Monday, August 22, 2011

The Truth about John Maynard Keynes

Professor Ralph Raico was kind enough to provide me with a copy of a chapter in his upcoming book, Classical Liberalism and the Austrian School, which will be published later this year by the Mises Institute.

The chapter is titled, Was Keynes a Liberal.

Professor Raico begins the chapter by writing:
It is now common practice to rank John Maynard Keynes as one of modern history's outstanding liberals, perhaps the most recent "great" in the tradition of John Locke, Adam Smith and Thomas Jefferson.
He then goes on to completely destroy this view. It is impossible to give a sense for the sustained attack that Professor Raico conducts on the view of Keynes as a liberal without publishing the entire chapter. That will have to wait for the book, but I print below a few short snippets that will provide some sense of the things you will learn about Keynes from the book. Professor Raico writes:
Prior to Keynes, budget balancing had at least been the goal of civilized countries. Keynesianism reversed this "fiscal constitution." By making governments responsible for "counter-cyclical" fiscal policy while ignoring the tendency of shortsighted politicians to accumulate deficits, it set the stage for unprecedented levels of taxation and public debt of the decades following the Second World War.

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[Keynes] confessed that he had played in his mind "with the possibilities of greater social changes than come within the present philosophies" even of Fabian socialist thinkers like Sidney Webb. "The republic of my imagination lies on the extreme left of celestial space," he mused.

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The state, according to Keynes, will even decide on the optimal level of population...So, the state--in its guise as "civilized man"--will channel and oversee the reproduction of the human race as well.

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Keynes gushes over the Soviets will to engage in bold "experiments" in social engineering. In Russia, "the method of trial-and-error is unreservedly employed. No one has ever been more experimentalist than Lenin." As for the catastrophically failed "experiments" of the first years of Bolshevik rule, which had compelled the shift from the "war communism" to the then-current system of the New Economic Policy(NEP), Keynes describes them in the most anodyne terms: earlier "errors" had now been corrected and "confusions" dissipated.

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In his passion to malign money-making, Keynes even resorted to calling on psychoanalysis for support...In his Treatise on Money,  Keynes refers to a passage in a 1908 paper by Freud, in which he writes of the "connections which exist between the complexes of interest in money and defaecation" and the unconscious "identification of gold with faeces." (Freud 1924:49-50; Keynes 1971b: 258 and n. 1; Skidelsky 1992: 188, 234, 237, 414).
What can be said other than Keynes was truly a madman and we must be grateful to authors such as Professor Raico who are willing to stand-up to orthodoxy and speak truth.

24 comments:

  1. If Keynes suggested holding gold was being somehow anal retentive, doesn't that suggest paper money is the same as diarrhoea ie from the Greek for 'flowing through'?

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  2. "Lord Keynes" strikes back:

    http://socialdemocracy21stcentury.blogspot.com/2011/08/keyness-opinion-of-communism-and.html

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  3. LK quotes the conluding paragraph on p. 51 from this book as an example of Mises' apologetic attitude toward fascism:

    http://mises.org/books/liberalism.pdf

    Read the whole chapter and see if you conclude similarly.

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  4. Ad hominem attacks on Keynes, as though this invalidates modern Keynesian economcis in its various forms, is a total waste of time.

    If the ad hominem fallacy were remotely valid, then ALL of Misesian economics can be dismissed by this vile quote from Mises:

    “It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.”
    Mises, L. von. 1978 [1927]. Liberalism: A Socio-Economic Exposition (2nd edn; trans. R. Raico), Sheed Andrews and McMeel, Mission, Kansas. p. 51.

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  5. @Lord

    And why would that invalidate the Austrian economics?

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  6. "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."

    Keynes on FA Hayek's Road to Serfdom, 1945

    http://reason.com/archives/1992/07/01/the-road-from-serfdom

    So even if Keynes did flirt with the Fabians in the early 1930s, it is obvious by the end of the war, he no longer shared that viewpoint, otherwise, how could he praise Hayek?

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  7. "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."

    Keynes opinion of my book 'Road to Serfdom'

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  8. “It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships (NOTE: this would include Stalinism) are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.”
    Mises, L. von. 1978 [1927]. Liberalism: A Socio-Economic Exposition (2nd edn; trans. R. Raico), Sheed Andrews and McMeel, Mission, Kansas. p. 51.

    So, Mises (himself Jewish) states that Fascism (among other dictator-based economies) is the politico-economic version of a tourniquet applied to a gaping wound, briefly forestalling a bad scenario, but if used for the long-term will result in the same, and not without its own set of problems.

    [sarcasm]
    Sounds like a wholehearted endorsement to me!
    [/sarcasm]

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  9. @Lord Keynes

    That would be if you subscribed to the odd notion that fascism is WORSE than communism.

