Sunday, February 13, 2011

Keynes’ General Theory: A 75 Year Anniversary

This month – February, 2011 – marks the 75th anniversary of the publication of Keynes’ classic The General Theory of Employment, Interest and Money (1936), which Keynes published when he was 52.

While others have celebrated the anniversary of his work more eloquently than I ever could (see Jesper Jespersen’s lecture on the 75th anniversary of the General Theory, Ann Pettifor and Victoria Chick, “Happy Anniversary, Mr. Keynes,” Bloomberg.com, February 4, 2011 and Robert Skidelsky, “The relevance of Keynes,” January 17, 2011), I cannot resist making a few comments.

Keynes once wrote a letter in reply to George Bernard Shaw. This letter concerned Keynes’ view of Marxism and the writing of the General Theory:
“Thank you for your letter. I will try to take your words to heart. There must be something in what you say, because there generally is. But I’ve made another shot at old K.[arl] M.[arx] last week, reading the Marx-Engels correspondence just published, without making much progress. I prefer Engels of the two. I can see that they invented a certain method of carrying on and a vile manner of writing, both of which their successors have maintained with fidelity. But if you tell me that they discovered a clue to the economic riddle, still I am beaten – I can discover nothing but out-of-date controversialising.

To understand my state of mind, however, you have to know that I believe myself to be writing a book on economic theory which will largely revolutionalise – not, I suppose, at once but in the course of the next ten years – the way the world thinks about economic problems. When my new theory has been duly assimilated and mixed with politics and feelings and passions, I can’t predict what the final upshot will be in its effect on action and affairs. But there will be a great change, and, in particular, the Ricardian foundations of Marxism will be knocked away.

I can’t expect you, or anyone else, to believe this at the present stage. But for myself I don’t merely hope what I say, – in my own mind I’m quite sure.”
(Keynes to Shaw, 1 January, 1935, quoted in Skidelsky 1992: 520–521).
Here is the key to one of the greatest achievements of Keynes. He overthrew the foundations of both Classical and neoclassical economics, and avoided the errors and flaws of Marxism. Keynes in fact despised both communism and fascism (Skidelsky 1992: 485–489), and saw himself firmly in the British liberal tradition.

While detractors of Keynes – whether Marxists, Austrians, and other neoclassicals – accuse of him of being a defender of capitalism, fascism, or communism (take your pick!), in reality his destruction of neoclassical economics and the subsequent development of his ideas in Post Keynesian economics are the starting point for a democratic socialist/social democratic system that is independent of Marxism.

In some ways, the full promise of Keynes’ revolution was aborted by neoclassical synthesis Keynesianism (see “Neoclassical Synthesis Keynesianism, New Keynesianism and Post Keynesianism: A Review,” July 7, 2010), but that “revolution” has been kept alive by the Cambridge Keynesians, their successors the Post Keynesians, and now by Modern Monetary Theory (which, in many ways, also owes a fundamental debt to Keynes’ thought, as well as to the work of Abba Lerner).

I also suspect that a good deal of the insights of Post Keynesian economics would apply even to libertarian socialist economies where production would be conducted by worker-run enterprises.

BIBLIOGRAPHY

Minsky, H. P. 2008. John Maynard Keynes, McGraw-Hill, New York and London.

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour 1920–1937, Macmillan, London.

48 comments:

  1. Lord Keynes wrote:

    "I also suspect that a good deal of the insights of Post Keynesian economics would apply even to libertarian socialist economies where production would be conducted by worker-run enterprises."

    Very interesting. As someone who strongly supports worker-run enterprises but is also attracted to the insights of Keynesianism, this is good news. As you note, Keynes has enemies on both sides of the political spectrum, and those on the Left, especially libertarian socialists, are often dismissive of Keynesianism as “state capitalism.”

    However, while libertarian socialists are often very good when it comes to discussing the workplace, the firm, and other aspects of the “micro” level of economics, they often falter when discussing macroeconomics, or at least that has been my experience. Post-Keynesian insights could perhaps help rectify that defect in libertarian socialist thinking.

    In any event, I will stay tuned to this blog!

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  2. Here's a point that confuses me.

    Is the logical endpoint of all of Keyne's beliefs really social democracy? Or was social democracy a postwar trend that happened to coincide with Keynesian economics in the same period?

    Keynes was a member of the Liberal Party, and did not identify with the Labour Party, which was the source of British postwar social democracy under Clement Attlee. http://andrewsullivan.theatlantic.com/the_daily_dish/2010/05/quote-for-the-day-ii-1.html He saw himself, along with other Liberals, as a source of ideas for Labour, but not a full sponsor of Labour's plans.

    I also refer to Tony Judt, who wrote the history book Postwar. Judt was an ex-Marxist and ex-Zionist who called himself a post-ideological person later in life starting from the 1970s, and considered social democracy to be the sum of his post-ideological views. But in his last book, Ill Fares The Land, his stand on Keynesian economics was, "This is hardly an intellectual revolution. Quite the contrary: as the response of the Obama administration suggests, the reversion to Keynesian economics is but a tactical retreat. Much the same may be said of New Labour, as committed as ever to the private sector."

    An arch-social-democrat like Judt considers Keynesian economics to be a mere tactical retreat from another kind of capitalism, and he condemns Gordon Brown for having a commitment to the private sector.

    Keynesian economists and Keynes himself had never a serious problem with capitalism and the private sector, and they would be condemned by a social democratic historian like Judt for not constituting enough of an intellectual revolution away from both.

