Eighty years ago an anguished debate between two economists began in Britain — and came to shape the politics of the world after World War Two. The differences between John Maynard Keynes and his nemesis Friedrich Hayek sharply described alternative approaches to addressing the ebb and flow of the business cycle, with Keynes arguing that to put the jobless back to work governments could and should intervene in the market and Hayek insisting that such actions were based on an inadequate understanding of how economics really worked and would only delay the day of reckoning. That snarky disagreement was so vicious and ill-mannered that one old-school economics professor described it as "the method of the duello" being "conducted in the manner of Kilkenny cats." On Tuesday, in the Asia Society on Park Avenue, New York, two teams of economists, one representing Keynes, the other Hayek, will slug it out before an audience of 250 and bring the debate to America. – Reuters
Dominant Social Theme: Get yer popcorn here! Sody Pop, too! The great debate is underway between FA Hayek, a converted socialist and favorite "radical," free-market thinker of the power elite, and John Maynard Keynes, simply the favorite economist of the elites hands-down – forever and ever. This is going to be one good debate! Who will win? Keynes, who said the current economic crisis could be cured using his nostrums? Or Hayek, who for all his compromises with government ideology, predicted it? Doesn't seem like much of a debate to us. But we'll pretend it is …
Free-Market Analysis: Whatever FA Hayek was or was not, he was a helluva lot better than John Maynard Keynes, a card-carrying monetary crack-dealer for the Anglosphere power elite. An econometric economist, Keynes was always willing to make a specious argument based on statistics and the manipulation of numbers. His talent was in obfuscation; his rhetoric was purposefully dense. Roosevelt said talking to Keynes made his head hurt, but Roosevelt dutifully adopted Keynes's loony promulgations nonetheless.
And what exactly did Keynes preach? What Keynes came up with in his indecipherable and impossibly mathematical treatise, The General Theory, was basically simple enough: Government ought to save up in the good times and then spend money in the bad times. No wonder big government types love him.
In fact, Keynes was so focused on the big picture he hardly paid attention to the smaller one, which was the question of where the money came from in the first place and how it interacted with the larger economy. A facile man with a mind like a surface of a hockey rink, Keynes glided right over the difficult issues. Monetary inflation? Why, it was the result of workers' "wage push." The business cycle? It was the natural occurrence of the animate economy, as predictable as breathing.
Into this web of half-truths and untruths stepped the apprentice of one of the greatest free-market minds, Ludwig von Mises. It somehow fell to FA Hayek, not nearly as ideological a free-market thinker as Mises, to defend the free-market from the facile nostrums of Keynes.
Of course, despite Hayek's brilliance (and yes, he was a brilliant writer and free-market thinker despite his compromises), the result was preordained. The controlled, socialist media declared Keynes the winner of the "great debate" after various radio appearances and newspaper articles. Yes! There was a role for government price-fixing after all. But of course, there was not.
Now some 75 years later, history has rendered the only verdict it could. Keynes, the Bloomsbury hypester, the Fabian fraudster, was wrong, and Hayek was right. The only problem with Hayek, theoretically, was that he didn't go far enough.
He too was willing to grant a role to government, which was why the Anglosphere power elite that pays attention to these things was eventually willing to award him an "Economics" Nobel Prize. (Not the real thing, as feedbackers constantly remind us.) He was a useful foil if nothing else.
Keynes meanwhile went on to have a glorious career. After the war, along with a few others including David Rockefeller, he virtually recreated the world's financial system, recreating the BIS and helping to found the World Bank and the IMF under the shaky guidance of the sparkling and soon-to-be ineffably corrupt United Nations.
This is the system, in fact, that has collapsed today. Turns out that government NEVER saves money in the "good" times. Turns out that spending fiat-money in the "bad" times doesn't work either. This whole idea that government is some kind of person who can "save" is ludicrous. Government is force. A mercantilist power elite manipulates it and funds apologists like Keynes to justify that manipulation.
Keynes was very valuable to the elites. He was a rare blend of sophistry and sophistication, someone whose ideas were so muddled by mathematics that no one could fully confront him at the time. History was the only power that could defeat him. And it has.
Keynes's tricks have all been tried by the Obama administration. The meretricious idea that one can "spend" one's way out of a depression was earnestly declared and then adopted. Didn't work, of course. And maybe that's the REAL reason Keynes was so celebrated.
Not only did he provide a rationale for government intervention; that rationale inevitably MADE THINGS WORSE. He had created an elite, monetary symphony, a way of making music that brought the powers-that-be closer and closer to their goal of world government. When things were bad, all you did was apply Keynesian theories and things turned from disastrous to catastrophic.
This is actually what the elites want, in our view. They need chaos to create world government and Keynes provided them a theory that created further damage while those who supported and implemented it could claim they were doing a greater good.
And this is why we write that there really IS no great debate. Not after 75 or 80 years. The Misesian formula has predicted virtually every disaster that has befallen the West. The Keynesian theories have only exacerbated what was bad and made the monetary madness even worse. Reuters doesn't see it that way, of course. Here's some more from the article:
The Reuters debate will put such practical prescriptions and counter-arguments into perspective. Four Keynesians – economist James Galbraith, son of the high priest of Keynesianism, John K. Galbraith; New Yorker columnist John Cassidy; Sylvia Nasar, the historian of economic thought and author of Grand Pursuit; Steve Rattner, the architect of Obama's auto company bail-out – will slug it out with four Hayekians – Economics Nobel Prize-winner Edmund Phelps; Professor Lawrence H. White of George Mason University; Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute; and Stephen Moore of the Wall Street Journal.
If this group of distinguished thinkers follows the spirit of the original debate, the usual academic civilities may soon make way for acerbic fireworks. The spirit of the original debate is likely to inform Tuesday's lively discussion, framed like an Oxford Union debate and presided over by Sir Harry Evans, Thomson Reuters' editor-at-large.
After publication of Hayek's The Road to Serfdom in 1944, a second front was opened against the Keynesians that suggested that the increase in the size of government that accompanied widespread intervention in the economy tended towards a loss of individual freedom and the rise of authoritarianism, a charge that was hotly denied.
Those who attend the Reuters Keynes-Hayek debate, to be relayed live on Reuters.com and posted for all those unable to be there in person, will witness the opening salvos in the latest American chapter of a saga that came to define politics and economics in the twentieth century.
We note, of course, that no one from the pre-eminent think tank of the Mises Institute will be participating in the debate, though we highly esteem Dr White and have interviewed him in the past. You can see that interview here: Lawrence White on Austrian Economics, Free-Banking and Real Bills.
We're sure this will be an interesting debate, but for those who don't want to sit through the endless untruths of the Keynesian opposition, we provide this public service: Keynes lost long ago. You can take that to the bank!