    If you didn't, then that quote isn't vile. It's accurate.

    Plainly, fascism killed fewer people than communism, so if you go by totals (I don't), then it's not an unreasonable statement and quite far from being vile.

    The phrases "It cannot be denied" and "the best intentions" clearly show that Mises was not commending fascist rulers whole heartedly but merely pointing out their success in standing up to what he thought was much worse.

    It's hard to call that vile.

    It might not be agreeable to present day sensibilities, but that is another thing, isn't it?

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  10. @Lord Keynes,

    The "Fascism" that Mises was writing about in 1927 was the Italian Fascism / "Third Way" (not free market democracy, nor communism) advanced by Mussolini. Musso had quite a following in the US, especially the liberal set until he threw in his lot with the Nazis in WWII. Even today's "liberal" agenda of government-corporate collaboration to solve social problems in a monopolistic/oligopolistic fashion is at its core the same as Musso's fascism. Mises was correct in pointing out that while Musso's movement stopped Communism spreading to Europe, fascism will eventually lead to catastrophic results.

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  11. Lord Keynes has to be some sort of elaborate reverse troll by an Austrian with a good sense of humor exposing the idiocy of Keynesians. He always shows up on austrians blogs, defends krugman or keynes with some offhand quote, then when he gets smacked down for the actual context or asked other difficult questions disappears.

    For instance, he won't address why krugman was so wrong about qe2 not raising commodity prices or that we needed to worry about deflation now instead of inflation, and how horribly wrong he was on both basic predictions. I believe a true keynesian would at least attempt to defend his own...

    Anyway, he is doing a great job of showing how wrong the typical keynesian is, even if he is choosing an unconventional manner.

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  12. Anon@1036-

    That must be it, because I've tried parsing his post @235PM this afternoon, and couldn't believe even a doctrinaire hardcore Krugman-worshipping Keynesian could believe the horseshit he spewed.

    If your hypothesis is correct, then he has done an excellent job at mimicking the vapid and incomprehensible "logic" of Keynes!

    Kudos, LK!

    Dale Fitz

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  13. That Fascism “saved European civilization” from Bolshevism was a commonly-held view among anti-Communists of the period. For instance, Winston Churchill visited Italy, met with Mussolini, and publicly lauded “Fascismo’s triumphant struggle against the bestial appetites and passions of Leninism,” claiming that “it proved the necessary antidote to the Communist poison” (New York Times January 21, 1927). All of the Italian classical liberals supported Mussolini's seizure of power in 1922, fearing that the country was teetering on the brink of a Leninist takeover. When I discussed with Mises translating his Liberalismus, from which this quote comes, he suggested I include a note explaining the circumstances of the time. I told him I thought that was unnecessary--vastly underestimating the prevalence of the historically clueless. There is a section on this whole episode in my forthcoming Classical Liberalism and the Austrian School, from the Mises Institute.

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  14. "When I discussed with Mises translating his Liberalismus, from which this quote comes, he suggested I include a note explaining the circumstances of the time."

    So in fact we can say clearly and withouyt doubt that this was Mises' personal opinion?:

    It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.”
    Mises, L. von. 1978 [1927]. Liberalism: A Socio-Economic Exposition (2nd edn; trans. R. Raico), Sheed Andrews and McMeel, Mission, Kansas. p. 51.

    Can you clarify that? I would be very grateful.

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  15. "The "Fascism" that Mises was writing about in 1927 was the Italian Fascism / "Third Way" (not free market democracy, nor communism) advanced by Mussolini. Musso had quite a following in the US, especially the liberal set until he threw in his lot with the Nazis in WWII."

    Fascism is more like Coolidge or Reagan. Coolidge, who attacked Nicaragua and lowered taxes on the rich, is exactly the policy that Mussolini advocated.

    Furthermore, Mussolini's advocacy of business was purely for the benefit of business, not for the benefit of the working class. The working class stuff was just rhetoric.


    "Even today's "liberal" agenda of government-corporate collaboration to solve social problems in a monopolistic/oligopolistic fashion is at its core the same as Musso's fascism."

    It isn't the same thing at all. The liberals seek across the board regulation or regulation to weaken the fascists. The fascists supported regulation to strengthen business.

    The goals of strengthening businesses are more along the lines of Austrian cranks like you.

    Furthermore, Mises was far more of a racist than Keynes. Another characteristic of fascism.


    "Mises was correct in pointing out that while Musso's movement stopped Communism spreading to Europe, fascism will eventually lead to catastrophic results..."

    By raw numbers, Fascism killed more than communism. It had a systemic program of killing human beings. So you have 12 million in the Holocaust plus 50 million killed by World War II.

