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John Maynard Keynes' "General Theory" Eighty Years Later
09-03-2016, 07:47 PM,
#1
John Maynard Keynes' "General Theory" Eighty Years Later
John Maynard Keynes' "General Theory" Eighty Years Later

<p><a href="https://antoniusaquinas.com/2016/09/02/john-maynard-keynes-general-theory-eighty-years-later/"><em>Authored by Antonius Aquinas,</em></a></p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/religious%20fiction.jpg"><img alt="" height="672" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/religious%20fiction.jpg" width="503" /></a></p>
<p><strong>To the economic and political detriment of the Western world and those economies beyond which have adopted its precepts</strong>, 2016 marks the eightieth anniversary of the publication of one of, if not, the most influential economics books ever penned, John Maynard Keynes&rsquo; <em>The General Theory of Employment, Interest and Money</em>.&nbsp;<strong> Sadly, even to this day, despite its thorough refutation by lights such as Henry Hazlitt and other eminent scholars, <em>The General Theory</em>, which spawned &ldquo;Keynesianism&rdquo; and its later variants, remains supreme in academics, financial markets, and public policy.</strong></p>
<p>Despite its outlandish theoretical flaws and nonsensical economic jargon and the catastrophic empirical evidence of its failure to prevent financial downturns or &ldquo;stimulate&rdquo; sustainable growth, <strong>Keynesianism remains the ruling paradigm of economic thought.</strong></p>
<p><u><em><strong>Why?</strong></em></u></p>
<p>A number of trenchant reasons have been given for the <em>General Theory&rsquo;s</em> continued dominance, however, one stands above all else: <em><strong>Keynesian economics provides the intellectual justification for economists, statisticians, technocrats, bureaucrats, and policy wonks in their exalted positions as &ldquo;fine tuners&rdquo; of economies the world over</strong></em>.&nbsp; 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&rsquo;s teachings to ameliorate any economic fluctuations.</p>
<p><em>The General Theory</em> came on the scene at a propitious time during the height (or more accurately the depth) of&nbsp; the Great Depression, which in 1936, despite Roosevelt&rsquo;s New Deal and other Western nation states&rsquo; initiatives, had not improved conditions.&nbsp;<strong> Keynesianism was actually a &ldquo;middle way&rdquo; between all out Soviet-style central planning and that of laissez-faire capitalism.</strong>&nbsp; Primarily through fiscal policy, the economy would be kept on an even keel under the astute management of Keynesian-trained economists.&nbsp; Naturally, this appealed to academics and intellectuals the world over who correctly envisioned positions of power and influence in expanded state apparatuses.</p>
<p>As history has shown, Keynesianism was to become more than a remedy for the Depression, but would be applicable after the crisis dissipated.&nbsp; <strong><em>The General Theory</em> was based, in part, on the (false) notion that the capitalist system is inherently unstable and is, therefore, in need of state intervention.&nbsp; </strong>Keynes&nbsp; deliberately ignored the scholarship at the time, which demonstrated that the instability was not a &ldquo;market failure,&rdquo; but a monetary disorder caused by artificial credit expansion generated by the central banks, especially the Federal Reserve.</p>
<p>The enthusiasm for <em>The General Theory</em> came at first from younger economists while it was (rightly) dismissed by many of their elders as incomprehensible.&nbsp; Yet, its lack of clarity was appealing to the novices, since they would become the Creed&rsquo;s interpreters.</p>
<p>Not all, however, were entirely overwhelmed by their mentor&rsquo;s <em>magnum opus</em> as Paul Samuelson candidly admitted:</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>[The General Theory] is a badly written book: poorly organized. . . . It abounds in mares&rsquo; nests of confusions. . . .&nbsp; I think I am giving away no secrets when I solemnly aver &ndash; upon the basis of vivid personal recollection &ndash; that no one else in Cambridge, Massachusetts, really knew what it was all about for some twelve to eighteen months after publication.*</em></strong></p>
</blockquote>
<p><u><strong>Despite such an assessment, Keynesianism was never seriously challenged by its adherents, it opened too many lucrative policy making doors to be refuted.</strong></u></p>
<p>That Keynesianism continues to reign supreme, despite its theoretical and empirical bankruptcy, speaks volumes of the state of Western intellectual and academic life.&nbsp; <strong>Instead of the pursuit of truth and the refutation of error, Western intelligentsia is primarily concerned with securing privilege and power for itself.&nbsp; </strong>At one time such status was gained by honest inquiry into social questions and issues, now it is obtained in the justification of the expansion of state power.&nbsp; Very few turn down such enticements!</p>
<p><strong>Societies are the product of ideas.&nbsp; </strong>Since the release of <em>The General Theory</em>, the Western world has been under the destructive sway of Keynesianism, which has resulted in stagnation, financial turmoil, and eventual collapse.&nbsp; <strong><em>Until Keynes and his nutty theories have been refuted, the economic malaise will continue.</em></strong></p>


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