Liberty Forged

the State has no money of its own, so it has no power of its own. ` Nock

Great Frank van Dun Article & The Destruction of Keynes

Posted by Jesse on January 26, 2009

DEAD END STREET BLUES [Doc] [PDF]

With apparent relief, neo-liberals resurrect the Keynesian paradigm they had so enthusiastically denounced when its failures made the daily news bulletins. None of them has any idea to offer on the conditions that made the  crisis possible or on how it could have been avoided without sacrificing freedom and the rule of law. After all, they cannot see a crisis until it shows up in their data. Hindsight teaches them just enough to make them talk about low  interest rates, imprudent lending and structured investment vehicles. It does not teach them enough to make them admit that, as specialists, they should perhaps have been aware of the moral hazard involved not only in such  expansionary policies, practices and instruments but also in the framework of rules that had enabled these things to fester and drag down the entire economy. They paid a heavy price for using free-market rhetoric without  having a deep understanding of what constitutes freedom or what makes a market free. Unfortunately, the price they paid is mainly a loss of prestige. The real costs are borne by the public, which is still as much subject to the vagaries  of supposedly enlightened economic, monetary and fiscal policy as it was in the heyday of the Keynesians.   The main fallacy of the neo-liberal paradigm is the same as the fallacy of its Keynesian counterpart. It is the notion that the market is some kind of tool—a machine that the government can fire up or slow down as required to  reach desired outcomes. Every crisis is to some extent an intellectual crisis. That was true for the long stagflation of the nineteen-seventies and it is equally true for the crisis that made headlines in the summer of 2008

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2 Responses to “Great Frank van Dun Article & The Destruction of Keynes”

  1. […] Commodity Surge: wrote an interesting post today onHere’s a quick excerpt DEAD END STREET BLUES [Doc] [PDF] With apparent relief, neo-liberals resurrect the Keynesian paradigm they had so enthusiastically denounced when its failures made the daily news bulletins. None of them has any idea to offer on the conditions that made the  crisis possible or on how it could have been avoided without sacrificing freedom and the rule of law. After all, they cannot see a crisis until it shows up in their data. Hindsight teaches them just enough to make them talk about low  interest rates, imprudent lending and structured investment vehicles. It does not teach them enough to make them admit that, as specialists, they should perhaps have been aware of the moral hazard involved not only in such  expansionary policies, practices and instruments but also in the framework of rules that had enabled these things to fester and drag down the entire economy. They paid a heavy price for […] […]

  2. hpx83 said

    Horrible isn’t it. The world officially thinks capitalism = neo-liberalism.

    Just because Friedman found out how to manipulate the system that Keynes built doesn’t mean that he was right. But was Keynes ever buried, I wonder – becuase today I learned that the farm-subsidies of the US was a “temporary” solution that was implemented in the 30’s, yet they are still around …

    //hpx Save capitalism?

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