    Furthermore, in my own reading of the history of social democracy, the economics of it were largely "neo-corporativism" or the incorporating of representatives of capital, labour, agriculture, and state into a single decision-making committee; such was the system in Sweden after 1937. Corporativist economic decision-making seems to have been opposed by today's Keynesians (albeit New Keynesians) like Paul Krugman, who objected to Obama appointing Jeffrey Immelt and other representatives of industry in decision-making. Understandably, it would deflect the technocratic expertise of an economist, including a Keynesian, and thus I imagine the corporativism of social democracy goes against what some Keynesians might desire.

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  3. Keynes was a member of the Liberal Party, and did not identify with the Labour Party…

    All true, but irrelevant. Why would modern Post Keynesians who have developed Keynes’ thought be bound to follow him in his personal political beliefs? As I said, Keynes’ thought developed in its modern Post Keynesian form gives us a macroeconomic theory that can be used in a non-Marxist social democratic system.

    Also, you underestimate how radical the British Liberals had become by the 1930s.
    And a good many liberals in Keynes’ time just went over to the Labour party or an ideology very similar to it:
    David Lloyd George adopted a programme at the 1929 general election entitled We Can Conquer Unemployment!, although by this stage the Liberals had declined to third-party status. The Liberals now (as expressed in the Liberal Yellow Book) regarded opposition to state intervention as being a characteristic of right-wing extremists.
    After nearly becoming extinct in the 1940s and 50s, the Liberal Party revived its fortunes somewhat under the leadership of Jo Grimond in the 1960s, by positioning itself as a radical centrist non-socialist alternative to the Conservative government of the time.

    http://en.wikipedia.org/wiki/Liberal_Party_%28UK%29#Ideology

    “Keynesian economists and Keynes himself had never a serious problem with capitalism and the private sector”

    You are right, but who ever said that a social democratic system is not compatible with a large measure of private enterprise? The type of system I envisage is like the Scandinavian social democracies – perhaps even a bit more radical.

    Keynes had a major problem with the foundations of classical and neoclassical economics – he overthrew the economic theories that support extreme versions of capitalism. As I have said above, it is the development of his work in Post Keynesian economics that I advocate, not some rigid adherence to everything Keynes’ believed. Keynes made mistakes – and the latter development of Keynesian economics owed alot to people who came after him like Abba Lerner, Joan Robinson, Kaldor etc.

    “This is hardly an intellectual revolution. Quite the contrary: as the response of the Obama administration suggests, the reversion to Keynesian economics is but a tactical retreat. Much the same may be said of New Labour, as committed as ever to the private sector.”

    Tony Judt is completely correct in regarding Blair and Brown’s “Third Way” as a sham.

    New Labour wasn’t particularly Keynesian either – it was only in 2008 that fiscal stimulus and Keynesian economics made a comeback.

    And Obama’s economic advisors are New Keynesians, a watered down, weak and deeply flawed neoclassical version of Keynes’ thought.

    I think you continue to fail to understand the 3 different types of Keynesianism:

    http://socialdemocracy21stcentury.blogspot.com/2010/07/three-varieties-of-keynesianism.html

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  4. Prateek Sanjay,

    Also, in the 1929 UK election the Liberal Party, under Keynes' policy guidance, was the real radical party, better on economics even than the hapless fiscally conservative Labour party at that time:

    During this campaign, the Opposition Liberal Party of the day came into the election campaign with a pledge to reduce unemployment by introducing large-scale public works. The plan was outlined in a speech that the Liberal leader Lloyd George made to all Liberal candidates on March 1, 1929 which is based on the simultaneous release of their manifesto "We can conquer unemployment" ...

    http://bilbo.economicoutlook.net/blog/?p=11650

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  5. Ah. So the Liberal Party was Keynesian long before all others were.

    Yes, I understand the difference between New Keynesian and Post Keynesian, but even if I were to avoid painting them all with a broad brush, here's how I understand what social democracy has been in the context of social democratic history and what social democratic writers (whose works I have read) expect -

    1) nationalisation of some industry (transportation, communication, and energy mainly)
    2) industrial policy through subsidies, tarriffs, cheap loans, cheap land, and even foreign state involvement in deals on behalf of domestic companies (such as airline deals abroad)
    3) complete state involvement in the mind and health of people, to the point of state-run daycare centers to complete monopoly on education and medical care to even state-funded entertainment and media; based on increasing metrical happiness of a populace as high as possible

    Now, I have not yet seen you or any of the (few) articles by Abba Ptatchya Lerner I have read give any support to nationalisation of transportation, energy, or communications. Further, very little interest is shown by Keynesians in social engineering, and they merely wish fiscal and monetary policy as a main concern of state involvement. While modern day social democrats have long given up the eugenics policies of 1950s social democrats under which many "unfit" people were sterilized, to this date, they still do have a complete interest in top-down running of people's lives for their own good and happiness, down to control of what is shown on television (as Swedish acquaintances attest). Lastly, at least in comments on other blogs, you speak of a need for a state-run medical care system, but you do not go as far as a cradle-to-grave protection and nurturing of people, down to letting state take care of children instead of mothers in daycare centers.

    To be a Social Democrat, with a capital S and D, seems to require a very rigourous interest in restructuring society and bringing social reform, and is based on a belief on state being a source of all justice, happiness, and fulfilment in society. Neoclassical Keynesians, New Keynesians, and Post Keynesians merely take an interest in tweaking a few perceived faults in raw capitalism, taking some countercyclical measures, and...stopping there, really.

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  6. Neoclassical Keynesians, New Keynesians, and Post Keynesians merely take an interest in tweaking a few perceived faults in raw capitalism,

    Wrong. Exclude Post Keynesian from that list.

    The flaws of neoclassical theory and current public economic policy need radical reform, from financial regulation, monetary policy, fiscal policy, to the international paymets system and more.

    and is based on a belief on state being a source of all justice, happiness, and fulfilment in society

    A straw man. The majority of people in a democracy can demand social and economic policies that they want and vote for them, they are the source - not government.

    down to control of what is shown on television (as Swedish acquaintances attest).

