Howard Kveck wrote:
>
> Greg, I remember you citing Friedman at least once previously (maybe
> more, I'll admit that I didn't check that just now). I was wondering what
> you thought of Keynes?
Basically, I am not myself remotely qualified to talk about it -- but I would say from my reading --
Hayek and Friedman themselves are not at all complimentary of Keynes. To my knowledge, Keynes did
not write a popular text in political economy (for average people like me), like Hayek and Friedman
have done.
From
http://www.iedm.org/library/crowler_en.html
START QUOTE
But it was Keynes's intellectual dilettantism that most appalled Hayek. When Keynes wrote A Treatise
on Money in 1930, Hayek spent a full year carefully analyzing it and then wrote a devastating
review. At their next meeting, Hayek was outraged when Keynes airily said that he agreed with Hayek,
but it was all beside the point because he had long since changed his mind in any case. Hayek always
regretted that this incident led him to neglect replying to Keynes's next book, because it swept all
before it, and by the time that Hayek was alive to the danger, it was too late.
Keynes's 1936 General Theory of Employment, Interest and Money became the bible of a whole new
generation of economists, first in the universities, and later in governments around the world. The
Keynesians, as they came to be known, shared Keynes's own unshakable belief in the ability of clever
people, like himself, to smooth out capitalism's cycles of boom and bust by manipulating the level
of demand in a nation's economy, through, for example, inflationary monetary expansion and large
public works programs. Such vigorous actions appealed to a world already in the grips of a
devastating depression — far more than the "do-nothing" non-interventionist economics of the likes
of Robbins and Hayek, who counselled letting the economy's self-corrective mechanisms do their work.
To those concerned about the inflationary consequences of his policies, Keynes breezily asserted
that inflation was the hallmark of rising civilizations.
In the very early days of Keynes's apotheosis, Hayek was already explaining why this clever scheme
too would come to grief. He showed how the consistent pursuit of Keynesian policies would, in the
long run, produce simultaneous inflation and economic stagnation and unemployment. The long run was
reached in the 1970s, when economists had to coin a new word, stagflation, to describe a condition
Keynesians had always dismissed as impossible. Far from being a "general theory," Hayek saw Keynes's
book as nothing but a superficial tract for the times.
END QUOTE
Of course, Friedman got even more famous during the stagflation problems of the '70's. Note the
preceding was not Hayek, it was someone talking about Hayek (I thought it was a good essay).
Consider that, but I am not surprised by the characterization.
From
http://www.sbe.csuhayward.edu/~sbesc/frlect.html
START QUOTE
Professor Friedman was the founder, and chief proponent of the Chicago School of monetary economics
aka., monetarism. I can recall during the 1960s that the great debate in macroeconomics, set off by
Friedman & Schwartz' monumental Monetary History of the U.S., was between the Keynesians and the
Monetarists. Which was more stable: the Keynesian multiplier or, as Friedman would have it, the
velocity of circulation of money? Most economists today would agree that Friedman and company had
the better arguments and the better evidence.
END QUOTE
The article goes on with Milton himself speaking. I have noted some criticism in forums regarding
Friedman's Hong Kong example as a "perfectly free market." The critics say it is not perfectly
free. However, and the best I could tell, Hong Kong was *relatively* free, thus the criticism just
"nicks the corners," as usual, and really does nothing to bring down the essence of the argument.
Krugman calls this "Friedman cutting corners." Others call it cutting to the chase. I especially
liked this one in the article: "We mislead ourselves if we think we are going to correct the
situation by electing the right people to government."
Krugman says that Keynesians took the lumps delivered by the monetarists and stagflation, learned
their lessons, and became so-called New Keynesians. Krugman is not the least bit impartial (I think
his NYT articles are stupid, but have three of his books and do like them). I don't really know,
but I think the Gov (fiscal policy) and the Fed (monetary policy) are still Keynesian to a large
extent. After all, when things go bad for a week the dopey electorate screams "do something!," and
is ready to roast whomever happens to be in office unless they "do something!, even if it is
wrong!" I perceive that folks often want short term "fixes," so maybe Keynes is right that "we'll
all be dead in the long run" because our short term stupidty kills us for the long run. I somehow
think he never put it quite like that. ;-)
It has been so long since I took a intro college econ class, I'm getting frustrated with my lack of
basic nuts and bolts technical background (very rusty). I order coffee and I get oatmeal. I'm
hoping to squeeze in a macro refresher soon.
If Econ was a fantasy league like basball, Milt and Fred would be on my team. I traded Paul K.
because he had poor off-the-field behavior, despite his obvious game talent. And I don't believe
that sucker _walked_ or _rode a bike_ to the top of that mountain:
http://www.pkarchive.org/personal/VacationingWithEnemy.html
Start/End essay paragraphs from Pressman's _Fifty Major Economists_:
FRIEDRICH HAYEK (1899-1992)
Friedrich Hayek (pronounced HI-YACK)
achieved worldwide recognition as a cham-
pion of the free market and an opponent of
government interference with the right of
individuals to engage in free exchange
through the market. His work makes a strong
case that individual choice, rather than
government decision-making, yields both
economic benefits (greater efficiency) and
non-economic benefits (greater liberty and
freedom).
...
Hayek’s main contribution as an econo-
mist has been his arguments about the
benefits of free markets and the information
provided by prices. These arguments lead to
the conclusion that attempts to alter or
control markets should be opposed because
they inevitably limit individual freedom,
reduce economic efficiency and lower living
standards. Markets, for Hayek, were self-
regulating devices that promote prosperity.
Government policy and other attempts to
hinder the workings of markets make us
worse off economically and reduce individual
liberty.
MILTON FRIEDMAN (1912-)
The two main themes in the work of Fried-
man are that money matters and that free-
dom matters. Money matters because only
changes in the money supply can affect
economic activity. Money also matters be-
cause inflation results from too much money
in the economy. Freedom matters because
economies run better when governments do
not attempt to control prices, exchange rates
or entry into professions. And freedom is
also important as an end in itself.
...
Milton Friedman is the rare economist
who has managed to span two very different
worlds. On the one hand, he is regarded a
giant within the economics profession, and is
one of the two or three most referenced and
revered economic figures in the twentieth
century. This work has stressed the impor-
tance of money and the importance of
markets to improve economic well-being.
At the same time Friedman has written
voluminously for the general public. This
work has stressed the importance of indivi-
dual decision-making and freedom, and has
made Friedman one of the two or three best
known and most recognized economists of
the late twentieth century.
