Hayek’s review of the Treatise in Economica appeared technical in character, but it was politically charged…
|March 13, 2012|
The Theatre, LSE, c.1930. Photograph from LSE Library Collection
In London, Robbins had experienced Keynes’s less attractive side. They had both been appointed to the Macmillan Committee on Finance and Industry, which was intended to find answers to the severe economic downturn then under way. Keynes had been a free trader for most of his life, but in the crisis conditions of the early 1930s he persuaded the majority of the committee to support import tariffs. Robbins, who remained committed to free trade, insisted that he write a dissident minority opinion. According to a later account from Robbins, Keynes “then, as always, was capable of fits of almost impossible anger”. Indeed, he was “furious” with Robbins and treated him “most roughly”.
According to Nicholas Wapshott in Keynes–Hayek: The clash that defined modern economics, the Keynes–Robbins quarrel on the Macmillan Committee had far-reaching consequences. Robbins was so angry that he invited Friedrich Hayek, one of the most promising young men in the Austrian School, to give a lecture series at the LSE. The lectures were seen – by both Robbins and Hayek – as presenting a rival view to that in the Treatise on Money. The purpose of bringing Hayek from Vienna to London was that he should act, in Wapshott’s words, “like a western gunslinger” whose priority was “to target the troublesome Keynes”.
In the summer of 1931, Hayek reviewed the Treatise in Economica, the LSE’s specialist economics journal. The review was extremely critical, alleging that Keynes had been sloppy in his definition of terms, that his meaning was difficult and obscure, that his conclusions did not follow from his premisses, and that he had not read enough of the Continental literature. Implicitly, Keynes was at fault because he had not familiarized himself with the doctrines of the Austrian School, notably its recondite analysis of “roundabout” methods of production. This analysis stemmed from a branch of economics, known as “capital theory”, for which the Austrians were famous.
Hayek’s review appeared technical in character, but it was politically charged. In the Treatise, as in his subsequent and more celebrated General Theory of Employment, Interest and Money, Keynes advocated the active use of fiscal and monetary policy to regulate demand, output and employment. In fact, the key policy prescription of the Treatise was what Keynes termed “monetary policy à outrance” – and what we now call “quantitative easing” – to combat an emerging slump in the global economy. Hayek repudiated this monetary activism as inflationary. He believed that during the boom, banks had the bad habit of extending too much credit for particularly “roundabout” kinds of production. In these credit binges, some entrepreneurs made mistakes and sinned against the free market, and the State should do nothing to ease their pain.
But it was less the content of Hayek’s review that drew attention than its fiercely polemical tone.
The Black Dog
W. H. C. Pynchon
In a corner of our country not far removed from two of its great cities, there is a low range of mountains, the hoary evidences of ancient volcanic action. Countless years have elapsed since the great tide of molten lava rolled over the region. Years fewer, but still countless, have passed during which the shattered and tilted remnants of the lava sheets have watched over the land.
Merleau-Ponty’s Child Psychology
As much as death signals the end of the self, birth is just as mysterious. Both extend out to infinity and signal the brevity and contingency of our lives. As mysterious are those first few years of life that one does not have access to as an adult, I know I existed before my earliest memories. I know I interacted with others, I learned to walk and talk. I was willful from my parent’s tales.
William Pope.L: Reader Friendly
William Pope.L is famous for (among other things) carrying a business card that identifies him as “The Friendliest Black Artist in America.” It’s a clever gag because it makes itself true, in a way, every time it draws people closer. The card must be especially useful when Pope.L does business with people who dread Black men or Black artists.
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