This was sent some time ago, in response to Steve Kates's email, but it
was rejected because I sent it from the wrong email account:

There was no intention to ignore you and certainly no intention to
ignore remarks because they come from down under. Serious arguments
deserve response whoever they come from. We have responded to
criticism, made by several people, of our mention of Friedman and
Hayek. I am sorry that we overlooked your remark about Allyn Young.
This was not deliberate.

We are happy to be reminded of your new book, which I have not read.
Maybe it will provide a convincing new vision of capitalism. Perhaps
it will persuade us that no attention need be paid to the problem of
generating sufficient aggregate demand and that Keynes was misguided.
The only comment I can make is that I have read some of your work on
Say's Law, including the paper you presented in Oxford in September,
and I was not convinced by the arguments.

Roger

On 10 November 2011 08:23, Steve Kates <[log in to unmask]> wrote:
> It is interesting to see just how relentlessly Roger Backhouse and Brad
> Bateman choose to ignore what I wrote. That was the reason I thought I
> would bring Allyn Young into the conversation since I understand
> perfectly well that some faraway economist living in the antipodes would
> have no standing in such discussions but I thought Allyn might.
> Nevertheless, I do wish to impress upon them once again that what I am
> writing about is a direct response to the issues they raised. And since
> the only compass in which these issues can be properly discussed is the
> evolution of economic theory over the past  hundred years, in every way
> this is a subject matter for this site.
>
> Going back to the original NYT article, let me take the final sentence
> as the core point Backhouse and Bateman wished to make. What they wrote
> was: “If economists want to help create a better world, they first
> have to ask, and try to answer, the hard questions that can shape a new
> vision of capitalism’s potential.” To do this, they argued, economic
> theory should include a major recognition of government and its role. To
> emphasise how important this point is, they criticised Hayek and
> Friedman for ignoring the important contributions of government,
> writing:
>
> “In the 20th century, the main challenge to Keynes’s vision came
> from economists like Friedrich Hayek and Milton Friedman, who envisioned
> an ideal economy involving isolated individuals bargaining with one
> another in free markets. Government, they contended, usually messes
> things up. Overtaking a Keynesianism that many found inadequate to the
> task of tackling the stagflation of the 1970s, this vision fueled
> neoliberal and free-market conservative agendas of governments around
> the world. That vision has in turn been undermined by the current
> crisis.”
>
> Well, what I am trying to tell them is that I have attempted in my book
> on “Free Market Economics” to do exactly what they have argued needs
> to be done. It is not perfect but what is?  And  because of the book's
> hostility to Keynes and what he stands for, I fear that if they read it
> they would unlikely find much in it that would give them pleasure. But
> (a) it is obviously about capitalism (although the word does not appear
> anywhere in the book) and (b) it provides a vision of the world in which
> economic actions are of necessity buried inside a political structure.
> Don’t believe it? Here are the opening three paragraphs of the book:
>
> “This is a book about the market economy.
>
> “A market economy is one in which overwhelmingly the largest part of
> economic activity is organised by private individuals, entrepreneurs,
> for personal profit. Such entrepreneurs are private citizens not
> government employees. They make decisions for themselves on what to
> produce, who to hire, what inputs to buy, which machinery to install and
> what prices to charge.
>
> “There are, of course, in every nation state legislative barriers put
> in place by governments which limit every one of these decisions. No
> market is or ever has been even remotely laissez-faire. Entrepreneurial
> decisions are circumscribed by the laws, rules and regulations that
> surround each and every such decision.”
>
> My aim in writing the book was to explain to governments, and to their
> citizens, how an economy can be run so that prosperity for the largest
> number is the result. This is not a book about how governments should be
> kept away from economic interactions. This is a book that embeds within
> the text the very necessity for governments to intervene to make free
> markets work. The point that I try to make is that since governments not
> only are going to intervene but must, they should do so in a way that
> actually does some good.
>
> But Backhouse and Bateman do not just say we need a new vision and
> leave it at that. In their article and subsequent post, they are
> promoting a book with the title, “Capitalist Revolutionary: John
> Maynard Keynes”. In their view, it is in Keynes that we ought to find
> that vision. Well the point I wish to make is that it is precisely in
> Keynes that we will not find that vision, and that if we economists had
> any sense we would abandon Keynesian theory and policy root and branch.
> To draw some inference from Keynes that capitalism is in constant need
> of reform is about as vacuous a statement as I can imagine. The need for
> institutional adjustment to the changing nature of the world is hardly
> some great insight.
>
> The Keynesian policy vision has created a global nightmare both
> politically and economically, a nightmare whose end is nowhere in sight.
> There may be an old guard that wishes to cling to such rancid and
> outdated ideas but by now it ought to be obvious beyond argument that
> Keynesian policies do not work. There is not a single economy in the
> entire world that is safe from the ravages that the stimulus has caused.
> By all means, let us find a new vision, but for heaven sake, the last
> place we should be looking for that vision is in the works of John
> Maynard Keynes.
>
>
> Dr Steven Kates
> School of Economics, Finance
>    and Marketing
> RMIT University
> Level 12 / 239 Bourke Street
> Melbourne Vic 3000
>
> Phone: (03) 9925 5878
> Mobile: 042 7297 529
>