    For god's sake, in highly free market societies, there is still censorship. In the extreme laissez-faire 19th-century UK in the 1880s, people were jailed for publishing private pamphlets on how to use condoms!

    Do you think people can say anything they want, even on US TV?

    And do you, for example, think there should be no standards (partial censorship) for what you can show on free-to-air private or public TV at 6 pm? You want your children to hear vile swear words or obscene material?

    Basic standards are common sense, not an example of the "evils" of socialism.

    While modern day social democrats have long given up the eugenics policies of 1950s social democrats under which many "unfit" people were sterilized, to this date,

    Eugenics was supported by people of extreme or strong free market ideology, not just by social democrats - and they were all wrong.

    http://en.wikipedia.org/wiki/Eugenics#United_States

    This is a ridiculous point. You remind me of the ridiculous libertarians who try and discredit Swedish social democracy by bringing up eugenics. Yes, eugenics was a vile and disgraceful movement - it was held by very many people, capitalist fanatics included.

    If Sweden's whole post-WWII system is somehow "discredited" by disgraceful eugenics policies, the America's pre-1929 laissez faire system is also discredited by American eugenics.

    Of course, the only intelligent position is that ALL people who advocated eugenics were wrong, and eugenics was not a necassrty part of the respective economic systems in question, except (paradoxically for you) extreme free market types of Social Darwinism, a la Herbert Spencer.

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  7. Also, note Keynes' own open-ended view of where his General Theory would lead:

    "When my new theory has been duly assimilated and mixed with politics and feelings and passions, I can’t predict what the final upshot will be in its effect on action and affairs"

    No doubt you can construct conservative varieties of Keynesianism - I don't deny this.

    But my point above is that it can be the firm macroeconomic basis of social democratic movements as well.

    The justification for such social democratic systems will be on the grounds of morality and justice, not only economic efficiency.

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  8. Of course Swedish social democracy as a whole is not discredited by the long discontinued eugenics policies. (Without diverting too much from the original discussion, eugenics in United States first came about under the Progressive Era (1890-1914) which is not considered laissez-faire by even proud modern day American progressives who appeal to its history of activist government in modern United States.)

    But if there were an idea of a model society, and we found that some people do not fit to that idea of a model society, what do we do with them? Modest proposals would merely be to educate them, but the most radical would be what happened briefly in that era in Scandinavia. Either way, a model society requires engineering human behaviour - a daunting, difficult prospect.

    You are right that the general public is the one that votes for their model societies and resultant social policies. Except, the public is so diverse, so disparate, that there is no effective homogenous idea of society under which all can be aligned. Thereon, a necessary mental revolution in many members of the public is required. Debates rage during elections about what children are taught in schools, and one set of parents lose out after elections. Meanwhile, in day to day life, Mac and PC users enjoy their respective electronics items without conflict. Capitalism is not a zero-sum game. All politics is a zero-sum game.

    Here in India, if the government dares to remove the brutal security forces from Kashmir, or dares to stop killing Naxal villagers in the forests, they would be trumped in elections for being "too soft on terror". Ordinary voting Indians are, unfortunately, not bothered by murder of children in the north and northeast, and see any softening of force as lack of vigilance. What the public sees as good or bad is not the sanction of what is right - else those Republican-voting Americans are justified in wanting Iraqi, Afghani, Yemeni, and Pakistani families wiped out in drone attacks for American safety.

    As an apolitical, I recount feelings of nausea and upset when I think of past elections when the mere thought of sympathy and mercy for murdered Kashmiris and Naxals is instant backfire in elections. In life outside politics, a man is not required to believe anything. You have to be a Christian to live in a Christian society, a Spartan to live in Sparta, a nationalist to live in an ultra-nationalist society, and a social democrat to live in social democracy, but you don't have to be anything under plain capitalism.

    PS: I spoke not of censorship of dirty words, but rather that Sweden once used to have all telecommunications from phones to television as state-controlled before they had Telia. FRA monitored everything, down to what people spoke on their phones. http://www.thelocal.se/6645/20070309/

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  9. "But if there were an idea of a model society, and we found that some people do not fit to that idea of a model society, what do we do with them? "

    Not fit in what sense? A social democratic society would continue the liberal values of freedom of religion, freedom of speech, freedom of the press, and freedom of conscience.

    Diversity in the population would not be a problem.

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  10. "Sweden once used to have all telecommunications from phones to television as state-controlled before they had Telia. FRA monitored everything, down to what people spoke on their phones."

    You say: "FRA monitored everything, down to what people spoke on their phones."

    The article you link to shows NO SUCH THING.

    What it says is:

    "Previously, at a time when all telecommunications were state-operated, Sweden's National Defence Radio Establishment (Försvarets Radioanstalt - FRA) regularly tapped telephone lines in and out of the country, says Olofsson."
    ....
    "In April 1948 the government reached a secret agreement to make telegraph traffic available to FRA on a limited basis. This concerned telegraphs to and from foreign missions in Sweden"


    They weren't monitoring "everything". It says they "regularly tapped telephone lines" and communications of "foreign missions".

    This is precisely what EVERY nation in the world has always done: tap communications of suspected criminals or diplomats suspected of spying or being threats to national security.

    You have just invented the idea that the "evil" Swedish govenrment was "monitoring everything".

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  11. A social democratic society would continue the liberal values of freedom of religion, freedom of speech, freedom of the press, and freedom of conscience.

