A practical man?

On the American Spectator, Acton Research Director Samuel Gregg examines the baleful influence exerted on economic thought and public policy for decades by John Maynard Keynes. Gregg observes that “despite his iconoclastic reputation, Keynes was a quintessentially establishment man.” This was in contrast to free-market critics of Keynes such as Friedrich Hayek and Wilhelm Röpke who generally speaking “exerted influence primarily from the ‘outside’: not least through their writings capturing the imagination of decidedly non-establishment politicians such as Britain’s Margaret Thatcher and West Germany’s Ludwig Erhard.” Perhaps not so surprisingly, many of Keynes’ most prominent devotees are also “insider” types:

The story of Keynes’s rise as the scholar shaping economic policy from “within” is more, however, than just the tale of one man’s meteoric career. It also heralded the surge of an army of activist-intellectuals into the ranks of governments before, during, and after World War II. The revolution in economics pioneered by Keynes effectively accompanied and rationalized an upheaval in the composition and activities of governments.

From this standpoint, it’s not hard to understand why New Dealers such as John Kenneth Galbraith were so giddy when they first read Keynes’s General Theory. Confident that Keynes and his followers had given them the conceptual tools to “run” the economy, scholars like Galbraith increasingly spent their careers shifting between tenured university posts, government advisory boards, international financial institutions, and political appointments — without, of course, spending any time whatsoever in the private sector.

In short, Keynes helped make possible the Jeffrey Sachs, Robert Reichs, Joseph Stiglitz’s, and Timothy Geithners of this world. Moreover, features of post-Keynesian economics — especially a penchant for econometrics and building abstract models that borders on physics-envy — fueled hopes that an expert-guided state could direct economic life without necessarily embracing socialism. A type of nexus consequently developed between postwar economists seeking influence (and jobs), and governments wanting studies that conferred scientific authority upon interventionist policies.

Read Samuel Gregg’s “The Madness of Lord Keynes” on the American Spectator.


  • Rmckinney

    God occasionally punished Israel for their immorality by appointing silly young men to lead them.

  • http://twitter.com/umbrarchist umbrarchist

    Keynes said that governments should build up surpluses when the economy was good.   When did any government do that?  The politicians only want a good excuse for deficits and will only hire the economists who will twist Keynesianism to suit that objective.
    So now after decades of the misuse of Keynesianism lots of people want to blame Keynes when technology has created an economy that Keynes never saw.  When did Keynes ever watch a television commercial for automobiles.  But we are supposed to buy a car because of a kid in a Darth Vader suit.  It’s so cute!

    http://www.youtube.com/watch?v=R55e-uHQna0

    It’s 42 years after the Moon landing.  What technological sense does it make to keep redesigning cars?

    Give pseudo-intellectuals some new knowledge and they will come up with more complicated ways of being stupid.  The economics profession created these problems by ignoring planned obsolescence and Demand Side Depreciation.

  • Anonymous

    Well, Keynes knew that when politicians start spending, they control the votes with the purse, and this leads to never ending spending, no cuts, and bought votes. Exactly what they wanted. 
    http://www.youtube.com/watch?v=6uR4lqa7IK4