    The number that died due to communism was far less.

    --successfulbuild

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  16. Fascism killed more? Not even close. Mao killed at least 50 million with the latest estimates, and the Soviets killed 20 to 30 million at least. Those two alone trump anything done by fascists, as evil as they were.

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  17. @Successful build

    Mao killed roughly 50-60 million. The Soviets killed nearly that many, if Conquest is right.
    Then there's Pol Pot, sundry African regimes....just there, you have overtaken the fascists, even if you included WW1, which most people would call a stretch

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  18. O.M.G!!!

    LK seems to be the real deal. If your request for clarification @332PM today is genuine, then I would implore Dr Raico to give you his personal phone number, or offer to meet with you in person one-on-one and explain in detail Mises' "support" for fascism as you point to in your previous post. I think Dr Raico, due to his personal relationship with Mises, has provided a broad outline of the reasons this quote- used out of context- appears on the surface to praise Italian fascism, but a deeper exploration would probably help you understand the nuance more clearly.

    If you will continue to visit this site, and post counter-points to Wenzel's arguments against Keynesianism and the current actions of the government, it would be helpful to all of us.

    Cheers,

    Dale Fitz

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  19. It should be noted that Austrians are incoherent. They say that fascism stopped communism, but people were so repulsed by fascism that they turned to more democratic-socialist systems in both Latin America and in Europe, what Austrians consider to be socialist systems. The socialist systems that would have grown up had the communists and the socialists combined to defeat Hitler would probably just have been more extreme forms of what exists in Europe today, not Stalinism. (East Germany is different because it was a satellite of the USSR, like Poland and the Czech Republic.)

    The proper response to any threat of totalitarian communism is not to ally with business and terrorists to suppress the population, but to suppress the communists, end of story. By Austrian logic, we should lose all our freedoms just to respond to terrorism. It is a kind of Bush/Ayn Rand logic that says we need to give up freedoms to stop a greater enemy. It would have been better to just let socialist/communism take over if you couldn't stop it, and that would have been better than the fascists as I will explain.

    First, Conquest has never said that Mao killed 50 million people; he specialized in the USSR, not China. You're probably thinking of Courtois, or maybe Rummel's sources. What Rummel did was he calculated what he thought the population should be (in other words he calculated people dead that never even existed). He had the worst methodology possible and had to refine his figures, which at least he did do, after they exposed as frauds on the Internet (he published his "findings" on geocities). Famine had occurred in China before Mao and floods and so on killed considerably more people than died during the famine.

    It should be noted that like Rummel, the authors of the BBoC have recanted. Rummel now says 35 million. So 35 million (an incredibly high estimate, some historians place it at about 25 million) is the number for China.

    Furthermore, to get these deaths they count excess deaths. It is difficult to know just how many died by these standards. The population doubled under Mao as did life expectancy, so it's difficult to figure out how many literally starved to death, and how many people died because they were old or because of disease. In fact, the Great Leap Forward excess deaths are calculated relative to the low levels of mortality during the first decade of the PRC. Actual mortality rates during the Great Leap Forward were not much different from the mortality rates during the first half of the 20th century:

    http://www.bikealpine.com/p_10.gif

    You may as well blame the government for the millions that died during feudalist periods -- which had overall far more people dying from wars, poverty, disease, and so on than in the twentieth century.

    Civilization was advancing in China and if Chiang Kai-Shek stayed in power millions more would likely have died than under Mao. Chiang Kai-shek failed to reform the agrarian economy, was more incompetent than Mao, ruled over an unjust society, and headed a brutal military regime. It's been estimated by Sen that because India didn't have even Mao's social programs, every 8 years more people died in India every 8 years than they did during Mao under the Great Leap Forward. Plus, from 1870s to about 1910, tens of millions in India died due to famines. These feudalist systems killed far more people than even communism, and, combined with capitalism, communism doesn't even come close.

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  20. As for Stalinism, it should be noted that one of the co-authors of the BBoC, Nicolas Werth, said that Stalin never had "death camps." I don't think they're a source that you would be interested in citing. What Werth means is that, like Getty has said, Stalin's camps were different from Hitler's. Tens of thousands were released every year and before WWII more inmates escaped from the camps than died there. They were a part of the Soviet economy, and the substandard care in the camps was not much worse than what existed elsewhere in the Soviet Union.

    Stephen Wheatcroft refuted Conquest's claims about the numbers in the labor camps as well, but in any case, Conquest puts the deaths of the USSR at about 20 million. Again, these were not killed a systematic program, but are excess deaths, deaths calculated based on what the perceived mortality rate should have been. During the first four years of Yeltsin's tenure, the excess deaths were larger than the excess deaths of Stalin's Great Purge. You cannot morally equate these "excess deaths" or even the "let die" ideology of Maoism with Hitler's attempts to systematically execute all Jews and all non-whites.

