor has no clothes.

    We can't take interviews like this as solid fact. These are Hayeks impressions, thirty years later, after a turbulent history of Keynesianism, with Keynes long dead and unable to reply to his old friend, riding high on the Nobel, and with many "supreme conceits" of his own (just as Keynes and many other people rack up their own "supreme conceits" over the years).

  5. Actually, it wouldn't surprise if Keynes were like that. I've known a few geniuses in my life (I am most assuredly not a genius - smart yes, genius no), and while some of them are true Renaissance men (like Schumpeter), others are lazer beam smart (like Sherlock Holmes). Each has its advantages.

  6. To argue that Keynes didn't know Marshall is to say that he was neither a renaissance man nor "laser beam smart".

    If of all people Keynes doesn't even know Marshall, then one starts to wonder (1.) how Keynes one such praise from Marshall's disciples in Cambridge, and (2.) how he ever received the accolades that he received from everyone else.

    There comes a point where Hayek doesn't pass the smell test on this. It's easy to believe that maybe Keynes wasn't deeply familiar with continental economics. His own self-deprecating comments further that impression. But Hayek goes much farther than that, and it strains credulity - particularly, as I say, when Hayek is being interviewed (1.) thirty years after the fact, (2.) in the midst of a backlash against Keynes, (3.) sitting on his own laurels which inevitably will lead to their own "supreme conceits". You have to accept it all critically - and the statements on Keynes's understanding of economics strain credulity most of all.

  7. "the statements on Keynes's understanding of economics strain credulity most of all"

    And yet for some reason that's what you're most impressed with!

    I'd sooner believe the part about Keynes being dismissive of Hayek than I would believe this stuff.

  8. The last bit of this exchange is hard for me to understand. Are two people named Daniel arguing with one another?

  9. No - just several responses to Xenophon.

  10. I don't know if I was impressed with it; I did find it to be the most interesting aspect of the conversation (probably because it was new to me).

    Anyway, it does seem like you are arguing with yourself there.


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