tag:blogger.com,1999:blog-6245381193993153721.post2940704871419975350..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Axel Leijonhufvud and the Post-WalrasiansLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger30125tag:blogger.com,1999:blog-6245381193993153721.post-53985497229609004172013-05-12T00:44:03.130-07:002013-05-12T00:44:03.130-07:00Jan:Axel Leijonhufvud is surely more inspired by M...Jan:Axel Leijonhufvud is surely more inspired by Minsky than Hayek.He often mention Minsky in interviews long before the recent crisis as influental inspirator.He also mention Erik Lundberg the main buisness cycle economist of the Stockholm school,as early inspiration,also what we now could be called a disequilibrium-Keynsian.Erik Lundberg was inspired by Wicksellian thoughts in early years and by Keynes in his doctoral thesis 1937 "Studies in the theory of economic expansion",and later called himself Keynsian it was no real discrepance by the Keynsianism and Stockholm school after the General Theory,it was embraced by them.Hayek never became a big name among Stockholm school,since he for them dealed with Wicksellian ideas they had either developed to something else or leaved as dead threads.The natural rate concept was not the big thing for them as for Hayek.They had past that.Axel Leijonhufvud was of course familiar with that discussion,and to i don´t think Hayek had much to offer<br />that not expressed by Stockholm schoolars much earlier. That the generation after them,the economist that gave the "Nobel Prize" to Hayek,had more in common with him then such as Myrdal,Lundberg or Lindahl,is another story.It was a shift mainly ideological.But at that time had Leijonhufvud left for the US and studied for Modligiani and others,and made his own path,but his roots was surely not Hayekian.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-89881482387179557402013-05-11T23:30:51.983-07:002013-05-11T23:30:51.983-07:00Jan: Axel Leijonhufvud´s was first,inspired by wha...Jan: Axel Leijonhufvud´s was first,inspired by what<br />was taught in Swedish tradition by Stockholm school and especially by Gunnar Myrdal.It was the concept o circular cumulative causation,a sort of disequilibrium Keynesianism/Instituionalism one could say,that also Nicholas Kaldor embraced and developed together with his friend Gunnar Myrdal.It was the first formative influence on Leijonhufhuvud,alongside with the other disequilibrium Swedes way back to Knut Wicksell,so it was early in Leijonhufvud´s mind. The thought is described by Myrdal in this way:<br />"The notion of stable equilibrium is normally a false analogy to choose when constructing a theory to explain the changes in a social system. What is wrong with the stable equilibrium assumption as applied to social reality is the very idea that a social process follows a direction – though it might move towards it in a circuitous way – towards a position which in some sense or other can be described as a state of equilibrium between forces. Behind this idea is another and still more basic assumption,namely that a change will regularly call forth a reaction in the system in the form of changes which on the whole go in the opposite direction to the first change.The idea I want to expound in this book is that, on the contrary, in the normal case there is no such a tendency towards automatic self-stabilisation in the social system.The system is by itself not moving towards any sort of balance between forces,but is constantly on the move away from such a situation. In the normal case a change does not call forth countervailing changes but,instead,supporting changes,which move the system in the same direction as the first change but much further. Because of such circular causation as a social process tends to become cumulative and often gather speed at an accelerating rate" (Myrdal, G.,1957,pp. 12–13 Economic Theory and Underdeveloped Regions, London:University Paperbacks, Methuen)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-63967962894777586352013-04-10T22:12:04.558-07:002013-04-10T22:12:04.558-07:00You are wrong. In "A Life in Our Times",...You are wrong. In "A Life in Our Times", Galbraith recognizes as flawed his policy of price controls, so it is not a reason to dismiss Galbraith's work and label him as ideological. <br /><br />Instead, Galbraith made very important contributions to economic theory, I can give you 6 at least:<br /><br />(1) his institutional analysis of the Great Depression,<br /><br />(2) the 'dependence effect' that, along with Duesenberry's work, anticipated the Endogenous Preferences approach which is an example of the downward causation advocated by post-Keynesians against methodological individualism,<br /><br />(3) the characterization of monetary policy as a distributive and inequality-biased policy,<br /><br />(4) the acceptance of the role of great corporations in shaping society through political and economic power -another example of downward causation- and the concept of 'technostructure' which replaces the individual by the entreprenurial organization as the driving force in production and innovation and dismisses the role of methodological individualism,<br /><br />(5) the concept of market structure: an economy divided in two sectors, the one subject to market forces and the other with enough power to influence the whole economy, composed by great corporations and the government -so, he is not alien to Austrian concept of government failures-; this would lead to the concept of dual economies in developing countries,<br /><br />(6) his analysis of migration and education policies<br /><br />So, you just cannot dismiss Galbraith's work; I think post-Keynesians should pay more attention to Galbraith because he offered a sound institutionalist framework to micro-fundament post-Keynesian macro, based on emergent properties and downward causation and away from methodological individualism.Davidhttps://www.blogger.com/profile/15447373832509279040noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-26129356577554334512011-05-18T09:01:44.066-07:002011-05-18T09:01:44.066-07:00"so price stickness is baloney both theoretic...