    So, we have 35 + 20 = 55 million people. That is still lower than the amount that died due to WWII and the Holocaust. And we still haven't counted the number that died from starvation, poverty, etc. during the industrial revolution. And we haven't counted the amount that died in India. And we haven't counted the amount that died by private enterprise in other areas of the world, such as in the Congo. And we haven't included Latin America. So just the fascist deaths from Nazi Germany, Latin America, and the wars they caused is greater than communism, and was more dangerous.

    The comments on Cambodia show that the author has no understanding of Cambodia and probably doesn't even know where it is on the map. It was the United States' intervention in the region that led to Pol Pot and the United States' undermining the moderate regime there and constant bombings of inner-Cambodia. Pol Pot would never have gotten the support he needed and Prince Sihanouk would have maintained power had the US not intervened (and the US support of Pol Pot continued even into the Reagan years). For those interested, the historical estimate is about 1.7 million, about a third of the country, not half the country as revisionists suggest.

    --successfulbuild

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  21. When it comes to a murderous regime, I'd rather have an inefficient hellhole like the Soviet Union, whose systematic executions were probably around 4 million or so, and who didn't even have control over the entire country, than an efficient one like Nazi Germany. Stalin's incompetence led to many deaths, but much of his bumbling and vague plans weren't all that much different from Russia in 1884.There was also widespread dissent, active resistance, strikes, and so on that existed in the USSR but which did not exist in Nazi Germany. As I said, the proper approach to a tyrannical social system, if it takes over, is to suppress or let it happen and collapse. It is not to start up an even more efficient killing machine with plans to take over the whole world and kill all non-white peoples.

    I'm not going to reply to any responses that aren't by historians. I have no interest in the cranky sources written by economists. In fact, we see that the "Austrians" are little kids with no interest in historical accuracy, and probably do not have the mental capacity to be dealing with historians, data, analysis, and so on, as evidenced by the confusing of Conquest with Courtois.

    Ultimately, I do think Nazism was more Keynesian than Austrian in economy, where Pinochet was more Chicago School/Austrian (the philosophical differences are irrelevant). Both economic theories show that without proper political morality, you can have great terror. The Austrians who advocate anarcho-capitalist feudalism advocate an even worse terror than Nazism or communism combined and obviously shouldn't be responded to.

    --successfulbuild

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  22. @Anonymous 2:28
    successful build 2.35

    1. Are you referring to me?
    Where did I say Conquest specialized in China?

    I referred to Conquest in regard to the SOVIET figures, NOT China. Go back and read my post, which was very brief.

    2. I said NEARLY as many as 50-60 million.
    And yes, I made a mistake when I referred to Conquest for those figures. I was actually thinking of Solzhenitsyn.

    But the statement itself is correct.

    Conquest's own figures, in his earlier writings, are high enough - 30 million and Rummel actually comes out with 50 million, which is the same as the figures for Mao.
    I think 30 million for Stalin can be conceded.

    And that doesn't include what happened before Stalin, nor the figures for the Russian Civil War or the Revolution - which should all be attributed to Communism too.

    3. I never mentioned Courtois, so I could scarcely have muddled him with anyone.

    4. Regarding your figures on famine during India, those are per Mike Davis. I've blogged about his work on my own blog.

    But first, Davis' numbers are not uncontroversial and second, he ties them to global climate changes, not solely to imperial policy.

    Third. I don't know how the mercantilist policies of the British empire combined with famines produced by alleged climate change can be lumped in with Mussolini's Italy, which was a wannabe in the imperial game. (The death toll under Mussolini, all told, is said to be around 225,000).

    You might as well lump in Nehru with Stalin and count all the deaths that have resulted from India NOT having advanced economically under socialism as equal to the deaths under Mao.

    Fascism of the kind Mises referred to is not the equivalent of imperialism/colonialism, which DID in fact kill huge numbers of people directly and indirectly.

    However, since Austrians are ANTI-STATE and ANTIWAR, by definition they do not support mercantilism or imperialism.

    Final point. The CHICAGO school is NOT the same as the AUSTRIAN school. The Chicago school is considered statist and mercantilist by Austrians.

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  23. Also, in my first post, I was referring not to Stalin alone but to the communist period.

    If you include Lenin (about 5 million) and before that the Civil War (9 million) and add to that the median figure for Stalin (30 million), then indeed the figures do parallel the figures for Mao.

    Both figures include the number of deaths from famine, because starvation here is the result not of badly managed natural disasters (as with the Davis figures), but of deliberate policy.

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  24. Imbecile, Raico's world view is the opposite of any apology of totalitarianism.

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