What, in layman’s terms, is the difference between Austrian economics, Keynes economics, and so on? I’ve seen these phrases thrown around here and i don’t know what it means completely.
Also, are there any other economics that i should know about?
Keynesian economics is a bunch of lies used to justify fiat money and State intervention in the economy. It started becoming popular in the 1930s as a way of justifying the default on the gold standard and gold confiscation by Roosevelt, along with the New Deal and Welfare State.
Austrian economics is better. As far as I can tell, it’s about sound money and little/no government regulation of the monetary system.
Another good one is “counter-economics”, which is the idea that people should just ignore the government and form competing free market based organizations.
Well, to begin with, until recently almost all work done in Austrian economics was in the area of microeconomics (economic calculation, nature of equilibrium etc.). The exception to this would be the early work done by Hayek and Mises on the business cycle and the more recent work done by Garrison, Horwitz and Huerta de Soto. Conversely, Keynesian economics is a macroeconomic school of thought that is largely irrelevant now ideas if one ignores DeLong and Krugman (which one would be well advised to do). Outside of undergraduate classes, nobody really does Keynesian economics anymore, although it does largely inform policy makers, this merely reinforces Hayek’s point that the economic is the first person to whom to policy maker will turn, only to disregard his advice.
As you know, Keynesian economics began with the work of John Maynard Keynes, specifically his The General Theory. Now, this work became popular for a number of reasons. Keynes argued that certain ends (saving) and certain means (liquidity preference) would cause economic depressions since they would curtail expenditure on goods and services thereby reducing “effective demand” (Keynes’ term for aggregate demand). The problem in Keynes’ vision was that because buyers were unwilling to spend, suppliers were unable to sell. Hutt has argued that actually this is absurd since any valuable assets will be demanded at some price. And as long as prices are able to adjust there will be no problems to microeconomic coordination, however, if this process is interferred with there will be problems in the macroeconomy due to microeconomic discoordination (as Garrison correctly pointed out, there are macroeconomic questions, but only microeconomic answers).Hutt pointed out that what actually occurs is when a shift in consumer desires occurs (say, they shift to more future oriented consumption) if labour if priced above its market clearing value (due to, say, unions) then this will cause unemployment to occur, due to Say’s Law the spending power of those producers in noncompeting industries will be curtailed and a depression may follow. IOW, what actually happens is that buyers are unable to buy because sellers are unwilling to sell (at the market clearing value).
Keynes emphasized the forces of uncertainty and instability of free markets. To use Keynes’ phrase, macroeconomic coordination can only be acheived by “accident or design”. Now, there are a number of reasons for this, because the role the interest rate played in Keynesian thought (equilibrating demand for and supply of money) there is no price with which intertemporal coordination can be acheived, rather “animal spirits” are at play. Moreover, Keynes disregarded any notion of the natural interest rate, regarding is that one which preserves the status quo. With this gone, and with the high level of aggregation that he worked with (which allowed to only see derived demand effects and not interest rate effects) his macroeconomics (sort of) make sense. In fact, Keynes called for a socialization of all investment because the state could be more farsighted and immune from the issues of uncertainty than free market entrepreneurs could be.
By contrast, Austrians stress the role of the interest rate, the capital structure, the importance of the notions of time and of the crucial role played by money. Now, there’s no single Austrian theory of macroeconomics. Some Austrians would say that all business cycles are caused by the traditional Austrian theory, others would say that there are numerous factors that cause the recession to play itself out in the way it does. In any case, Austrian macroeconomics is easily distinguished from the rest due to its realistic foundations in Austrian microeconomics and the other aforementioned points (time, money, capital).
How nuanced.
Everyone likes a good narrative even if it is a lie itself.
Of course, if somebody had said:
The people here would be up in arms.
whats your point? im afraid you are too nuanced and subtle for me…spit it out lad.
My point is that calling Keynes a state lackey is somewhat unfair if you’re going to protest when people say similar things about Austrian economics. Look, I object to some of the caricatures about Austrian economics as much as everybody else here does, but I don’t think that using the terms and the tone that fsk did to describe Keynesian economics is the best way to go about creating discourse, of a scholarly type, between economists. Even if you don’t agree with what Keynes wrote I think some of the personal characteristics that are attributed to him are uncharitable. Many people were persuaded by Keynesian thought either because of his wit, charm and eloquence or because they believed (wrongly) the pre-Keynesian economics had failed and that something radically new had to be tried in order to get the world out of the biggest economic crisis it had ever seen. No doubt, Keynesian economics held sway with policy makers, and I won’t deny that this helped its success. I’d also agree that Keynes’ polemics and strawmen against “classical” economists and economics were effective in gaining him support. But this is a far cry from stating that all Keynesian economists are simply being paid off by the establishment.
Keynes wasn’t a state lackey saying whatever the policy makers wanted him to hear. I think Keynes was something of an irresponsible thinker who had a clear idea of where he wanted to go and spent his career trying to get here. Also, keep in mind that after The General Theory was published, Keynes recanted some of his views and lamented the extent to which some of his disciples were taking them. So much that upon attending a meeting Keynes remarked that he was the only non-Keynesian in attendance. It’s also useful to have some notion of the state of mind of the public and the intellectuals in this period. They were living in the worlds biggest depression in history and it seemed that classical theories had failed. This sort of opinion was prevelant enough that Austrian economists such as Hayek and Robbins questioned their own views on what caused the great depression.
If you want to cry foul when people make unfair and uninformed assertiond about Austrian economics, go ahead. Just don’t expect anything else when you’re calling them intellectual dishonest, morally bankrupt liars at the same time.
Oh, it’s Giles the Scientist. Did I miss your scientific explanation for the scientific concept of ‘animal spirits’ invoked by Lord Keynes the Scientist ?
anything for a quiet life, eh?
You are just applying exactly the same methodology that socialists do when attacking free market - you are demasking sinister intentions of Keynes and his supporters instead of refuting his theory. You focus your attack on a person and his goals (which you can’t even know unless you are inside Keynes’ head) not on theory itself - that is marxist-style critique.
wrong. fsk was not required to refute the theory, which is plenty refuted, he was only required to briefly contrast it with other economic schools. he has hardly failed to do that. keynesianism is a pack of lies. we can know this without considering motives etc. it is a pack of lies plus that other stuff fsk said about it. its not a pack of lies because of that other stuff.
I take it the original question was answered to satisfaction?
The problem with the Marxist argument about bias is that it is not supported. What fsk said can easily be justified by understanding the selection process. The same can’t be a plausible accusation against ASE. Just how popular can AE become by the hand of libertarians, itself a small minority? Where are the tempting career opportunities for AE disciples? What pre-conceived notion does this group of mostly once-commies possess? How many virgins are there to lure them into faith? There are no financial or social benefits to being AS and plenty of detriments.
You simply cannot say that Keynes was a Marxist; their theories are not compatible whatsoever. Keynes simply misunderstood the Wicksellian framework and combined it with Marshallian economics, also misunderstood. You get to Keynes’ conclusion when you don’t include the structure of production, don’t incorporate the time-preference theory of interest, and believe that falling prices are a problem (a belief still dominant today).
Do you try to act as dogmatic as possible?
I laughed.
The general point of not treating people that disagree with you like idiots (in hopes of allowing your message to be received & thought upon & eventually win some listeners) will be largely over-looked, imo.
I dont understand the question.
This would be unfortunate enough if it was merely people that “we” disagreed with being treated as idiots. The fact is it goes further than this, not only are people that disagree with us idiots, but they’re morally bankrupt in that they’re just supporting the state, and more often than not, they’re “liars” (somehow, Austrian orientated scholars are more moral and more intelligent than their mainstream counterparts). Actually, it goes even further than this. Given what I’ve seen some people who associate themselves with the LvMI say about “fellow” Austrian scholars such as Selgin, Boettke, Horwitz, White, Lavoie and Prychitko you’d think Milton Friedman was on to something when he said the only way for Austrians to resolve conflict is to resort to a shoot out.
Giles, generally speaking, are people that support/advocate for things that are moral abominations morally bankrupt? or not? its time to impress me with your clarity.
do you think Milton was on to something when he said the only way for Austrians to resolve conflict is to resort to a shoot out?