<i>"so price stickness is baloney both theoretically and empirically."</i><br /><br />That says it all, really.<br />Your are comments devoid of <a href="http://books.google.com.au/books?id=2OEPPVsIXcMC&pg=PA428&dq=price+stickiness+empirical+evidence&hl=en&ei=1OnTTYXrLIiGvgPIteG4DQ&sa=X&oi=book_result&ct=result&resnum=3&ved=0CDUQ6AEwAg#v=onepage&q=price%20stickiness%20empirical%20evidence&f=false" rel="nofollow">basic facts about the real world</a>.<br />You probably should be congratulated, given you uphold the proud Misesian tradition of shunning empirical evidence.<br /><br />E.g., <br /><br />Carlton, D. W., "The Rigidity of Prices," <i>American Economic Review</i> 76 (1986): 637-658.<br /><br />Blinder, A. S. "Why Are Prices Sticky? Preliminary Results from an Interview Study," <i>American Economic Review</i> (1991): 89-96.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-50140811838198052072011-05-18T08:11:28.306-07:002011-05-18T08:11:28.306-07:00The factors you list are basically all true except...The factors you list are basically all true except point six; when companies spend less on salaries, the savings do not magically vaporize, you seem to assume that employees have some sort of monopoly to create real demand out of salary money; if salaries are not paid, you assume them to remain idle, and no deflation, no, no!. It's just one absurdity piled on top of another with keynesianism.<br /><br />As for all the other factors, you completely miss my point because I have nowhere said that inflation can only arise from deficit spending or even that it always arises from deficit spending. I have merely said that inflation must arise from deficit spending, ceteris frakking paribus.<br /><br />For instance, US had low price inflation in the 20s, even though FED was inflating money supply, because of your first factor (productivity increase). Bust had to come anyway and Mises/Hayek were predicting it from early 20s while all other economists were sure it would never happen again now that they had FED (so by early 30s eg basically all London School economists became Misesians/Hayekians, until The General Theory). That's the power of scientific ceteris frakking paribus analysis which you try to run away from all your life.<br /><br />The whole price stickness thing just proves you have no clue how the market works. No seller ever _wants_ to get less than the current market price. No buyer ever _wants_ to pay more than the current market price. In this sense, all prices are sticky as hell. But the law of supply and demand does not depend on what prices people _want_, otherwise it would not be called a law in the first place. Even if you reject self-evident assumptions and claim to adhere to empirical observation limited to as you understand it, that's okay because you can observe prices easily thirded over a few months, most powerful cartels and whatnot notwithstanding, so price stickness is baloney both theoretically and empirically.<br /><br />If I were to construct keynesian theory myself, the belief in your point six seems indeed crucial, combined obviously with the rejection of the law of supply and demand in determining prices (complete rejection both ways).Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-80119030542910496652011-05-18T06:01:53.762-07:002011-05-18T06:01:53.762-07:00"Previously you have said that with decreased...<i>"Previously you have said that with decreased spending prices do not fall because they are sticky."</i><br /><br />Wrong once again.<br />I say that prices are not <b>perfectly or significantly</b> flexible in the way imagined by Walrasians, neoclasscals and Austrians like you.<br /><br />That doesn't they don't move downward, but that we live in a world, as Leijonhufvud says above, of slow or imperfect price adjustments and sometimes false price signals.<br /><br />You would do better to get your opponents's positions clear, instead of straw man arguments.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-91254086431202559392011-05-18T05:54:47.194-07:002011-05-18T05:54:47.194-07:00"Now you say with increased spending prices d...<i>"Now you say with increased spending prices do not increase. Instead, there is increase in employment/output."</i><br /><br />One of your typical caricatures. To make it clear for you:<br /><br />In recessions or depression or periods of high unemployment/low capacity utilization, the <b>major effect</b> of deficit spending is to raise employment, output and capacity utilization, and not simply inflation. <br /><br />When employment and capacity utilization become high, <b>then an economy will start to experience the type of inflation</b> you imagine with a quantity theory of money model.