    As all collectivists, you envisage some fairytale apolitical benevolent government which never uses its leviathan power to jam its political and personal gain agendas down some minority's (or even majority's, if "social" need be) throats. Note how far Sweden's "freedoms" have gone with Assuange, issuing international arrest warrant for a guy who has dared merely not to call back a one night stand, never even formally charged.

    Pratek makes an excellent point that "you don't have to be anything under plain capitalism." Keynesians are not socialist, but keynesians are just halfway there. If you nationalize press, then you have no freedom of press. So okay, let's make it halfware there. Let's tax, regulate, license, subsidize, all just so that it "happens" to favor government's agendas. This is no socialism, just social democracy, halfway there.

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  12. "As all collectivists, you envisage some fairytale apolitical benevolent government which never uses its leviathan power to jam its political and personal gain agendas down some minority's ... throats"

    As Austrian/libertarian fanatics, you envisage some fairytale world where your brand of free market extremism would be accepted by all. The reality is that your Austrian/libertarian idelogy is of such limited appeal to most people that to ever get your libertarian world you would have to jam your minority political and agenda down the throats of the majority.

    Contrast that with social democratic policies - in poll after well-sampled poll there is wide electoral support for these policies.

    If you nationalize press, then you have no freedom of press.

    There is no reason why a social democratic / democratic socialist government would "nationalize" the press.

    Let's tax, regulate, license, subsidize, all just so that it "happens" to favor government's agendas

    This is typical of libertarian guff - you never realise that a government ramming unpopular "agendas" down the voting population's throats will quickly get kicked out.

    In your bizarre, warped world, policies that in fact command broad support from the community suddenly become the evil "agenda" of the government.

    In contrast, take the libertarian view that a starving, unemployed, and homeless human being who can find no work on the market or private charity has no moral right to any basic support from the state - try taking that idea to a voting public and see if you can get widespread supoort for such morally-debased, vile idiocy.

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  13. I must apologize for my hasty, irresponsible stand taken on the matter of the FRA. Intellectual dishonesty is wrong. I'd like to be less forgiving when I do it.

    My loose and admittedly imperfect point, however, was about a cradle-to-grave social democratic nation in which you are first raised in the state-run daycare centers, then go to state-run schools, and then to the state-run university, and then be placed to a public sector/state department job, whilst limited in television to state-run ventures - what scope of independent thought would you have then to vote for other than the same Social Democratic Party in a landslide election? What incentive would you have, when your public sector income depends on it, to vote for any other than the party that ensures you have it? Do note that in West Germany and France, even the arts and entertainment were state-patronized and with state incentives for artists - such was the level of state involvement in an ordinary man's life. What a democracy, where the party in power has already decided what you think, what you learn, and where you work long before you even begin voting!

    The "Social Democratic Moment", an interesting chapter of Postwar, mainly dealt with how the personal became the political in European social democracy. The author thought it as a positive development. I felt profoundly worried by the idea. As a moderate automobile enthusiast, I can point to the British Leyland, a government-owned venture. Just imagine in the 1960s, a highly intelligent student in Britain's best public school and college earning a management degree and being placed in British Leyland - under this guaranteed life, he has no further incentive, and thus contributes to the rotting and falling quality of British Leyland's cars. On the other hand, US in the past once had an illiterate beggar like Woolworth becoming a millionaire owner of a very-low-prices department store.

    Somehow, the guaranteed life of social democracy and the reduced incentive to come out of that comfort zone (plus indoctrinated public sector mindset since school days) seem to create a great deficit in innovation, thinking, spark, and creativity. I know you will disagree, Lord Keynes, and provide even good examples of great successful public ventures, but how many public sector ventures have produced a Bill Gates, a Steve Jobs,.etc? J. D. Rockefeller reduced the price of oil to a tiny fraction of what it was with his innovations in transporting oil - how many public sector ventures came up with such innovations? Had a working class boy like young Rockefeller grown up in social democracy, he would have more security, but for less initiative. Security is not bad, but how much of it? Long before postwar social democracy, Conservative Prime Minister Lord Salisbury generously and rightly improved conditions of coal miners; he did not give them a guaranteed life. In this anti-human system of social democracy, we have seen sucide and depression rates soar in Sweden - as professed social democrat Tony Judt himself admits.

    There is no such thing as what the "public" wants. The public is not homogenous. And in elections, people do not vote for policies. They vote for candidates. You may dislike one candidate's environmental policy but dislike the other candidate's bioethics policy. You can't choose the exact basket of policies you want. Under these competing bads, you have group A's interests against group B against group C against A again. A candidate may take a mixture of all, and thus hurt everybody's interests. And if this very candidate chooses a terrible education policy, he pays no price for it - education has results in 12 years, but elections are held in 4. The candidate responsible for crack-brained policies would be long out of office, with no price to pay.

    PS: Joanna, you must reduce the hyperbole, and be more respectful of people on their own blogs. I understand libertarians pride themselves on their lack of manners, but this is not the way.

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  14. "cradle-to-grave social democratic nation in which you are first raised in the state-run daycare centers, then go to state-run schools, and then to the state-run university, and then be placed to a public sector/state department job"

    Again - and you seem to fail to understand the type of system I support - a social democratic system would have public schools etc but ALSO any number of private schools, private daycare centers, private universities and a large space for private sector employment.

    whilst limited in television to state-run ventures

    Again - a total caricature.
    Where have I ever said that I think a social democratic state would only have state-run TV? Nowhere.
    Why?
    Because in such a system there would be no reason why any number of private free to air channels would exist as well as private pay-to-view TV channels.

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  15. "Do note that in West Germany and France, even the arts and entertainment were state-patronized and with state incentives for artists - such was the level of state involvement in an ordinary man's life"

    "such was the state involvement in an ordinary man's life"??

    A "state of involvement" that was pretty minimal?

