Tag Archives: John Maynard Keynes

Say’s law and macroeconomic ignorance, by Alasdair Macleod

Marx and Keynes both ignored French economist Jean-Baptiste Say, and their economic theories are both fatally flawed because of it. From Alasdair Macleod at goldmoney.com:

Probably the greatest error in modern economics was the abandonment of Say’s law, otherwise known as the law of the markets. In a nutshell, it demonstrated that through the division of labour, production is firmly linked to consumption, and the former is tied to the latter through the medium of money and credit.

While there are variations in production outputs of individual goods, in free markets there can never be a general glut. It was this that Keynes had to disprove in order to create a role for the state, intervening to make up for the supposed deficiencies of free markets. While reasoned analysis shows that Keynes failed to disprove Say’s law, he managed to convince the mainstream establishment that he had actually succeeded.

This article traces the history of Say’s law, from Jean-Baptiste Say’s original work on the subject to the present day. It shows how Keynes bent the truth about free markets, that an understanding of Say’s law explains why state intervention fails, and why prices will continue to rise in the imminent economic recession.


Back in the 1930s, forward looking economists trying to justify an economic role for the state had a hurdle in classical economics to mount: the self-evident truth in what was described as Say’s law. Otherwise known as the law of the markets, Say’s law pointed out that we turn up at the factory or office to do a day’s work, so that we can afford all the things other people produce that make life tolerable, and even pleasurable.

It refers to the writings of Jean-Baptist Say, a French economist who in his A Treatise of Political Economy, originally published in 1803, described the relationship between production, consumption, and the role of the division of labour in how humans organise themselves economically-speaking. It was a remarkable achievement, defining the science of economics and the roles of money and credit in great detail, when the science was yet young.

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Financial Fraud: Lord Keynes, the New Deal and ‘Stimulus’ Mania, by Steve Penfield

John Maynard Keynes was a fraud. From Steve Penfield at unz.com:

Groucho Marx in the movie Horse Feathers, 1932.

A collection of quacks and shrewd self-promoters sold millions of Americans on exotic theories of financial ease. Instead of a promised land of sustained prosperity, we’re left with an enormous mess to clean up (at best) and probably a full economic meltdown on the horizon. For starters, we might want to try looking for better advice.

If the stars align just right, each generation may witness one or two radiant figures who achieve such dazzling advances for totalitarian authority that our ruling elites can speak no ill of their personal and public failings, no matter how dramatic. Abe Lincoln, Franklin Roosevelt and Michael “Martin Luther” King serve as worthy members of that ignoble pantheon, if we can look past so much Hollywood, state media and public school adulation. (Some may question the inclusion of MLK on this short list of super-villains. But providing rhetorical ammunition for three generations of arbitrary racial revenge, hounding millions of European Americans from their U.S. urban homelands, chasing manufacturing jobs out of city environments with nationalized union fascism, spawning the scourge of black welfare dependency, neutralizing non-governmental black progress of the 1940s and 50s, and riling up his followers so greatly they would riot in over 110 cities the week after his death—while helping to seed a staggering 750 race riots from 1964 to 1971—settles it for me.)

The Right Honorable Lord John Maynard Keynes (1883–1946) is another such example.

The distinguished British salesman of international “free lunch” economics was a master of pandering to politicians’ short-term desires for instant gratification at someone else’s expense. His eloquence in advocating fallacious but soothing positions empowered ruling establishments and their corporate facilitators for decades. For that, he is celebrated by many, despised by a few, yet emulated by nearly everyone in the halls of high finance.

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Malinvestment: Have We Learned Anything Since the Last Recession? by Bradley Thomas

Government spending does not promote recoveries or economic growth, especially when it goes down the rat holes to which most such spending goes. From Bradley Thomas at mises.org:

A growing number of economists are predicting the current economic boom will turn to bust in 2019. When recession does come, will economists simply call for more of the same — namely endless government spending?

After all, in the wake of the 2008 financial crisis, most economists told us the problem was the private sector was not spending and investing enough. So, we were told, government must step in and make up the difference with deficit spending to get “idle resources” — like capital goods and labor — back to work.

But what should the government be spending on? Apparently, anything.

This is not an exaggeration. For example, noted Cal-Berkeley economist Brad DeLong insisted in 2009 “At this point, anything that boosts the government’s deficit over the next two years passes the benefit-cost test — anything at all.”

Such thinking reveals one of fatal flaws of mainstream economics: the idea that all the economy is one big homogeneous blob. As Friedrich Hayek put it, “Mr. Keynes’ aggregates conceal the most fundamental mechanisms of change.”

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He Said That? 3/4/18

From John Maynard Keynes (1883–1946), British economist, The Economic Consequences of the Peace (1919)

When the final result is expected to be a compromise, it is often prudent to start from an extreme position.

Was Keynes anticipating Donald Trump?

John Maynard Keynes’ General Theory Eighty Years Later, by Antonius Aquinas

John Maynard Keynes was a crackpot whose “economics” have provided cover for political intervention into the economy since the Great Depression. From Antonius Aquinas at acting-man.com:

The “Scientific” Fig Leaf for Statism and Interventionism

To the economic and political detriment of the Western world and those economies beyond which have adopted its precepts, 2016 marks the eightieth anniversary of the publication of one of, if not, the most influential economics books ever penned, John Maynard Keynes’ The General Theory of Employment, Interest and Money.

