Niklas Blanchard has a post up on the Keynes-Hayek rap. He also takes issue with the "central planning" line (the list is getting longer). Steve Horwitz thinks we can just chalk it up to poetic license. Now I've been very good about noting the scope for poetic license in most of my commentary on the video, but this is an awfully odd way for Russ and John to exercise it. Poetic license seems to me to be useful for bending truths to fit rhymes... not to fabricate stuff. Why not substitute "fiscal plan" for "central plan"? The proof is in the pudding - many take it literally (Gary Gunnels), and John Papola seems to have intended it literally. And that's... well there's no point in sugar coating it: that's dishonest. In a political climate where I regularly get called a socialist, a statist, and even occasionally a fascist I personally don't think you can just call it "poetic license". Then again, I doubt Steve is ever called those things, which may explain his ability to shrug it off.
Anyway - that's not what I wanted to discuss. I wanted to discuss an interesting contrast that Blanchard draws between what modern self-identified "Hayekians" proclaim and what Hayek actually thought. He quotes David Frum:
"it is precisely a policy response that our modern self-described Hayekians preclude. Monetary policy? No can’t do that – it only leads to inflation and more bubbles. Stimulative government spending then? No that’s out, it leads to inflation, bubbles, etc. Tax cuts for the ordinary working person such as the payroll tax holiday? No way – we must balance the budget. So that leaves only supply-side tax cuts aimed at the upper-income brackets. balanced by large immediate budget cuts in Medicaid, food stamps, unemployment insurance. Does anybody believe that such a policy mix will lead to rapid employment growth? The Heritage Foundation claimed so, for approximately 48 hours, but now even they have abandoned that assertion."
I don't think I necessarily agree on this point about the tax cuts. Usually they aren't opposed to tax cuts for working Americans (although some seem to prefer not supporting any tax cuts to supporting only tax cuts for working Americans). But I think the real point is on monetary and fiscal policy. People who claim Hayek today are adamantly opposed to both.
Blanchard then cites White's JMCB article on Hayek and the depression and points out that Hayek was actually a proto-Sumnerian! When I worked through this paper for my 1920-21 article I remember thinking White's case was a little weak - I'd have to dig up the exact concerns I have. But the point still remains - White argues (I think most think persuasively) that Hayek was open to monetary policy at least, and maybe fiscal policy? (I'd have to review the paper).
This all makes me wonder why nobody talks about "Hayekian economics and the economics of Hayek". Why is that? I have to justify and clarify this point on Keynes all the time. I personally think the distinction between "Keynes" and "Keynesians" is vastly overblown. Neoclassical synthesis was different in presentation from Keynes, but it didn't change any of the fundamental points. The New Keynesians had a Pigovian streak, and I always note that. But that's about all. I also have always argued that while Keynes added new details (the multiplier from Kahn, etc.) his fundamental outlook didn't even change all that radically in his own life. It matured, as everyone's thinking does. But there was no stark difference between a young Keynes and an old Keynes.
Hayek is different - certainly his later focus on spontaneous order and the knowledge problem is an entirely new focus (although not exactly inconsistent with what he had written earlier). And as Blanchard points out, modern Hayekians to a large extent make very different arguments than Hayek if we are to take Larry White at his word. White himself of course is more consistent with what he says Hayek said. Steve Horwitz, who I mentioned above, is also one of those guys that matches White's Hayek in the JMCB article pretty closely. But aside from them and a few others, why is it that the libertarians who are the most consistent with Hayek himself (or White's version of him) are also the libertarians who are least identified with the Austrian school (Sumner, Cowen, etc.). I think someone oughta write a book to match Leijonhufvud's book, and title it On Hayekian Economics and the Economics of Hayek.
UPDATE: And Steve - you can add Greg Ransom to the list of people who think that Keynes advocated what amounted to the same thing Lange and Lerner were saying to Hayek on "collectivist economic planning". Lange and Lerner do advocate "central planning", and Greg thinks Keynes is on par with them. He's not taking it as "poetic license".
It's "the proof of the pudding is in the eating."
ReplyDeleteWhat did Keynes mean when he said "advantages of State Socialism?"
Well, there is Caldwell's biography of Hayek.
ReplyDeleteWell Greg's wrong then.
ReplyDeleteOnce again, Daniel, you are not being honest toward your critics. Yes, I think it's acceptable poetic license to do what they did. Yes, technically, Keynes was not a central planner. I agree with you on the technical question, but ...
But you know what? This is not HOPE, it's hip-hop! It's not a scholarly article, it's popular music.
I have more to say here: http://www.coordinationproblem.org/2011/05/keynes-central-planning-and-the-scholarly-standards-of-hip-hop-lyrics.html
And, in fact, not only have I been called a fascist myself, you might check your new best buddy DeLong's archives for him calling me "an ethics-free Republican hack" and "the stupidest man alive." So spare me your victim complex, we've all been called names before.