    How many "ordinary men" do you see at the opera or ballet?

    Yes, high-brow art is generally subsidized by the state - and it is a perfect example of why most production of higher aspects of culture needs state support.

    If there was no such support, most of it would collapse.

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  16. "but how many public sector ventures have produced a Bill Gates, a Steve Jobs,.etc?

    I suspect you have very little understanding of how technology actually is created in the modern world.

    The modern computer and internet only exist because of decades of government intervention.

    Bill Gates would have no job without the billions spent by government creating the technologies he uses.

    And where have I ever said that private businessman cannot innovate and build successful businesses in a social democratic system?

    Again and again and again, what you write is complete and utter caricature of social democracy.

    All of your points about alleged lack of "innovation, thinking, spark, and creativity" in a social democratic system are TOTALLY - COMEPLTELY - destroyed by Sweden:

    (1) Sweden ranks at number 3 with Japan for technological achievement
    http://www.nationmaster.com/graph/eco_tec_ach-economy-technological-achievement

    (2) Sweden ranks as number 4 on the global innovation index, such as patents, technology transfer, and other R&D results; business performance, such as labor productivity and total shareholder returns; and the impact of innovation on business migration and economic growth.

    http://en.wikipedia.org/wiki/Global_Innovation_Index

    (3) Sweden is most networked country in the world
    http://www.swedishwire.com/economy/3509-sweden-ranked-worlds-most-networked-economy

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  17. "There is no such thing as what the "public" wants.

    You are wrong.
    "public" wants = a policy position that can command support form a majorty of the population.

    For example, if the majority of the population does not "want" the NHS why does it get so much support in poll after poll after poll?

    The public is not homogenous.

    A true but trivial point.

    "And in elections, people do not vote for policies. They vote for candidates."

    You present a false choice: I can vote for a set of policies as well as a candidate.

    I may not get my ideal policy mix - that does not mean I cannot get a number of them or the most important ones.

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  18. Addressing your points in backwards order.

    Franklin Delano Roosevelt presided over a country that largely did not like war or cosmopolitanism. Under previous America First policies, Americans wished to stay out of war and foreign matters. Yet, FDR repeatedly violated the interests of his citizens by incorporating the Victory Program that would allow him to go to war even with Congressional opposition, repealing the Neutrality Act, and even personally ordered the Tuscaloosa to maneuver German ship Columbus into the hands of British warships. Although the Republican Party regularly opposed his war-baiting and wished him to remain neutral, FDR was politically invincible because he held the keys of hope to unemployed young people. 400,000 of those young people would die after being drafted in war. Let alone whether FDR was right or wrong - if people did not want war, why would they still have to stick with a leader who would send them into it? No choice, that's why!

    Next on the issue of technology...

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  19. In this anti-human system of social democracy, we have seen sucide and depression rates soar in Sweden - as professed social democrat Tony Judt himself admits.

    Suicide is an extremely complex phenomeon. This is probably one of the most poor arguments you have ever presented.

    The countries with the worst suicide rate per capita:

    1 Lithuania 31.5 per 100 000
    2 South Korea 31.0 2009
    3 Kazakhstan 26.9 2007
    4 Belarus 25.3 2010
    5 Japan 24.4 2007
    6 Russia 23.5 2010
    7 Guyana 22.9 2005
    8 Ukraine 22.6 2005
    9 Hungary 21.8 2009
    10 Sri Lanka 21.6

    http://en.wikipedia.org/wiki/List_of_countries_by_suicide_rate

    Of these, South Korea and Japan have extreme cultures of shame where suicide is seen as respectable way out of your problems or as a solution to personal failure. It is perfectly obvious that culture has a great deal to do with this.

    Lithuania, Kazakhstan, Belarus, Russia, Guyana, Sri Lanka are countries with moderate to very severe poverty and social misery.

    And what country comes in at number 1?
    Lithuania - a country that has just been subjected to a brutal neoliberal programme of deflation and mass unemployment.

    As for Sweden where does it rank?

    16 France 17.0 2006
    17 Estonia 16.5 2008
    18 Uruguay 15.8 2004
    19 Moldova 15.7 2007
    20 South Africa 15.4 2005
    21 Hong Kong 15.2 2006
    22 Poland 15.2 2006
    23 Switzerland 15.1 2007
    24 Croatia 15.0 2009
    25 Suriname 14.4 2005
    26 Sweden 13.2 2006
    36 Norway 11.4 2006
    37 Romania 11.3 2007
    38 Iceland 11.3 2009
    39 United States 11.1

    These statistics don't tell you alot about the the relationship between economic systems and suicide.

    Poor countries can be found both at the very top and bottom - and so can rich, interventionist nations.

    Israel, for example, is highly social democratic state - but ranks at the bottom at number 70.

    Quite a few Muslim nations have very low ranking. Why? Probably because it is condemned in Islam as a great sin.

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  20. Technology is often touted as a government creation - be it computers or telecommunications networks.

    Scientific research is useful, but it's only a small part of the equation. The larger part of the equation is capital. Yes, the United States government spent billions of dollars developing early computers. Those computers were not available for mass production back then and were not commercially feasible back then. Not until the 1980s was it so. That's because there was enough capital to produce those goods in large numbers and enough income with consumers to purchase those goods. If the US government spent billions of dollars on developing items with no marketable use at that time, then we are admitting this was a waste of funds. It wouldn't have been any different if those were put to development and mass production in the 1980s anyway. As it is, the brilliant computer scientists behind the UNIVAC continued their works in private ventures and obtained private capital to advance computer technology - this claim of government funding being needed to advance technology is not borne out by the simple fact that technology has advanced without government funding.

