I sent this note off to Robert Skidelsky in response to his column on Project Syndicate on the “Keynes-Hayek Rematch” between he and George Selgin. Lord Skidelsky is a well-known Keynesian scholar who recently wrote a biography of him. Skidelsky repeats every cliché about Austrian theory that Austrians have disproved, time and time again. The man is irritating and incorrect. Like Paul Krugman the man is a politician cloaked in economist’s clothing.
Selgin countered in this piece on Free Banking. I believe George is being too collegial in his response. Skidelsky apparently sheds his collegiality in his article, which Selgin says is a “sucker punch.” In fact, Skidelsky is a politician, and while he may be a Keynesian scholar, his analysis of Austrian theory is quite simplistic (“not nuanced” as the Brits would say). I say the man is a hack much in the cut of Paul Krugman. His ends are political rather than academic.
Usually I bite my tongue, count to 100, and ignore these debates because I cannot change their minds. I used to “debate” Martin Wolf of the Financial Times by e-mail but it got boring and repetitious. This time I only got to 10 and wrote it anyway.
Here is my letter:
I have read your column in defence of Keynes. I also saw your recent debate with George Selgin. I was rather disappointed in the debate as not accomplishing anything of substance. Which is understandable with most such debates.
What is disappointing is the lack of intellectual insight you have of Austrian theory economics. I understand your loyalty to Keynes, but simply put the man was a lightweight. It unfortunately puts you in the position of polemicist, much as Paul Krugman. I would say that Keynes’s popularity has much to do with his simplistic concepts which are easy to communicate versus the complexity of Austrian theory which is much more difficult to explain to the general public. And obviously to groupthink academic economists.
Further, I have read similar claims that Keynesian stimulus saved the world from collapse–recently by Blinder and Zandi. I find absolutely no credibility in a formula that assumes such stimulus works as its premise — it is an exercise of curve fitting within a tautology.
Why haven’t those fiscal stimulus solutions worked? I am also sure that you would say that we just didn’t spend enough, but I have yet to hear a Keynesian not say that in response to the constant failure of such policies whenever and wherever they have been tried.
After all, in the U.S. between fiscal (now about $900B) and monetary ($2 trillion) stimulus we are still in decline. Don’t you find that curious? (I’m aware that Keynes was not an advocate of monetary stimulus. But his neo-followers are.)
Your uninformed summation of Austrian business cycle theory in your Friday column was an example of fallacy rather than argument. The Weimar problem was not due to the failure to bail out the unfixable, but the destruction of the economy through bad monetary and fiscal policy in the first place. Your argument is shocking and incorrect.
I don’t mean this to be insulting, but it is the view that most Austrian theory economists have of Keynes and your defence of him. I don’t expect to change your mind either. But I am rather challenged by the subtle uninformed disdain that Keynesians have for the Austrians. It would be nice if critics would actually understand Austrian theory economics before they commented instead of degrading it by misrepresenting its concepts.
This is from an Austrian theory “fanatic” who read Keynes, and who actually believes that the ‘collapse of the world’ concept was a fiction created by panicked Keynesians to justify their failed policies, and if one really studied the data of what actually occurred at the time such threats were false based on ignorance and falsehoods.