Roger Backhouse and Brad Bateman have done us all an immense favour by
opening up an issue that really ought to be at the top of the economics
agenda today, and that is, given what we have discovered in the past two
years, whether the Keynesian policy vision still makes much sense. They
think it does, which is why they wrote their book, wrote their article
for the NYT and finally initiated this thread to alert the rest of us to
what they have done. 

Unless they were of the opinion that no one disagrees with them about
Keynes and his vision, they must take it as a rightful expectation that
there are some who are of a different persuasion and that they will
actually say so in reply. And what seems to trouble some is this comment
of mine and particularly the word “rancid”: 

“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outdated ideas but by now it ought to be obvious beyond argument that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.” 

There is nothing ad hom in this. It is, as Brad Bateman has himself
noted, the ideas which I describe as rancid. It may not be a typical
word used by economists but it gets my point across. Keynesian economic
theory, assuming it was ever valid which I do not, should be seen by now
as well past its use-by date and recognised as having become stale and
moldy over the past three-quarters of a century. But in the use of this
word, it is quite clear that it is the sin and not the sinner that I am
referring to.  

Thomas Humphrey has entered into this discussion thread in exactly the
right way. A great scholar and one whose writings I admire, he has
posted to say that the way Keynesian economic theory has developed since
the 1930s has created a macroeconomic theory of immense power and
penetration and that my approach would throw baby out with bathwater.
And with this, the issues that I think are important have been engaged.
And unless there were anything further for me to say on the issue of
Keynesian theory and vision, I would have felt there was nothing else to
add. I have said my piece. Keynes, yes or no. We report; you decide. 

Rob Leeson has now, however, suggested that the moderator should not
only determine whether something ought to be published depending on its
relevance, but also dependant on the choice of words used, on the number
of words used and on some determination of the degree of ad hominem
involved. I take it that Rob would not therefore have published my posts
had he been the moderator which makes me grateful that he is not and
Humberto is. 

Of course we are all bad judges in our own case but I don’t think any of
my posts, nor any of the others on this thread, have been too long. I
have read each one through with great interest. And if they are too
long, it is only the writer who loses out since eventually others stop
reading what they have to say. 






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

>>> Robert Leeson <[log in to unmask]> 12/11/11 6:47 AM >>>
Brad´s response raises an important issue: the legitimisation of
discourse with the taint of argumentum ad hominem.  Mises and in his own
way Keynes were enemies of civilisation in this context: by posturing as
Defenders of Civilisation they encouraged their followers to believe
that the rules of civil discourse should no longer apply for "the
duration". Equally, one (non-ideological) contributor to this list
appears to be motivated entirely by generalised malice towards the human
race - he and (almost)With inadequate self-censorship perhaps the long-suffering moderator
should return inflamatory contributions with a standard SHOE flag of
"BOOT" (a hint that a rewrite is called for).  Overlong contributions
should be returned with a standard SHOE flag of "SHOE!!" (a hint that
shortening is required). 

Gresham´s Law punch-ups (which can squeeze out some merit) should be
conducted between consenting adults in private.  But having spent much
of the last year in Popper-related archives, economists are comparative
saints of moderation in this regard.

RL 
 
----- Ursprüngliche Mail -----
Von: "Brad Bateman" <[log in to unmask]>
An: [log in to unmask]
Gesendet: Donnerstag, 10. November 2011 21:24:22
Betreff: Re: [SHOE] Backhouse and Bateman, "Wanted: Worldly
Philosophers"

It is difficult to respond to someone like Steve Kates who is rude about
your ideas ( calling them "rancid") and relentlessly insistent that
they, and they alone, know the truth and that you will address their
work immediately and in the detail they demand. Prudence suggests
walking away from the opportunity.

Before I say anything else, however, I would like to say that some of
the best work done in the history of economic thought comes out of
Australia. I have been engaged all my professional life with Australian
historians of economic thought. While I was in my long cycle of service
on the HES executive committee, I was a signatory to the letter of
protest sent to the research body that tried to diminish the status of
the history of economic thought in Australian research assessments.
Thus, I refuse to take Kates' comments about his citizenship seriously.
Frankly, they have no place in a post on this list.

I suspect that I should say very little else to Kates' demands. In his
critique of our op-ed piece, he continually returns to his understanding
of Keynes's ideas and insists that anything we have said about Keynes
must be interpreted through the frame of his understanding of Keynes. I
find Kates' understanding to consist largely of caricature. It is a
straw man and I refuse to argue with him about his straw man. I have
written for many years trying to explain why the figure that Kates is so
intent on beating in public is a straw man. I have also argued against
several other interpretations that I believe are inaccurate. As best as
I can tell, Kates has ignored in his own work everything I have written
on Keynes's policy ideas; but now he demands that I address his work
point by point. There is an odd asymmetry in his demand.

Brad Bateman


On 11/10/2011 3:23 AM, Steve Kates 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> 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