16
Jun
2011
Keynes, Krugman, and the Crisis
The infomercial for my next Mises Academy class is up today. It’s sort of like Christopher Hitchens teaching a class on John Calvin.
As usual, the graphics they made for my article are the best part. Look at how Krugman appears to be praying to Keynes.
(For those who are serious, let me say that I actually ordered Krugman’s macro textbook to prepare myself to teach this course. It will not be a hatchet job.)
You sell your course short.
Hitchens teaching on Calvin would be an entertaining and intelligent instructor teaching the ideas of a relatively stale thinker.
Murphy teaching on Keynes would be an entertaining and intelligent instructor teaching the ideas of a fascinating, relevant, and important thinker!
However, one of your TAs shares some troubling developments: http://www.economicthought.net/2011/06/daniel-kuehn-might-hate-us/
Daniel, what is your problem? Murphy doesn’t even understand Keynesianism. In fact, he can’t even read a basic chart. You may as well have Koko the Gorilla teach an anthropology course.
I have had specific concerns about some of Bob’s thoughts in the past – in relation to Keynes and Krugman both. I’ve even said the Krugman-Murphy debate wouldn’t break any particularly interesting ground. But I think it’s far too much to say he doesn’t understand Keynesianism. Of course he does. He can dumb it down at times as a rhetorical strategy to draw easy conclusions like that 1920-21 demolishes Keynesian claims – but that’s a FAR cry from not understanding it.
Yeah, about that 1920-1921 demolition of Keynesianism that was allegedly not a demolition of Keynesianism.
You referred to Keynes pre-General Theory work that was very different from his GT and post-GT work, then conflated the two. The early Keynes was closer to classical liberal Austrianism. By 1936, his major views were almost completely different. Keynes even explicitly proclaimed that the GT was new, and revolutionary from him, and new and revolutionary as such (which Hazlitt of course refuted). He told Hayek that by 1936, he didn’t even believe in his own Treatise on Money anymore. It was probably in 1926 that he dropped his laissez-faire views for good when he wrote The End Of Laissez Faire.
The Depression of 1920-1921 does serve as a refutation of Keynesianism qua Keynesianism, if we correctly understand Keynesianism to mean his GT work.
The irony is that it is you who has utilized a rhetorical strategy to draw the easy conclusion that the 1920 depression allegedly did not refute Keynesianism.
This didn’t make sense when Bob initially raised it and it doesn’t make sense now.
What, exactly, do you think changed with the GT that makes his view on 1920-21 any different at all? To be honest, you are completely vague on this and don’t even flesh out your own point. Saying it doesn’t make it so. Details???
re: “Keynes even explicitly proclaimed that the GT was new, and revolutionary from him”
Sure – the theory was largely new. But what (1.) what policy recommendations had changed?, and (2.) how are the theoretical innovations that did come with the GT – surrounding demand deficiency mainly – have anything at all to do with 1920-21? They didn’t Major_Freedom.
re: “which Hazlitt of course refuted”
HA!!!
This didn’t make sense when Bob initially raised it and it doesn’t make sense now.
I thought it made perfect sense then, and it still makes sense now.
What, exactly, do you think changed with the GT that makes his view on 1920-21 any different at all?
Where to begin. Paradox of thrift, marginal propensity to consume, invariability of investment (animal spirits), demand for money, aggregate demand, expectations and uncertainty, interest allegedly solely being a money phenomenon, etc, etc
re: “Keynes even explicitly proclaimed that the GT was new, and revolutionary from him” Sure – the theory was largely new. But what (1.) what policy recommendations had changed?
GT Keynes would never have accepted a decline in aggregate demand as would pre-GT Keynes.
(2.) how are the theoretical innovations that did come with the GT – surrounding demand deficiency mainly – have anything at all to do with 1920-21?
The government’s reactions were almost exactly contra GT Keynes. This is why you had to relegate your unsupported defense that 1920-1921 didn’t refute Keynes because “the 1920s Keynes (Tract, Treatise on Money, etc) would have supported it.”
You don’t appear to be familiar with my argument. I cited the GT as much as I cited the tract, and I don’t think I cited the treatise at all.
Yeah, but the foundations for your conclusion that 1920-21 doesn’t refute Keynesianism RESTS on non-GT arguments from Keynes.
1. You should read Moggridge and Howson on the consistency of Keynes’s thought on monetary policy.
2. The End of Laissez Faire is one of my favorite books of Keynes’s.
1. Don’t need to. I can read the original source material myself.
2. That’s nice.
That’s why DK needs to go to law school. Of course there was no “Keynesian” stimulus in 1920. Interest rates were high, spending was slashed and wages and prices were allowed to crash.
But DK proved that Keynes would have supported those policies (at one time or another).so “Keynesianism” has not been refuted. Only the dumbed-down would think so.
Exactly. If I wrote a series of books that completely contradicted one another, then I too could be said to have agreed with whatever anyone ever does, thus nothing can refute me.
It’s tragic that DK actually seems to believe that 1920-1921 does not refute Keynesianism the way everyone understands Keynesianism.
I’m not interested in law. I’m interested in economic science. I plan on doing it for decades, retiring comfortably, and then dying. No need for law school in that plan.
That’s good. Lawyering is hell. I just think you’d be good at it.
How can you claim Murphy doesn’t understand Keynesianism, when you don’t even understand economics as such, that would enable you to be any sort of judge on who knows what?
Well that’s no fun. Can you recommend a hatchet job?
1. $145 is obviously illegal and felonious price gouging.
2. Mr. Kuehn needs to go to law school. He would make millions with his brilliant, friendly, easy-going, rope-a-dope, dissembling, obscurantist writing style. No joke. His opponents will read his briefs and go “WTF did he just say?” The judge will be befuddled and think “Well, I think that sounds right. I guess“. And his opponents will lose.
Major firm quality stuff, I say. Seriously.
“His opponents will read his briefs and go “WTF did he just say?”
It’s one of the many talents you can pick up by subscribing to Gene Callahan’s news feed.
With the added bonus of cantankerousness!
I had to use that book in college. They point out that 50-70% of US dollars are overseas, but there is nothing in the book about what that will do to the economy when we stop being the reserve currency…
They never point out the amount of dollars which come back through foreign purchases of our government’s t-bills, do they?
His textbook is quite mainstream, so to really go after Krugman you’ll have to address his “wonkish” blog posts.
I see on your syllabus that you’re doing just that. You could go to his boy DeLong for more.
Not that I will be taking the course, but an interesting study material would be Krugman’s analysis of the Capitol Hill baby-sitting cooperative.
No Brooke burke, no weight loss guarantee, no free gift for ordering, no easy payment option, no money back guarantee, no testimonies of how it changed peoples lives. Worst infomercial ever.