Monday, February 10, 2014

Judt on Hayek, The David Gordon View

I asked David Gordon, who knows everything, to comment on this E.J Dionne slap at Hayek:
Those who follow Hayek and Mises would have us forget this history or rewrite it beyond comprehension. They would also have us overlook that Hayek’s “own historical justification for apolitical market economics was entirely wrong,” as the late Tony Judt put it in “Thinking the Twentieth Century,” his extraordinary dialogue with his fellow historian Timothy Snyder, published in 2012, after Judt’s death.
David responded:
Judt was an American historian of Europe. He didn't know economics, and Dionne's quotation from him is just a passing remark by Judt and is not supported by any analysis of Hayek's text.


  1. like when Germans couldn't find food and Adenaur scrapped rationing and then things started appearing in the shops

  2. Dionne knows better. He is no schoolboy. He has been with the either the New York Times or the Washington Post since at least the mid-70s. When he was with the Times he pretended to write objective news reports with only a few snide remarks smuggled in. Since he has been with the Post (for the last 20 years or so) intellectual dishonesty has been his avocation in virtually all his published work. Since it is virtually impossible to read anything in Hayek's work but that of a well-meaning liberal in the classical tradition, to say that he wrote that social democracy would lead to a Hitler is simply not credible. Clement Attlee was perfectly good enough to wreck a country.

    I just know Dionne is seething at the change of ownership.

    Permit me another suggestion for Bezos. He should say as did Cromwell:

    "Is there a single virtue now remaining amongst you? Is there one vice you do not possess?......In the name of God, go!"

  3. Yes. Like that. The facts are really on Dionne's side here ("... postwar initiatives along Keynesian lines are precisely what prevented both the resurgence of fascism and the collapse of Western Europe.").

    "The German Miracle: Another Look" (WSJ, Sept. 8, 2010)
    by Lawrence H. White

    "Unfortunately, occupation policy makers actually perpetuated the shortages by retaining the price controls the Nazi government had imposed before and during the war. Consumers and businessmen battled against the bureaucratic regime of controls and rationing in what the German economist Ludwig Erhard described as Der Papierkrieg—the paper war. Black markets were pervasive.

    Germany's new Social Democratic Party wanted to continue the controls and rationing, and some American advisers agreed, particularly John Kenneth Galbraith. Galbraith, an official of the U.S. State Department overseeing economic policy for occupied Germany and Japan, had been the U.S. price-control czar from 1941-1943; he completely dismissed the idea of reviving the German economy through decontrol.

    "Fortunately for ordinary Germans, Erhard—who became director of the economic administration for the U.K.-U.S. occupation Bizone in April 1948—thought otherwise. A currency reform that he helped to design was slated to replace the feeble old Reichsmark with the new Deutsche mark in all three Western zones on June 20. Without approval from the Allied military command, Erhard used the occasion to issue a sweeping decree abolishing most of the price controls and rationing directives. He later told friends that the American commander, Gen. Lucius Clay, phoned him when he heard about the decree and said: "Professor Erhard, my advisers tell me that you are making a big mistake." Erhard replied, "So my advisers also tell me."

    "It was not a big mistake. In the following weeks Erhard removed most of the Bizone's remaining price controls, wage controls, allocation edicts and rationing directives. The effects of decontrol were dramatic.

    "The shortages ended, black markets disappeared, and Germany's recovery began. ...

    "Between June and December of 1948, industrial production in the three Western zones increased by an astounding 50%. ...

    "Between 1950 and 1960 the West German economy's real output more than doubled, growing for a decade at a compound annual rate of nearly 8% per year. ...