Suggestions for Research Topics on Keynes
March 11, 2010
Keynes' legacy is a confused one, because he was a confused economist. The more clearly that a critic of Keynes can demonstrate Keynes' confusion, the better for this project.
Here are several research projects that will throw light on his confusion.
Keynes vs. Keynes. Begin with a study of his entire corpus. Looks for contradictions. There will be many. Sometimes these were contradictions in theory. He changed his views of how the economy works. At other times, the change will be based on different facts. Still other cases are changing interpretations of the relevance of these facts.
The key to Keynes is his attempt to make sense of bad effects that he did not predict in his earlier writings. He was always looking for ad hoc explanations of what was going wrong. The General Theory is a mastery work of ad hockery.
The project should be broken down into a series of quotations, contradictory, with an explanation for what motivated the change. The critic should also provide a discussion of how a change led to the ultimate error in The General Theory. Some changes may have been merely his latest attempt to explain what he had not previously seen was coming. Which are the important flip-flops and which are merely the result of his latest failure to predict accurately?
Glossary for The General Theory. This is a major project. How did he used terms in The General Theory? What did he mean in 1936: the internal coherence of The General Theory? Then the critic should show how these words had been used by 19th-century economists. Provide examples. Were these definitions still common in Keynes' day? If so, why did he change their meaning? What was his hidden agenda? What aspect of his 1936 outlook depended on shifts in definitions?
Examining the New Terminology. What were the accelerator and the multiplier? Do they make economic sense? To what extent was The General Theory dependent on them for its coherence?
Keynes vs. Hayek. We need a detailed, cogent summary of the Hayek-Keynes exchange over Keynes' Treatise on Money. How did it represent a fundamental confrontation between Keynes and Mises? What errors did Hayek emphasize? Why? Did Keynes deal with these issues in his response?
To what extent did Keynes abandon A Treatise on Money in The General Theory? Why did he change? Did the General Theory represent a break with his previous thinking? If not, why did he tell Hayek that he was no longer committed to defending the Treatise?
Keynes and the Monetary Cranks. Why did he praise Gessell and Major Douglas? To what extent were his errors in The General Theory comparable to the errors in the writings of the cranks. (For a critique of Douglas, see my book, Salvation Through Inflation.)
Keynes and the Gold Standard. What was Keynes' theory of causality between money and gold? What did he say about the gold exchange standard? About the re-establishment of the old pound exchange rate at the pre-war price? Were his criticisms unique?
Keynes and Fisher. How dependent was Keynes' theory of aggregate demand on Fisher's concept of the price level? Compare Keynes on Fisher with Mises on Fisher in The Theory of Money and Credit. Was Keynes' commitment to stable prices rather than stable money the same as Fisher/Friedman? http://econ161.berkeley.edu/Economists/keynes.html
Keynes and Capital. Why did he think the cost of capital -- the interest rate -- could someday be reduced to zero? Isn't this the abolition of scarcity and also the science of economics?
Keynes and the Trade Unions. Why did Keynes think that trade unions would passively accept the effects of price inflation on real wages, and tell their workers to go back to work?
Keynes and Say's Law. Why did Keynes deliberately distort the meaning of Say's law? What did Say teach? Did Keynes' arguments refute Say? In short, do falling prices clear markets? If not, why not? Begin with Hutt's Theory of Idle Resources.
Keynes on Entrepreneurship. To what extent was his invocation of the phrase "animal spirits" an admission that he had no theory of entrepreneurship? What was his concept of profit and loss?
Keynes and Government Policy. Did Western governments adopt Keynesian deficits because policy-makers had read Keynes, or did Keynes reconstruct economics on order to provide a theory to defend what policy-makers had already done? (Starting point: John Wood, A History of Macroeconomic Policy in the United States.)
Keynes and the FDIC. How can the government's deficit increase aggregate spending if the public is no longer hoarding currency? That is, to what extent was Keynes' theory in 1936 dependent on hoarding in order to justify increased government deficits as a way to increase aggregate spending? The FDIC went into effect in 1934. As soon as the public left their money in banks, how could the government increase deficit spending through borrowing? Didn't money removed from lenders' bank accounts offset the increased spending?
Conclusion. When you have your air-tight paper or monograph completed, which no conventional publisher will touch, send it to Jeff Tucker. Maybe Mises.org will post it.
Then, when it is posted, think about how you can break it into 10-minute YouTube segments.
Think about simple graphic images. //www.garynorth.com/public/6199.cfm
Want to see a great example of the use of simple images by the Cleveland FED? Watch this: