The “Dreaded” Post Keynesians?

In my various readings of the blogs that I find interesting, I just came across these remarks (that I seem to have missed) by George Selgin on the Free Banking blog referring to the debate that I recently had with Selgin here in the comments section of my blog on the Keynes versus Hayek LSE debate:

“At Social Democracy a post-Keynesian blogger who styles himself ‘Lord Keynes’ similarly misinterpreted my ‘liquidationist’ stand, inviting what became a long exchange with me there that was interesting in part because by engaging in it I learned that trying to argue with a dreaded Post-Keynesian can after all be a lot more rewarding, as well as a lot more pleasant, than trying to argue with many Rothbardians!
George Selgin, “The Keynesians Answer Back,” August 5th, 2011.

I did indeed make an error in my original post on Selgin’s position, but I was happy to correct it. And it was a pleasant surprise to find that Selgin’s position on the bailouts was one that a Post Keynesian could readily agree with. In actual fact, debating Selgin was a pleasure, and so much more rewarding than the blathering nonsense that one normally encounters from Rothbardian anarcho-capitalists.

But Selgin refers to the “dreaded” Post-Keynesians? Why “dreaded”?

It has long been known that the radical subjectivist wing of the Austrians and the Post Keynesians have ideas in common. In fact, the Austrian moderate subjectivists O’Driscoll and Rizzo tried to reach out to Post Keynesians in their book The Economics of Time and Ignorance with this comment:

“[i]t is evident that there is much more common ground between post-Keynesian subjectivism and Austrian subjectivism …. the possibilities for mutually advantageous interchange seem significant” (The Economics of Time and Ignorance, Oxford, UK, 1985, p. 9).

The “possibilities for mutually advantageous interchange” seem real to me, but there is so much mutual hostility from both sides that dialogue rarely comes to anything, mainly because Austrian economics is hijacked by the Rothbardian cult.

But I would like to think that the Austrians and Post Keynesians can learn from each other, even if obstacles remain. Ludwig Lachmann seems to be an Austrian whose work should be seriously examined by Post Keynesians.

Another point is that aspects of the Austrian/libertarian critique of Roosevelt’s New Deal, particularly those of Robert Higgs, are quite reasonable in some ways, especially since Keynes himself was also critical of the New Deal. There was undoubtedly some degree of “regime uncertainty” caused by the unprecedented interventions of Roosevelt’s New Deal which had never been seen before in America. When Keynes visited America in 1934, he saw first hand something that would confirm Higg’s view:

“[sc. Keynes] acknowledged that some aspects of the New Deal had created a crisis of confidence in the business community, but turned this into an argument that the government should increase its emergency expenditure to $400m. a month, while trying to reassure business that ‘they know the worst’ and discontinuing some aspects of the objectionable policies of the National Recovery Administration.” (Skidelsky 1992: 508).

The truth is that certain aspects of the New Deal had little if anything to do with Keynesianism. The New Deal came out of different ideas and types of thinking, and one of these was the sort of American corporatism/cartelism that even Herbert Hoover had supported to some extent. The solution to Roosevelt’s troubles was simply stopping his anti-business rhetoric and ending many of his counterproductive programs, and concentrating on fiscal stimulus, just as Keynes advised.

BIBLIOGRAPHY

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.