    Then, there is what Bastiat said about what is seen and not seen. Obviously, there is an unseen cost to wasting billions of dollars in an unmarketable venture. To put capital in such ventures is to consume capital and create a deficit of wealth, no?

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  21. Franklin Delano Roosevelt presided over a country that largely did not like war or cosmopolitanism... etc etc

    And I could give a dozen or more examples of governments responsive to public opinion or carrying out policies with majority support.

    If the US government spent billions of dollars on developing items with no marketable use at that time, then we are admitting this was a waste of funds.

    You are wrong - the reason we even have modern computers as advanced as they are now was this government spending.

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  22. Technology is often touted as a government creation - be it computers or telecommunications networks.

    A straw man, also, I think.
    I don't claim that *all* innovation comes from government - but a very large number of modern technologies certainly have.

    Of course, innovation comes out of the private sector too.

    Also, care to respond to the fact that Social democratic Sweden ranks at number 3 with Japan for technological achievement??

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  23. It proves I am wrong. I am that generous with opponents.

    But for our sake around here, could you explain why the public fertilizer company here was notorious for not developing a single saleable fertilizer? Why only a fraction of our engineers are employable? Why 140 million of educated unemployables have to be kept in a civil service to prevent mass riots? Why universities here are notorious for having 60% empty classrooms and little teaching?

    Somehow, in the local context, all I can imagine is that it goes back to the that guaranteed life, where nobody stands to lose anything. While it gets much more complicated abroad where there is much more honesty and culture of achievement, I see that even Britain's British Leyland company or France's France Telecom and others were no models of enterprise and lagged behind private American competitors.

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  24. policies that in fact command broad support from the community

    This is the collectivist sham. Collectivists advertise fairytale apolitical benevolent leviathan government, if only their particular faction wins (be it liberal or conservative). The public believes, but is always ultimately dissatisfied (fairytales are not reality), so alternately votes for competing collectivists. You are correct the collectivist sham will continue as long as public believes it is "morally-debased, vile idiocy" to deprive people the right to steal from others.

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  25. you envisage some fairytale world where your brand of free market extremism would be accepted by all

    Why all, majority is enough, note most liberal agendas have been passed by quite narrow majority and you don't oppose, don't you.

    you would have to jam your minority political and agenda down the throats of the majority

    Yes, scary fairy tales, and now a reality check: historically, 100% cases of such jamming was by collectivists, and likely most often liberal ones.

    in poll after well-sampled poll there is wide electoral support for these policies

    This is the collectivist sham. You always promise benevolent leviathan, if only your particual collectivist faction wins (be it conservative or liberal). The public buys, then finally becomes dissatisfied, as fairy tale is no reality, so votes for competing collectivists who promise essentially the same and so on. You are correct the collectivist sham will continue as long as people believe they have a right to steal from others just because they are in need.

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  26. Joanna Liberation,

    On your own blog, your stated position:

    "It's time to state my views in detail. Basically I'm a minarchist, Misesian libertarian. As it turns out, I'm quite a collectivist too, at least compared to Rothbard. ....

    However, I still can't help but support government legislative monopoly (public legislative bodies, with private ones illegal) and government monopoly on violence (public courts, police, army, with private ones legal) ....

    I also like public roads, subways and national/city parks. They are so nice! No, seriously, I simply accept the utalitarian argument (yes, Rothbard turns in his grave right now) that they are more efficient than private ones.


    Like Mises, your position is subject to a fundametal contradiction:

    http://socialdemocracy21stcentury.blogspot.com/2010/10/was-mises-socialist-why-mises-refutes.html

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  27. LK obviously treats the first quote as a proof that Mises is anarcho-capitalist

    I do no such thing. I am well aware - and have always been perfectly well aware - that Mises was a minimal state, classical liberal who held to utilitarian ethics.

    You clearly did not read my blog post properly.

    The devastating contrdiction in Mises' thought was in fact pointed out by G. J. Schuller, “Mises’ ‘Human Action’: Rejoinder,” American Economic Review 41.1 (1951): 185–190.

    But I'm also worried that Rortbard has gone too far.

    Bravo. Something we can agree on.

    I am unable to disprove him though, same as LK can't. Rothbard may well be the genius that only future generations can appreciate.

    Actually Rothbard's natural law/natural rights ethics has severe problems and their are powerful arguments against it - and Rothbard justifies his whole anarcho-capitalism system through the moral argument from natural law/rights. Many people have already shot natural rights down in flames:

    Kai Nielsen, “The Myth of Natural Law,” in S. Hook (ed.), Law and Philosophy: A Symposium, University Press, New York. 1963.

    L. A. Rollins, The Myth of Natural Rights (Loompanics Unlimited, 1983).

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  28. You clearly did not read my blog post properly.

    If you understand Mises is a minarchist, then where for god's sake is the contradiction in his support for state intervention, provided it does not come from "the doctrine and the practice of interventionism"? Unless, again, you believe minarchism is such a doctrine.

    Bravo. Something we can agree on.

    Not quite, actually, you've just criticized Mises for supporting state intervention, which you cannot criticize Rothbard for, so paradoxically you should already support Rothbard more than I, at least on this ground.

    Many people have already shot natural rights down in flames

    Save "money people" arguments for a different audience please. But you know what, I also don't care about morality. And I really do not care about morality consistently, whereas you have already called my convictions "morally-debased" in this very thread just a couple of comments before. How about that contradiction of yours???

    Now, Rothbard's work shows anarcho-capitalism lads to maximum economic efficiency, and that's all I care for. I won't go into war with someone just because he believes the principles that lead to maximum economic efficiency also happen to be moral, or even "naturally" moral. Rothbard may well choose to justify anarcho-capitalism on moral grounds, but then not before he has shown excellent utalitarian arguments for it (starting with inherently mutually beneficial voluntary exchanges), all his despise of utalitarianism notwithstanding, so all the moral considerations are secondary to me, and should also be secondary, if you actually practiced what you preach.