"...many take it literally (Gary Gunnels)..."
ReplyDeleteYeah, literally, within the broad context of what the term means - not in the specific context of a "five year plan." Keynes was an advocate of "dirigsme" in other words; another term for dirigsme is central planning.
"And, in fact, not only have I been called a fascist myself, you might check your new best buddy DeLong's archives for him calling me "an ethics-free Republican hack" and "the stupidest man alive." So spare me your victim complex, we've all been called names before."
ReplyDeleteScore one for Horwitz.
Steven Horwitz,
ReplyDelete+1
I also notice that our host here isn't complaining about the song's claim (in Keynes's mouth) that Hayek didn't care about the unemployed. Is that any less of a problem than calling Keynes a central planner?
ReplyDeleteSteve -
ReplyDeleteI've taken Brad DeLong to task for saying that sort of thing in the past.
But you're right - my first priority has not been to defend Hayek's image in the public eye from Russ and John's somewhat distorted and unfair view of him.
I think you can ask any regular commenters on here what my opinion of Hayek is - I never spread the view that he was insensitive or unsympathetic and I wouldn't countenance it in any commenters - if it came up in the comment section here I would dispute it.
Ask my commenters - I think they'd agree.
Steve - and I think I defended YOU against Brad too, but I'd have to check my archives for that.
ReplyDeleteI don't think "but you guys do it too" deserves a "score one", Gary and Anonymous.
ReplyDeleteIf Steve can find an instance of me accusing him of those things, he's free to bring that to my attention. I can't control Brad DeLong, and I have differed from him on occasion - including defending Hayek.
It isn't an issue of "you guys do it too," it is an issue of stop bitching about it like it is a big deal, because it ain't.
ReplyDeleteHonestly, the other day you accused me of being like Glenn Beck (since I've never watch his TV show, you may in fact be right); but I just took it in stride.
Daniel,
ReplyDeletewhy is it that the libertarians who are the most consistent with Hayek himself (or White's version of him) are also the libertarians who are least identified with the Austrian school (Sumner, Cowen, etc.).
I disagree with this totally. Roger Garrison, for instance, is a big Hayekian.
You might have meant to ask: Why do some non-Austrian followers of Hayek emphasize these parts of Hayekian philosophy, and the Austrian followers emphasize other parts? It's dishonest to suggest that the "most consistent" Hayekians are not Austrians because 1. It's just not true - Hayek is given a premier position in the Austrian school and any Austrian who doesn't study Hayek is barely an Austrian; 2. There is no consistent "Hayekian" vision at all. He changes throughout his life. We tend to appreciate his work on capital theory, monetary theory, and knowledge problems as they complement and add to the existing body of Austrian economics; the rest of his work not so much. Some of his political philosophy is good too.
You said it yourself "It matured, as everyone's thinking does. But there was no stark difference between a young Keynes and an old Keynes."
I think it's backwards to suggest that Hayek was a static figure and that the whole Ludwig von Mises Institute and the Austrian school is misinterpreting him. It's more probable that Hayek was a complicated and diverse thinker (focusing on economics in his early life and political theory later in his life) and some people agree with different parts of him.
It's not surprising at all to me that Hayek's Constitution of Liberty; Law, Legislation, and Liberty; and, the Fatal Conceit are not sold by the Mises Institute. Unfortunately, Hayek tended to abandon the ideals he had found in his youth for a more gentle form of welfarism.
I left my thoughts regarding our lyric on your other post “Was Keynes a Central Planner” so check that out.
ReplyDeleteWhich Hayekians are these, Daniel? I believe that the libertarians most likely to reference Hayek over Mises or Rothbard and known as such by people who understand these differences are, in fact, Larry White, George Selgin, Steve Horwitz and to a lesser extent Scott Sumner. Probably others too. Maybe my reading list is narrow (not maybe. surely).
Those who oppose nominal income stabilization (at a minimum) are generally self-identified to be Rothbardians and many are openly critical of Hayek.
Personally, I’m not confident enough in my understanding of monetary economics to strongly assert which approach seems right. I am skeptical of a central bank’s ability to stabilize nominal income or nominal income expectations. The futures market approach pitched by Sumner is interesting but still rests on an error government statistic (NGDP) as its commodity to be traded.
My understanding also is that Hayek’s views on monetary policy did change over the course of his life and I do recall reading some passages that expressed skepticism regarding countercyclical monetary policy.
Russ is skeptical about our ability to understand the impacts of macro policies in general.
