Monday, September 21, 2015

Did Keynes Really Recant His Keynesian Views... Hayek said?

Murray Rothbard, in Keynes:The Man, didn't seem to think so:

Even though Hayek remained antiKeynesian,
he too was touched by the Keynesian charisma. Despite
everything, Hayek was proud to call Keynes a friend and indeed
promoted the legend that Keynes, at the end of his life, was about
to convert from his own Keynesianism.

Hayek’s evidence for Keynes’s alleged last-minute conversion
is remarkably slight—based on two events in the f nal years
of Keynes’s life.
First, in June 1944, upon reading The Road to
Serfdom, Keynes, now at the pinnacle of his career as a wartime
government planner, wrote a note to Hayek, calling it “a great
book … morally and philosophically I find myself in agreement
with virtually the whole of it.” But why should this be interpreted
as anything more than a polite note to a casual friend on the occasion
of his first popular book?

Moreover, Keynes made it clear that, despite his amiable words,
he never accepted the essential “slippery slope” thesis of Hayek,
namely, that statism and central planning lead straight to totalitarianism.
On the contrary, Keynes wrote that “moderate planning
will be safe if those carrying it out are rightly oriented in their
minds and hearts to the moral issue.” This sentence, of course,
rings true, for Keynes always believed that the installation of good
men, namely, himself and the technicians and statesmen of his
social class, was the only safeguard needed to check the powers of
the rulers (Wilson 1982, pp. 64ff .).

Hayek proffers one other bit of flimsy evidence for Keynes’s
alleged recantation, which occurred during his fi nal meeting with
Keynes in 1946, the last year of Keynes’s life. Hayek reports,
A turn in the conversation made me ask him whether or not
he was concerned about what some of his disciples were making
of his theories. After a not very complimentary remark
about the persons concerned he proceeded to reassure me:
those ideas had been badly needed at the time he had launched
them. But I need not be alarmed: if they should ever become
dangerous I could rely upon him that he would again quickly
swing round public opinion—indicating by a quick movement
of his hand how rapidly that would be done. But three months
later he was dead. (Hayek 1967, p. 348)14

Yet this was hardly a Keynes on the verge of recantation. Rather,
this was vintage Keynes, a man who always held his sovereign ego
higher than any principles, higher than any mere ideas, a man who
relished the power he held. He could and would turn the world, set
it right with a snap of his fingers, as he presumed to have done in
the past.

Moreover, this statement was also vintage Keynes in terms of
his long-held view of how to act properly when in or out of power.
In the 1930s, prominent but out of power, he could speak and act
“a little wild”; but now that he enjoyed the high seat of power, it
was time to tone down the “poetic license.” Joan Robinson and the
other Marxo-Keynesians were making the mistake, from Keynes’s
point of view, of not subordinating their cherished ideas to the
requirements of his prodigious position of power.

And so Hayek too, while never succumbing to Keynes’s ideas,
did fall under his charismatic spell. In addition to creating the
legend of Keynes’s change of heart, why did Hayek not demolish
The General Theory as he had Keynes’s Treatise on Money? Hayek
admitted to a strategic error, that he had not bothered to do so
because Keynes was notorious for changing his mind, so Hayek
did not think then that Th e General Theory would last. Moreover,
as Mark Skousen has noted in chapter 1 of this volume, Hayek
apparently pulled his punches in the 1940s in order to avoid interfering
with Britain’s Keynesian fi nancing of the war ef ort—certainly
an unfortunate example of truth suff ering at the hands of
presumed political expediency

Later economists continued to hew a revisionist line, maintaining
absurdly that Keynes was merely a benign pioneer of uncertainty
theory (Shackle and Lachmann), or that he was a prophet of
the idea that search costs were highly important in the labor market
(Clower and Leijonhufvud). None of this is true. That Keynes
was a Keynesian—of that much derided Keynesian system provided
by Hicks, Hansen, Samuelson, and Modigliani —is the only
explanation that makes any sense of Keynesian economics.
Yet Keynes was much more than a Keynesian. Above all, he
was the extraordinarily pernicious and malignant fi gure that we
have examined in this chapter: a charming but power-driven statist
Machiavelli, who embodied some of the most malevolent trends
and institutions of the 20th century

1 comment:

  1. In an interview, Hayek basically said Keynes was ignorant about economics. I'm not sure why he would consider such an arrogant buffoon a friend. Keynes was an Interventionist, like nearly everyone else in this long Progressive Era.