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  29. I'll butt in here, with a straightforward post.

    von Mises was a fairly middle-of-the-road person as far his views were concerned. His views did contradict in themselves. Sometimes, he would strongly distinguish between merely interventionist economy of United States and fully controlled economy of NSDAP Germany. Sometimes he would say that interventionism is a transitory process to the complete bureaucratic control observed in Germany, and thus not much different.

    Sometimes, he would say that it is wrong to use the word "socialist" to paint a broad brush over all forms of etatism, and strictly remind readers that socialist meant socialist, in the original stateless, propertyless, heirarchyless sense. Sometimes, he would himself paint with a broad brush many things as socialist, and even say that "state socialism" is redundant, because you need a state for socialism!

    I. Just. Don't. Get It. When I first read Omnipotent Government, I felt like I was reading a book by several different people. I'd go, "Yes, yes, I agree with you!" and then suddenly, "No, no, this is the complete opposite of what you just concluded!"

    However, if I had to be extremely charitable, I would say that his views were not contradictory so much as moderated with various perspectives. von Mises saw himself as a progressive democrat, and, like those who would use that label today, would (childishly) call opponents of democratic reform as reactionaries. Browsing Omnipotent Government, we see support for state-run schools to educate the "boorish, supersitious" German peasants, we see support for improving labour conditions through legislation, we see some support for trade and migration barriers during sensitive periods of international relations, and so on. Certainly, complete liberty and complete democracy are never the same, but von Mises does indicate he'd give up a little liberty for a little democracy.

    The lines that seem to summarize his views are "All present day political, economic, and social doctrines are condemned by the unappealable sentence of history." In short, von Mises makes no secret in thinking that his own liberal doctrines are as much a failure as ever other doctrine of the 1940s, not just socialism. More angrily, against pacifism, socialism, militarism, and even his own liberalism, von Mises bluntly wrote, "He who still believes...there are doctrines or policies beyond criticism has not grasped the meaning of terrible portents."

    So what was this von Mises? I propose that von Mises was a non-ideological person, who saw reason across various sides of the fence and kept leaping back and forth across it. Even when it was contradictory. When he begins OG, the first "ism" that appears in the book is not "socialism" or "liberalism" but "patriotism". The main issue on which he condemned the French, the British, and the Soviet Russians was on their lack of patriotism - that they would not abandon ideology out of love for their country.

    (That's why I don't understand those who use words like "Misesian". There is no essentially Misesian belief.)

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  30. Not quite, actually, you've just criticized Mises for supporting state intervention,

    Wrong. I criticise Mises for logical inconsistency and contradiction in his thought.

    whereas you have already called my convictions "morally-debased" in this very thread just a couple of comments before

    No, I said the idea "that a starving, unemployed, and homeless human being who can find no work on the market or private charity has no moral right to any basic support from the state" is morally-debased.

    Now, Rothbard's work shows anarcho-capitalism lads to maximum economic efficiency, and that's all I care for.

    You have now fatally contradicted yourself.

    Your statement:

    As it turns out, I'm quite a collectivist too, at least compared to Rothbard. ....

    However, I still can't help but support government legislative monopoly (public legislative bodies, with private ones illegal) and government monopoly on violence (public courts, police, army, with private ones legal) ....

    I also like public roads, subways and national/city parks. They are so nice! No, seriously, I simply accept the utalitarian argument (yes, Rothbard turns in his grave right now) that they are more efficient than private ones


    You reject an anarcho-capitalism privatization of "public roads, subways and national/city parks" because?? ... "they are more efficient than private ones".

    If so, then Rothbard cannot have shown that private "public roads, subways and national/city parks" are more efficient.

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  31. I criticise Mises for logical inconsistency and contradiction in his thought.

    But the alledged contradiction you've found is basically that minarchism is not anarcho-capitalism. Of course it isn't. I can't see how I can read your meaning more "properly".

    No, I said the idea [...] no moral right [...] is morally-debased

    Precisely, so you don't reject natural, moral rights after all.

    Rothbard cannot have shown that private "public roads, subways and national/city parks" are more efficient.

    He has, and I am unable to disprove him, except I'm simply not convinced in that particular case. That's why I'm a minarchist, not an anarcho-capitalist. Also because I don't accept natural rights justifications, which you and Rothbard both do.

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  32. Prateek, you've made great points, I'll remove "Misesian" from my position ;)

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  33. "But the alledged contradiction you've found is basically that minarchism is not anarcho-capitalism.

    No, it isn't.
    Read the post again.

    Precisely, so you don't reject natural, moral rights after all

    I totally reject natural law/natural rights.

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  34. I totally reject natural law/natural rights.

    So "homeless human being who can find no work on the market or private charity has no moral right to any basic support from the state" after all?

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  35. The "moral right" I refer to there is the human-contructed right by utilitarian/consequentialist ethics.

    Any "rights" we have as human beings are either ethical constructs or legal constructs.

    Natural law / natural rights theory is totally unecessary to justify a right justified by a utilitarian/consequentialist argument.

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  36. Weren't "rights" meant to be tautologies?

    I must admit, my brief college lectures on rights only explained it that way.

    As in:

    Since a person is alive, he has the right to live. Apparently, it has little to do with whether or not he should be, but simply states that he is.

    Or, since a person wears clothing, it is self-evident that he can own something.

    Basically, rights are self-evident claims or something. They are not granted or taken away, but simply exist. Somebody explained to me that if we had to take the Soviet Union, the right to property existed there too, because any person building a railway there would be using a tool, and it is only physically possible for one person to use the tool in his hands at a time. Hence he has a claim on what he has on his hands. It can't be proven or disproven, but it is supposed to be obvious in itself, I guess?