Oh… and one more thing. It is pretty clear that the NUMBER ONE attack on those of us who don’t believe in Keynesian policies by many keynesians and keynesian sympathizers is… to call us members of the “pointless pain caucus”. I happen to love Brad DeLong, because to the extent that I think he is wrong, he’s brilliant at totally discrediting himself through a vitriolic tone and embarrassing policy of comments censorship and micromanagement. If he want to slander me on his blog, lovely. But it should be understood that our “Keynes” is partly made up of Brad DeLong and Paul Krugman. That’s the “poetic license”. He’s Keynes the Keynesian, just as Hayek is Hayek + Higgs and others. It’s not a history lesson, folks. It’s a rap about worldviews and economic reasoning. Keynes and Hayek are both dead. There is nothing on the record from John Maynard Keynes about the Great Recession.
ReplyDeleteJohn Papola,
ReplyDelete+1
"but you guys do it too" deserves a "score one"
ReplyDeleteNo, but I do think it's worth pointing out that you 'sympathize' with a man who often performs smear jobs on his opponents. Yet, you get all limp-wristed in a tizzy when finding yourself on the receiving end of verbal abuse.
"Cue people with a cut and paste history of DeLong’s crimes against humanity – I know I know. Probably he cut one one day where someone demonstrated a factual error, when he actually cut it for some other statement in the comment."
http://consultingbyrpm.com/blog/2011/04/conspiracy-theory-or-fact.html#comments
Mattheus -
ReplyDeleteDon't be so concerned. I listed White and Horwitz and I said there were others. The point is a lot of people who identify as Hayekians are strongly against monetary stimulus. If White's Hayek is true, then a lot of this "Hayekian economics" is different from the "economics of Hayek". That's all I'm saying. Not that every single person who calls himself a Hayekian is different from what White says Hayek said.
John Papola -
ReplyDeleteIf you are not able to bear the fact that people think your policy positions will cause pointless pain at a painful time like this - and because of that your policy positions will be vocally opposed - then you need to get out of the dialogue.
People who call for austerity now are leading us to a path of pointless pain, and many of them are doing it because they're working off of half-baked economics.
If you can't deal with it - don't jump into the discussion.
That's very different from saying "X doesn't care about the unemployed". I've called DeLong out for saying that about Hayek. He doesn't say it all the time. He usually says something quite appropriate and legitimate: "you're wrong".
Needless to say, I'm not going to take your word on what Krugman or DeLong think either. I think I have a much better sense of their position on things than you do, or than Russ does for that matter.
Anonymous -
ReplyDeleteI'm "limp wristed and in a tizzy" because I disagree with John and Russ? Grow up. If I think he's wrong I'm going to say he's wrong. What's "limp wristed" about that? If you think expressing disagreement is limp-wristed, you shouldn't be visiting blogs.
"I'm "limp wristed and in a tizzy" because I disagree with John and Russ? Grow up."
ReplyDeleteAnd here's the response of a person who didn't consider what I said in the context of Steve's post and yours on Murphy's blog.
"What's "limp wristed" about that?"
I dunno strawman?
If you are not able to bear the fact that people think your policy positions will lead to painful socialism then you need to get out of the dialogue.
ReplyDeleteAnonymous - I'm perfectly "able to bear it". I'll just tell you that your wrong.
ReplyDeleteWhat would you prefer I do to "bear it"? Sit quietly and agree with you? Come on now - don't tell me I "can't bear" it because I am willing to register a disagreement. That makes no sense.
Just come out of the closet and admit it Daniel. You can do it. You won't feel ashamed after that. You will only be part of the pointless socialist pain caucus and proud of it.
ReplyDeleteSay what, exactly? Don't beat around the bush.
ReplyDeleteLooks like you are not ready yet. You'll know when you are ready.
ReplyDeleteDaniel, this is a bad misreading of what I said.
ReplyDeleteJust a terrible misreading.
You write,
"And Steve - you can add Greg Ransom to the list of people who think that Keynes advocated what amounted to the same thing Lange and Lerner were saying to Hayek on "collectivist economic planning". Lange and Lerner do advocate "central planning", and Greg thinks Keynes is on par with them. He's not taking it as "poetic license"."
Leijonhufvud's book was in large part an attempt to make sense of Keynes while taking Hayek -- i.e. markets -- seriously.
ReplyDeleteThere is no parallel that is cognitive compelling the other way. Keynes didn't understand markets.
You write,
"I think someone oughta write a book to match Leijonhufvud's book, and title it On Hayekian Economics and the Economics of Hayek."
Greg - if you tell me how to interpret what you wrote, then I'm happy to revise that update. You wrote: "Allan Meltzer makes a strong case for seeing Keynes belief in socializing all investment at the bedrock of his economics — which would directly implicate Hayek’s core argument against Lange and Lerner on collectivist economic planning."
ReplyDeleteYou seem to think that Keynes's socialization of investment was in some way related to Lange and Lerner's case for market socialism. I don't see how, but you seem to make the point. Tell me how I'm supposed to read this, Greg.
You can't say it's a misreading and then just neglect to explain what I misread.