<br /><br />Inflation is complex phenonenon. Changes in the level of prices depend very much on real factors, as well as monetary ones. For example, the following factors could tend to decrease the level of prices:<br /><br />1. the falling prices of specific goods through increasing productivity or output;<br />2. an appreciating exchange rate;<br />3. a rise in cheaper imports into a country;<br />4. falls in the prices of imported basic commodities that are factor inputs;<br />5. changes in the velocity of circulation of money;<br />6. higher unemployment (= less demand for goods and services), and<br />7. a fall in extension of bank credit.<br /><br />In reality, all or some of these factors listed above could operate to cause either a zero inflation rate (which Japan actually had in 1996 and 2004) or a fall in average prices (deflation), even when the money supply is still actually increasing.<br /><br />And when you have huge unemployment and idle resources, there is huge space for businesses merely to increase production and employment in response to increased demand.<br /><br />http://socialdemocracy21stcentury.blogspot.com/2010/04/austrian-theory-of-inflation-myths-and.htmlLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-35730134991983356742011-05-18T05:31:01.487-07:002011-05-18T05:31:01.487-07:00I mean, when you think about it, keynesian assumpt...I mean, when you think about it, keynesian assumptions are pretty wild. Previously you have said that with decreased spending prices do not fall because they are sticky. Instead, there is a drop in employment/output. Now you say with increased spending prices do not increase. Instead, there is increase in employment/output. In other words, prices never change, whatever spending (and money supply?) there is. In other words, supply and demand law? No, no, rubbish. In the "real" keynesian world, prices have been bestowed on us by a devine force once and for all and now we need to struggle for eternity with keynesian stimuluses and antistimuluses to keep demand and supply in synch with the devine. Wow. One thing is for certain. There will be always a huge demand for keynesian economists in a keynesian world, sort of a never ending job, clever, clever.Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-51840964133083292012011-05-18T03:10:47.823-07:002011-05-18T03:10:47.823-07:00real growth in output and GDP
This keynesian assu...<i>real growth in output and GDP</i><br /><br />This keynesian assumption is out of thin air and wishful thinking, it simply does not follow. My guess it's some legacy of the keynesian magic multiplier, broken window fallacy or some other fairy tale. Keynesian stimulus is merely an increase in _nominal_ spending, be it private or public, so it can have no _permanent_ effect on real demand/output/GDP. Temporary bubble-like, yes.<br /><br /><i>deficit spending just results in a rise in employment, output and capacity utilization, not inflation</i><br /><br />Yes, but it's as permanent as the time it takes for the nominal increase in spending to permeate the economy with inflation. When you do it with proper restrictions, you get stagflation. When you "liberalize" fiat credit enough, you get boom-bust.<br /><br /><i>The whole premise of your comment is a bizarre and ignorant assumption that when a government engages in Keynesian stimulus, its eocnomy is already at what the neoclassicals call full employment equilibrium.</i><br /><br />But my analysis would still be valid even if there were just 2 people employed out of all 300 million. Are you saying neoclassical full employment equilibrium also covers such extreme case? Okay, so I guess I do assume it :)Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-14976033746232557752011-05-18T02:50:39.700-07:002011-05-18T02:50:39.700-07:00"Yes, keynesian methods do create temporary s...<i>"Yes, keynesian methods do create temporary spending/employment/production bubbles, but they do _not_ increase total real demand,"</i><br /><br />They are not "prouduction bubbbles", but real growth in output and GDP. You assume the myth of ACBT.<br /><br /><i>"but that's just boom-bust cycle ... boom-bust cycle), no real growth there whatsoever."</i><br /><br />No "real growth"? Ridiculous.<br /><br /><i>"Hence, activity caused by increased nominal spending (private, public, whatever) while government real demand is left intact can only be inflationary and temporary bubble so the tax revenue increase is also inflationary."</i><br /><br />Again, I have already dealt with this:<br /><br />"in recessions or depression or periods of high unemployment/low capacity utilization, deficit spending just results <b>in a rise in employment, output and capacity utilization, not inflation.</b><br /><br />The whole premise of your comment is a bizarre and ignorant assumption that when a government engages in Keynesian stimulus, its eocnomy is already at what the neoclassicals call full employment equilibrium.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-81543982796527919112011-05-18T02:41:29.208-07:002011-05-18T02:41:29.208-07:00The whole premise of your comment is a bizarre and...