    Wasn't the whole idea behind liberal thought that since a "right" can't be conferred or taken away but simply exists, the state must just go on and work with reality rather against it?

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  37. I think you are thinking of natural rights.

    And perhaps you have never heard the opposing utilitarian attack on natural rights.

    As Jeremy Bentham argued, natural rights theory is "nonsense on stilts".

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  38. The "moral right" I refer to there is the human-contructed right by utilitarian/consequentialist ethics.

    Well, now I know, the context is completely different though: "take the libertarian view [...] has no moral right [...] try taking that idea to a voting public and see if you can get widespread supoort for such morally-debased, vile idiocy"

    In your argument, validity of a moral right can (should?) be determined by "a voting public" opinion, which, as you well know, has little time for theoretical constructs of utilitarian theory. Finally, you call libertarian view a "morally-debased, vile idiocy" instead of a, say, incorrect utalitarian argument. If you actually ever read Man, Economy and State, you'd see nothing about morality actually essential to its assumptions and logical reasoning. Rather, Rothbard first amorally develops economics theory that is evidently efficient on utalitarian grounds, then puts a label of "natural" moral good on top of it. I can't see why make such a fuss of it then, especially that your own comments moralize so much, unless you don't have any better arguments against Rothbard.

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  39. "In your argument, validity of a moral right can (should?) be determined by "a voting public" opinion"

    Nope.
    By our best moral philosophers who can use a defensible consequentialist.

    It is still perfectly possible for the voting public to want something that is immoral.

    In that case, then any moral person must strongly oppose public opinion, even if it is a majority opinion.

    Regarding Rothbard, he argued that "neither praxeological economics nor Mises’s utilitarian liberalism is sufficient to make the case for laissez faire and the free-market economy. To make such a case, one must go beyond economics and utilitarianism to establish an objective ethics which affirms the overriding value of liberty, and morally condemns all forms of statism” (Rothbard 2002: 214).

    http://socialdemocracy21stcentury.blogspot.com/2010/10/rothbard-on-mises-utilitarianism-why.html

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  40. Corrcetion:

    a defensible consequentialist ethics.

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  41. LK, I'm happy to hear you agree that utilitarian arguments are sufficient to make the case for laissez faire and the free-market economy. I know you believe they fail to do so, but still, they are sufficient in that we don't need to concern ourselves with morality. In other words, if you are an honest scientist, you can not ignore Rothbard's amoral Man, Economy and State even when Rothbard himself believed he also had to write The Ethics of Liberty to make a moral argument on top of the inherently utilitarian praxeological in Man, Economy and State.

    But then you also criticize Mises for being a utilitarian who allegedly "contradicts" himself when he admits some government intervention is fine, provided there is a utilitarian argument for it, even though that's precisely what a utalitarian should have been doing in the first place.

    I can't help but notice that you must have some anti-libertarian unscientific bias, don't you ;)

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  42. Hey LK, have you ever considered writing a blog post on the socio-biological or evolutionary roots of morality and ethics in human beings?

    Quite a few columnists and writers have given a shot at that, so I wonder what your thoughts might be. Some, like Thomas Sowell, have argued that morality exists out of necessary economic reality - exchange is not possible between dishonest people,.etc,.etc...

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  43. But then you also criticize Mises for being a utilitarian who allegedly "contradicts" himself when he admits some government intervention is fine, provided there...

    That is not the contradiction I criticise in Mises' thought.

    In fact, my post simply agrees with the criticism made decades ago by G. J. Schuller, “Mises’ ‘Human Action’: Rejoinder,” American Economic Review 41.1 (1951): 185–190.

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  44. LK, Mises has correctly stated that government intervention logically leads to even more government intervention, by the very logic of the doctrine and the practice of interventionism. An interventionist never sees government intervention failures, he only sees free market failures, so he keeps trying to add new government interventions cumulatively. Now, obviously, it does not mean society actually accepts the collectivist's ideas, unless, again, society accepts the doctrine and the practice of interventionism. Historically, society's tolerance to collectivism keeps falling, so that's "how western nations reversed mercantilist intervention and established partially free markets in the 18th and 19th centuries, or how they accomplished partial decontrol after World Wars I and II".

    I feel exploited now because I can't possibly believe that you had not already understood what I've just written. I can believe Schuller honestly asking that question in 1951, but this is 2011 and you cannot possibly believe Mises thought we were doomed to socialism no matter what society accepts, calling that a "contradiction".

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  45. "have you ever considered writing a blog post on the socio-biological or evolutionary roots of morality and ethics in human beings"

    That is an interesting subject - I written some things in it, which I might post at some stage.

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  46. Hi,

    I'm a new reader of your blog, and I find it very interesting and well-written.
    I am myself quite a libertarian socialist, at least a left-wing person interested in post keynesian economics so you got me really interested when you wrote :

    "I also suspect that a good deal of the insights of Post Keynesian economics would apply even to libertarian socialist economies where production would be conducted by worker-run enterprises."

    What do you mean by that ? Have you some exemples or reading advice on the subject ? Anyway, can you develop a little bit on the subject ?
    Maybe can you name some (broadly) left-libertarian or libertarian socialist economists ?
    Thank you,

    Achille

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  47. "I also suspect that a good deal of the insights of Post Keynesian economics would apply even to libertarian socialist economies where production would be conducted by worker-run enterprises."

    It means such an economy would still have macroeconomic problems - e.g., failures of aggregate demand and involuntary unemployment - and would require some entity like government to step in and solve those problems.

    As to libertarian socialism, I don't know much about it and my main interests are in Post Keynesian economics.

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