As the Korean translator of an Austrian text put it, “Keynes must die so the economy may live.” With your help, we can hasten that glorious day.
The piece goes onto show how Keynes successfully captured economics and politicians minds (but obviously) despite being a”tissue of distortions, fallacies, and drastically unrealistic assumptions”.
In 2012, Barack Obama warned that the United States would fall into a depression if Ron Paul’s plan to cut $1 trillion from the federal budget were enacted. Wait, I beg your pardon. It wasn’t Obama who warned that budget cuts would lead to a depression. It was Mitt Romney. Romney went on to become the nominee of the self-described free-market party.
An ideological rout is complete when both sides of respectable opinion take its basic ideas for granted. That’s how complete the Keynesian victory has been. In fact, Keynesianism had swept the boards a decade before Romney was even born.
The General Theory of Employment, Interest and Money, the seminal treatise by John Maynard Keynes, appeared during the Great Depression, a time when a great many people were beginning to doubt the merits and resilience of capitalism. It was a work of economic theory, but its boosters insisted that it also offered practical answers to urgent, contemporary questions like: how had the Depression occurred, and why was it lasting so long?
The answer to both questions, according to Keynes and his followers, was the same: not enough government intervention.
Now as Murray N. Rothbard showed in his 1963 book America’s Great Depression, and as Lionel Robbins and others had written at the time, the Depression had certainly not been caused by too little government intervention. It was caused by the world’s government-privileged central banks, and it was prolonged by the various quack remedies that governments kept trotting out.
But that wasn’t a thesis governments were eager to hear. Government officials were rather more attracted to the message Keynes was sending them: the free market can lead to depressions, and prosperity requires more government spending and intervention.
Hard hitting stuff…