<i>The whole premise of your comment is a bizarre and ignorant assumption that when a government engages in Keynesian stimulus, its eocnomy is already at what the neoclassicals call full employment equilibrium.</i><br /><br />Nowhere have I made such assumption. Yes, keynesian methods do create temporary spending/employment/production bubbles, but they do _not_ increase total real demand, more below.<br /><br /><i>As economic activity rises, so do tax revenues</i><br /><br />I think you believe that government can increase total real demand merely by increasing nominal expenditures, be it government or private, but this is erroneous. First of all, government does not produce (government just provides a framework to produce), so increased government real demand must always decrease private real demand accordingly (same as what happens when you add a new guy to society that consumes but does not produce). What happens with private nominal spending can have no permanent effect on that fact whatsoever. When you have fixed real government demand, you can even decrease all taxes to zero and you still do not increase neither private nor total real demand by one iota. <br /><br />It comes from the simple empirical observation that real goods do not magically fall from the sky (one of the "fantasy world" Austrian assumptions actually). Someone has to produce real goods, and someone is going to produce them only when they expect they can trade them for some other real goods. Keynesian tricks in the form of higher nominal spending do indeed temporarily dupe people into thinking there are real goods out there waiting and people indeed temporarily increase production/employment, but that's just boom-bust cycle (stagflation being sort of well managed boom-bust cycle), no real growth there whatsoever.<br /><br />Hence, activity caused by increased nominal spending (private, public, whatever) while government real demand is left intact can only be inflationary and temporary bubble so the tax revenue increase is also inflationary. Nominal tax revenues do increase with inflation, but real tax revenues don't. There can obviously be real tax income increase because of real GDP growth, but real GDP growth has nothing to do with stagflations or bubbles that keynesian methods produce.<br /><br />Basically, from what I can make out, keynesians (any variation) try to increase nominal demand (government, public, whatever) thinking erroneously they are increasing real demand. Keynesian government gives some group of people more money nominally (eg lower taxes). Yes, they start spending more and initially some other people start producing more, duped into thinking that it is some real new demand, on top of existing government demand (which is left intact). Finally inflation kicks in and we are back at square one, except with government debt.<br /><br />If government spending itself was lowered, together with lower taxes, then the new private nominal demand would indeed be new private real demand, because government would simply be appropriating less. Total demand would increase, but not because of higher nominal expenditures, but because there would be less parasitic consumption so society becomes more efficient.<br /><br /><i>the burden of debt falls and falls, making the "cost" of servicing it insignificant, and this is (as I said above) just what happened after WWII</i><br /><br />Government simply wasn't inflating enough back then :)Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-72299740830620582412011-05-18T01:42:05.176-07:002011-05-18T01:42:05.176-07:00Furthermore, in recessions or depression or period...Furthermore, in recessions or depression or periods of high unemployment/low capacity utilization, deficit spending just results in a rise in employment, output and capacity utilization, not inflation.<br /><br />The whole premise of your comment is a bizarre and ignorant assumption that when a government engages in Keynesian stimulus, its eocnomy is <i>already</i> at what the neoclassicals call full employment equilibrium.<br /><br />In other words, you're using a invalid quantity theory of money view of inflation, which ignores the state of the real economy.<br /><br />http://socialdemocracy21stcentury.blogspot.com/2010/07/quantity-theory-of-money-critique.htmlLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-19900767041332567202011-05-18T01:34:21.296-07:002011-05-18T01:34:21.296-07:00"Also, even though you can increase governmen...<i>"Also, even though you can increase government debt temporarily, eventually you have to pay for it somehow, and both ways I can think of (printing money or higher taxes) always _decrease_ private demand,"</i><br /><br />Even if a government increases taxes and changes fiscal policy in a period when the economy has hit full employment and high capacity utilization, with inflationary pressures, the demand contract in the future period is <i>precisely</i> what the economy needs after it has undergone a period of robust real GDP growth and strong growth in output.<br /><br />This is called Keynesian macroeconomic management, and smooths out the volatility of business cycles, setting the economy up for a new period of real GDP and output growth.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-23117310678367051612011-05-18T00:45:40.595-07:002011-05-18T00:45:40.595-07:00"Also, even though you can increase governmen...