Thomas Humphrey wrote:
> 1. James Ahiakpor claims that Keynes bamboozled and hoodwinked 
> generations of economists into believing that Wicksell's version of 
> the cumulative process (CP) was definitive. In so doing, James both 
> overstates Keynes's persuasiveness and understates economists' 
> intelligence. The idea that Keynes could fool so many economists for 
> so long is ludicrous. After all, economists, who famously preach the 
> gospel of rationality, must be given credit for being perceptive and 
> rational themselves. If the economics professions christens the CP 
> model with Wicksell's name, it must be because the profession finds 
> his statement indeed definitive, not because Keynes fooled them into 
> believing so.
>
I thought Tom's comment was much too loaded with misunderstanding that I 
would rather let someone else respond to him.  That hasn't happened.  So 
as not to let his characterization of what I've been saying stand, let 
me explain how wrong he is.

First, I think he misuses the word "bamboozle."  The /Webster's 
Dictionary/ defines bamboozle as "to conceal one's true motive from esp. 
by elaborately feigning good intentions" (1980, p. 86). Now, I don't 
think Keynes set out deliberately to deceive economists.  He wrote what 
he believed at the time to be true.  When he later changed his mind on 
some points, he said so.  That is why he could later declare that he was 
not a Keynesian.  I think "misled" is a more accurate word to describe 
what he did to many economists.

Keynes was persuasive enough as to have caused Milton Friedman, one of 
his fiercest critics to declare in print (1968, p.15) that "'in one 
sense, we are all Keynesians now; in another, no one is a Keynesian any 
longer.'  We all use the Keynesian language and apparatus; none of us 
any longer accepts the initial Keynesian conclusions."  In another 
publication (1970), Friedman calls Keynes's /General Theory/ "a great 
book"!  But this is the very book that contains the conclusions 
Friedman's life's work was dedicated to refuting.

Keynes's /General Theory /(pp. 183 n., 242) refers favorably to 
"Wicksell's 'natural' rate of interest," but the book thrashes 
Marshall's restatement of the classical theory of interest.  Keynes in 
that book also falsely accuses the classics, including David Ricardo, as 
having assumed the existence of full employment always in their theory 
of interest (as well as theories of the price level, inflation, 
force-saving doctrine, and Say's Law).  And to whom does Friedman refer 
in his Presidential address to economists in 1967 (/AER/ 1968, p. 7) for 
our getting to know about the "natural rate" of interest?  Wicksell!  
Had Friedman known that the "natural rate" idea goes all the way back to 
Adam Smith, the person whose image is on the tie he liked to wear, why 
wouldn't he have credited Smith?

Was Friedman a brilliant economist?  You bet, he was.  Such was his 
reputation that, while introducing Friedman at the Western Economic 
Association meetings at Las Vegas in June 1984, James Buchanan described 
his influence thus: "If the whole economics profession takes one 
position on an issue and Milton takes the opposite position, then the 
economics profession is equally divided!"

Need I mention other brilliant economists who have been misled by 
Keynes?  Perhaps, one more would suffice.  Take Paul Samuelson, who 
popularized in  economics such Keynesian mythologies as the "paradox of 
thrift" and the positive budget expenditure multiplier effect with 
algebra (equations) and geometry (graphs).  The American Recovery and 
Reinvestment Act (2009) otherwise known as the "Stimulus" was founded on 
the latter principle!

I don't think there's any shame in acknowledging having been misled.  
Indeed, it is an improvement when one recognizes that one has been 
misled.  One then stops believing the deception or mistaken belief.  It 
is rather a problem when one does not recognize the deception.  A once 
famous economist, and a previous ardent Keynesian, brilliant enough to 
have been an editor of the /American Economic Review/ said this to me in 
1995 after about 30 minutes of discussion (or debate) over the correct 
meaning of saving: "James, it took me 40 years to recognize how 
hoodwinked I was by Keynes!"  Would that many more people took much less 
time to recognize the Keynesian deceptions or errors in modern 
macroeconomics.

James Ahiakpor

-- 
James C.W. Ahiakpor, Ph.D.
Professor
Department of Economics
California State University, East Bay
Hayward, CA 94542

(510) 885-3137 Work
(510) 885-7175 Fax (Not Private)