I just finished reading Ron Paul’s new book End The Fed and Keynes hammered hard against inflation in one of his criticisms against Lennin. Apparently he used to be a free-market Austrian minded thinker before he turned Keynesian. Let me quote him for you.
So, who is the real Keynes? And… how should I look at him given this new information? Should we take anything after he did after he made these statements as just a lie?
I plan on reading Skidelsky’s book on Keynes soon, he’s certainly an interesting figure. This aspect of him has always intrigued me too. Even in The General Theory in which he lays out the heart of what was to become Keynesian macroeconomics he wrote about the virtues of the market in, I believe, the last chapter. Hutt discusses it in his The Keynesian Episode which I don’t unfortunately have with me, but essentially Keynes lauded the ability of markets to preserve liberty and concluded that they were the only way to do so. After The General Theory Keynes began to backpeddle from his earlier positions. Remarking after one conference that he was the only attendee who wasn’t a Keynesian. But on the other hand, he proclaimed himself to be a Bolshevik and was, I believe, a member of the Fabian Society (this could very well be untrue).
This interests me as well. I’ve been reading his book Economic Consequences of Peace and he sounds like a young austrian-economist. He even went as far as to say in one of his criticisms of the treaty of versailles when they said they would confiscate the government’s owned property- that the relationship between property and the state was artificial, He had the right idea then. He even admitted how the age of prosperity for the West at the time came to an end with WWI… I guess he kind of went back on his youth… and he felt foolish to believe that he could propell a nation into greatness through a central bank. His theories and his logic seems perfectly sound… here. I haven’t read his later books so I can’t comment too much on those… but I really wonder- what caused him to lose understanding of real economics and made him shift to becoming a statist? What could cause him to change so much?
Perhaps you will find this lecture enlightening. It seems as though Keynes bounced back and forth between protectionism and ‘free-trade’ though he was always a crony capitalist.
He never really believed in laissez faire. He was just a corrupt poseur. He parroted laissez-faire theory until he realized that libertarians didn’t have the upper hand. At that point he switched his position to a more ‘pragmatic’ one. Rats fleeing a sinking ship, you know.
If my memory is correct, Hayek once noted how Keynes beleived himself to be of the ranks of the English liberals despite the fact that the conclusions to his policies would be anathema to liberalism.
SilentXtarian, I think context is important. There was no such thing as “Austrian economics” as such when Keynes was writing. Whilst, I suppose, there were distinctly “Austrian” ideas neither Mises nor Hayek explicitely called themselves Austrian economists until after the socialist calculation and macroeconomic debates, at which point they realized the differences between themselves and the mainstream. So it doesn’t make much sense to call Keynes an Austrian. Whilst what passes as “classical economics” in regards to the mainstream is largely an invention of the textbooks, there something of a consensus and both Hayek and Mises considered themselves mainstream economists.
I also think you’re conflating libertarianism with Austrian economics. Whilst in his Treatise Keynes worked with something of a Wicksellian framework (which he then dropped in The General Theory) I don’t think he understood Say’s Law of Markets which whilst useful in understanding economics was rarely explicated. I think the important aspect was that Keynes wasn’t very knowledgable of Bohm Bawerk’s capital theory.
One confusing aspect is that I think Keynes has a pretty good idea of where he going, explaining the flaws in a free market economy, he just didn’t know how to get there. However, he also pays homage to the power of a free market to preserve liberty in the final chapter of The General Theory.
I don’t have that great of a knowledge of those things that you’re talking about that you say he doesn’t understand that well myself either… but isn’t this essentially austrian-economic- essentially- this statement by Keynes here?
No, that is from Keynes book Economic Consequences of the Peace. I just read it. If you’re interested in what Keynes had to say about the free market before he switched to taking a statist view- you should take a look at that.
What I quoted from Keynes comes from the book I named. Since Caley said “Juan, what is that from?” I assumed (correctly I think) he was referring to my quote, not yours =P.