<i>"Also, even though you can increase government debt temporarily, eventually you have to pay for it somehow, and both ways I can think of "</i><br /><br />Already told you how: by normal movements in the revenue from taxes (at the same tax level). As economic activity rises, so do tax revenues. As strong econonic growth occurs, and real GDP surges (and hence tax revenues), the burden of debt falls and falls, making the "cost" of servicing it insignificant, and this is (as I said above) just what happened after WWII.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-42923245163063801372011-05-17T23:57:05.021-07:002011-05-17T23:57:05.021-07:00inflation tends to happen in many periods of stron...<i>inflation tends to happen in many periods of strong economic growth</i><br /><br />Sure, in our FRB environment, when ecomic growth is driven by priate bank money supply inflation (or open market, whatever), then we also have price inflation (that's basically the boom period, before the bust), unless productivity increases equally fast (as it was in the 20s), but that's not the inflation I have in mind. <br /><br />The inflation I have in mind is, if you do deficit spending by lower taxes, government spending remains intact, correct, but private spending increases, so total spending increases, which must cause price inflation and total real demand back to what it was. <br /><br />Also, even though you can increase government debt temporarily, eventually you have to pay for it somehow, and both ways I can think of (printing money or higher taxes) always _decrease_ private demand, and decrease it to a level even lower than it had been before you started the whole deficit spending (at least until you pay the debts off).<br /><br />In other words, seems like your strategy is no different than any other Keynesian, you believe the temporary increase in total spending (not real demand really, because of inflation) can restore real GDP growth (rather than inflationary boom) and then higer tax incomes automatically pay off government debts. Would that be correct description?Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-72920871122103893982011-05-17T19:12:58.813-07:002011-05-17T19:12:58.813-07:00"But more deficit spending means higher infla...<i>"But more deficit spending means higher inflation (and permanently) which _decreases_ private demand back to what it was."</i><br /><br />That is a complete non sequitur. Yes, inflation tends to happen in many periods of strong economic growth. Inflationary periods happened in the 19th century too.<br />This doesn't decrease demand.<br /><br /><i>Either you print new money or actually increase taxes (and higher than before) to pay the debts off.</i><br /><br />Government debt can get paid off just by restoring full employment and seeing tax revenues soar as the budget goes back into surplus.<br /><br />And with robust GDP growth the debt to GDP ratio falls to insignificant levels, just as happened in virtually all major countries after WWII.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-37052086583759009402011-05-17T11:10:22.550-07:002011-05-17T11:10:22.550-07:00LK, could you please explain to me one thing. As f...LK, could you please explain to me one thing. As far as I can make out from your posts, Post Keynesians want more deficit spending (say, lower taxes) to increase private demand during a crisis. But more deficit spending means higher inflation (and permanently) which _decreases_ private demand back to what it was. I guess you prefer government to issue bonds rather than print money, but debts need to be paid off sooner or later, so again I can't see how you can avoid inflation. Either you print new money or actually increase taxes (and higher than before) to pay the debts off. I mean, it's either inflation or taxes, at the end of the day those are _the_ only two ways you can finance government demand, and both _decrease_ private demand. After all, if government financed its whole spending by printing money, that would simply be a special (extreme) case of deficit spending, wouldn't it (at zero tax income). In other words, there is no free lunch, if goverment consumes, it must always descrease private consumption, no matter how low or high taxes you have, unless you believe goods fall from heaven.Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-77595144522012298002011-05-17T01:16:22.475-07:002011-05-17T01:16:22.475-07:00"This, of course, does not make a Keynesian s...<i>"This, of course, does not make a Keynesian story. It is rather a variation on the Austrian overinvestment theme."</i><br /><br />Note the word "variation". It has similarities to Austrian theory, but is in no way an andorsement by Leijonhufvud of ABCT.<br /><br />And the Post Keynesian financial instability hypothesis is just as relevant - in fact even more so.<br /><br /><i>"To deny he has any connection to Austrian econ, or that he has never been influenced by Austrian insights, shows how partisan you are."</i><br /><br />I never "denied" any such thing. <br />The "Austrian" influence you cite is laughably weak.<br /><br />If anything, Leijonhufvud is more influenced by the Keynesian Minsky, then by any Austrian.