The mere fact that the book is lauded by TIME magazine on the cover should give everyone pause. We have taken it upon us to read this tome in its entirety, which proved to be quite a slog (the effects alternated between putting us to sleep and making us shake our head in wonderment as to how anyone familiar with economic theory could have taken this stuff seriously at the time of its publication). The idea was that in order to criticize an economic and political philosophy, one should know what it is actually about. That is by the way one of the many differences between us and Keynesians like Mr. Krugman, who occasionally publishes critical appraisals of Austrian economic theory, although he has evidently not read a single word of it. He has that in common with his hero Keynes, who according to Gottfried Haberler wrote a scathing review of Mises’ Theory of Money and Credit without having read it (!) – not exactly a display of intellectual honesty. It is unfortunately true though, as the cover spells out, that this book is the, or at least a “foundation of modern-day economics”. In case you were wondering why the economy is seemingly mired in perpetual malaise, look no further. Readers who lack the patience to face the superficiality, boredom and endless contradictions of the original text may want to check out Henry Hazlitt’s extensive critique The Failure of the “New Economics” (pdf, available for free), which makes the exercise a lot more interesting and entertaining. As an aside, putting quote marks around “New Economics” was entirely legitimate. Most of what Keynes wrote had already been propagated by a long line of interventionist cranks who preceded him, refuted by their contemporaries.

Sadly, even to this day, despite its thorough refutation by lights such as Henry Hazlitt and other eminent scholars, the General Theory, which spawned “Keynesianism” and its later variants, remains supreme in academics, financial markets, and public policy.

Despite its outlandish theoretical flaws and nonsensical economic jargon and the catastrophic empirical evidence of its failure to prevent financial downturns or “stimulate” sustainable growth, Keynesianism remains the ruling paradigm of economic thought. Why?

A number of trenchant reasons have been given for the General Theory’s continued dominance, however, one stands above all else: Keynesian economics provides the intellectual justification for economists, statisticians, technocrats, bureaucrats and policy wonks in their exalted positions as “fine tuners” of economies the world over.

Since markets are to Keynes and his disciples inherently unstable from erratic investment spending and aggregate demand, it is up to these theoreticians steeped in the knowledge of their master’s teachings to ameliorate any economic fluctuations.

To continue reading: John Maynard Keynes’ General Theory Eighty Years Later

Keynes Must Die, by Llewellyn H. Rockwell, Jr.

If Keynes hadn’t come along, statists looking for plausible-sounding rationales from the economics profession would have invented him. To the extent there is any analytic rigor within economics, Keynes makes no contribution to it. His economics are politics with more than enough abstruse drivel to con the gullible. From Llewellyn H. Rockwell at lewrockwell.com:

In 2012, Barack Obama warned that the United States would fall into a depression if Ron Paul’s plan to cut $1 trillion from the federal budget were enacted.

Wait, I beg your pardon. It wasn’t Obama who warned that budget cuts would lead to a depression.

It was Mitt Romney.

Romney went on to become the nominee of the self-described free-market party.

An ideological rout is complete when both sides of respectable opinion take its basic ideas for granted. That’s how complete the Keynesian victory has been.

In fact, Keynesianism had swept the boards a decade before Romney was even born.

The General Theory of Employment, Interest and Money, the seminal treatise by John Maynard Keynes, appeared during the Great Depression, a time when a great many people were beginning to doubt the merits and resilience of capitalism. It was a work of economic theory, but its boosters insisted that it also offered practical answers to urgent, contemporary questions like: how had the Depression occurred, and why was it lasting so long?

The answer to both questions, according to Keynes and his followers, was the same: not enough government intervention.

Now as Murray N. Rothbard showed in his 1963 book America’s Great Depression, and as Lionel Robbins and others had written at the time, the Depression had certainly not been caused by too little government intervention. It was caused by the world’s government-privileged central banks, and it was prolonged by the various quack remedies that governments kept trotting out.

But that wasn’t a thesis governments were eager to hear. Government officials were rather more attracted to the message Keynes was sending them: the free market can lead to depressions, and prosperity requires more government spending and intervention.

Let’s say a brief word about the book that launched this ideological revolution. If I may put it kindly, the General Theory was not the kind of text one might expect to sweep the boards.

Paul Samuelson, who went on to become one of the most notable American popularizers of Keynesianism, admitted in a candid moment that when he first read the book, he “did not at all understand what it was about.” “I think I am giving away no secrets,” he went on, “when I solemnly aver – upon the basis of vivid personal recollection – that no one else in Cambridge, Massachusetts, really knew what it was all about for some twelve to eighteen months after publication.”

The General Theory, he said,

is a badly written book, poorly organized; any layman who, beguiled by the author’s previous reputation bought the book, was cheated of his five shillings. It is not well suited for classroom use. It is arrogant, bad-tempered, polemical, and not overly generous in its acknowledgments. It abounds in mares’ nests and confusions.… In short, it is a work of genius.

Murray N. Rothbard, who after the death of Ludwig von Mises was considered the dean of the Austrian School of economics, wrote several major economic critiques of Keynes, along with a lengthy and revealing biographical essay about the man. The first of these critiques came in the form of an essay written when Murray was just 21 years old: “Spotlight on Keynesian Economics.” The second appeared in his 1962 treatise Man, Economy and State, and the third as a chapter in his book For a New Liberty.

Murray minced no words, referring to Keynesianism as “the most successful and pernicious hoax in the history of economic thought.” “All of the Keynesian thinking,” he added, “is a tissue of distortions, fallacies, and drastically unrealistic assumptions.”

To continue reading: Keynes Must Die