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-18397237736483438662011-05-16T22:56:05.845-07:002011-05-16T22:56:05.845-07:00http://www.cepr.org/pubs/policyinsights/PolicyInsi...http://www.cepr.org/pubs/policyinsights/PolicyInsight23.pdf<br /><br />"Operating an interest-targeting regime keying on the CPI, the Fed was lured into keeping rates far too low far too long. The result was inflation of asset prices combined with a general deterioration of credit quality (Leijonhufvud 2007a). This, of course, does not make a Keynesian story. It is rather a variation on the Austrian overinvestment theme."<br /><br />To deny he has any connection to Austrian econ, or that he has never been influenced by Austrian insights, shows how partisan you are.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-68208944408528115652011-05-16T13:36:04.147-07:002011-05-16T13:36:04.147-07:00Lord Keynes, here Leijonhufvudtalks talks somewhat...Lord Keynes, here Leijonhufvudtalks talks somewhat favorably about Hayek and the Austrian School:<br /><br />http://nowandfutures.com/d3/Wicksell_Hayek_Keynes_Friedman,_Minsky.pdfivanfoofoohttps://www.blogger.com/profile/07899286403907746852noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-89653998130315760132011-05-16T02:18:34.502-07:002011-05-16T02:18:34.502-07:00"Why do you ignore the role Hayek played in A...<i>"Why do you ignore the role Hayek played in A.L.'s thinking and instead exclusively discuss how similar his ideas were to Post-Keynesians"</i><br /><br />Cite some sources showing this alleged influence of Hayek on Leijonhufvud.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-65809961573834297552011-05-16T00:24:09.988-07:002011-05-16T00:24:09.988-07:00Why do you ignore the role Hayek played in A.L....Why do you ignore the role Hayek played in A.L.'s thinking and instead exclusively discuss how similar his ideas were to Post-Keynesians? Political motivations perhaps?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-15426868362957458952011-05-14T09:43:02.152-07:002011-05-14T09:43:02.152-07:00Prateek, old guys rarely change. Let me quote Roth...Prateek, old guys rarely change. Let me quote Rothbard: <br /><i>A famous example of that is Joseph Priestley, the late 18th century libertarian and physicist, who invented oxygen, and refused to believe it was really oxygen. He said, “No, no,” he was so locked into the Phlogiston Theory, so it’s only de-phlogisticated air. He refused to<br />acknowledge the implication of his own invention, his own discovery. Incredible.</i>Joanna Liberationhttps://www.blogger.com/profile/03683439858840562847noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-75460205602182849862011-05-14T08:40:13.717-07:002011-05-14T08:40:13.717-07:00Ah, we are again back to an "agree to disagre...Ah, we are again back to an "agree to disagree" situation.<br /><br />Listen, we can agree that the US military-industrial complex had outproduced those of its enemies in order to win the war. That's a different story. In that sense, yes, Galbraith did a good job and served the military's needs.<br /><br />We can also agree on the fact that wartime price controls meant reduced production and supply of all consumer items. There was a very serious housing shortage during and after World War II, despite there being no shortage before World War II (see "Ceilings or Floors?" by George Stigler). American production of automobiles also stopped and wartime posters said: http://www.nh.gov/nhsl/ww2/images/ww15.jpg<br /><br />Use It Up<br />Wear It Out<br />Make Do<br />Or Do Without<br /><br />Let's start asking the right questions.<br /><br />Were price controls useful for meeting wartime needs? Yes.<br /><br />Were price controls useful for meeting housing, automobile, and durable consumer good demand? No, they were not. It's why their production doubled after end of war and withdrawal of price controls.<br /><br />If Galbraith believed he managed to ensure affordable abundant housing for Americans in wartime, when they had to sleep several people in one room (see again Stigler's book), he is documentedly wrong.<br /><br />This has nothing to do with "free market fanatics", many of whom worked in the Office of Price Administration, such as the founder of the Foundation for Economic Education.<br /><br />My point is this. Galbraith was ridden by confirmation bias, because he was ideological. He lived long enough to be proven wrong on General Motors, but never retracted his past statements. He lived through times of fall in housing and automobile production under his own price controls, but he thought price controls were a good idea.<br /><br />Economists should not have confirmation bias and should not be ideological. Even Soviet economists - the ones who wrote The Turning Point changed their minds about their very own policies.Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-85573167133507846162011-05-14T01:42:01.035-07:002011-05-14T01:42:01.035-07:00"Galbraith brought from that experience the v...<i>"Galbraith brought from that experience the view that there was much to be said for having bureaucrats fix prices. The experience seemed to dismay everybody else and to convert them to the view that markets do the job better. Galbraith thought, no, he had done pretty well."</i><br /><br />And he did a good job too, as the US was running a command economy. Just because free market fanatics had a tantrum over it doesn't prove much.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.com