John Maynard Keynes and Hayek: Bruce Caldwell

[ThisSentenceIsFalse]

Oh man. I'd love to see a discussion between Hayek and Keynes.

[nhwapshott]

@ThisSentenceIsFalse My Keynes Hayek: The Clash That Defined Modern Economics is published in October by W.W.Norton. See website: sites.google.com/site/wapshott­keyneshayek/

Nicholas Wapshott

[ThisSentenceIsFalse]

@nhwapshott Thanks.

[NickDanger3]

"The natural rate of interest" is not the same thing as a pure time preference theory. In any case, I researched a little more and it was actually Frank Fetter who first introduced the pure time preference theory -- Bohm-Bawerk tied interest to productivity.

[Questfortruth86]

@NickDanger3

"In any case, I researched a little more and it was actually Frank Fetter who first introduced the pure time preference theory"

I never said that Bohm-Bawerk was the first to introduce the pure time preference theory of interest. I said he was the first to introduce the time preference theory of interest. There's a difference.

"Bohm-Bawerk tied interest to productivity."

Indeed, along with time preference.

[Questfortruth86]

@NickDanger3

But the fact remains: both Keynes and Hayek were building upon the works of Wicksell, who, unbenounced to Keynes, employed the Bohm-Bawerkian framework. In fact, Keynes' business cycle theory has no capital theory whatsoever; it entirely ignores capital altogether. Additionally, Irving Fisher was not the first to develop a time preference theory of interest. His theory came much later, and like Bohm-Bawerk, it fused time preference and productivity.

[Philippchaykin]

Thank you very much for this

[Questfortruth86]

The book in question, namely "Interest and Prices" (Wicksell, 1896), was Austrian through and through (Mises' 1913 TMC merely extended upon Wicksell's work and remedied a few confusions). "Natural interest," the center of both Keynes' and Hayeks' monetary and trade cycle frameworks, is based on a time-preference framework, which presupposes the Austrian capital theory.

Keynes, in his earlier days, was merely a confused Austrian economist, and later in his life, was a well-versed Mercantilist.

[NickDanger3]

@Questfortruth86:

"is based on a time-preference framework, which presupposes the Austrian capital theory."

No, it doesn't. In fact, the time preference understanding of interest was developed by Irving Fisher, who had a distinctly non-Austrian view of capital. And Bohm-Bawerk, the main developer of Austrian capital theory, did NOT have a time preference theory of interest!

[Questfortruth86]

@NickDanger3

That's absolutely incorrect. It's true that Irving Fisher did incorporate time preference within his capital framework, but it was first introduced as an explanation of Interest by Bohm-Bawerk, in his "Positive Theory of Capital (pp. 242)," and the "Capital and Interest" series. In fact, if you read Wicksell's "Interest and Prices," he explicitly cites Bohm-Bawerk as the originator of "natural interest" (what Wicksell calls, "the natural rate of interest").

[Questfortruth86]

@NickDanger3

I must say. though, that Bohm-Bawerk "borrowed" his time preference theory of interest from Turgot. Thus, Turgot is really the first to explain the phenomenon of interest with time preference. Additionally, there's a lot more to Austrian capital theory than just the TPT (time preference theory) of interest.

[loverofbeats]

interesting video, i enjoyed it!

[Nintendomanwill]

@loverofbeats This is an interesting lecture but not a good one. Keynes' Treatise on Money was utterly debunked by Hayek and Keynes even admitted that by the mid-30s he no longer agreed with it which is why Hayek never bothered to write a detailed criticism of the laughable General Theory of Mercantilistic Bullshit.

Keynes effectively had no theory as to the WHY of the business-cycle.

Hayek does not agree with theft of money and spending it on 'stimulus' ie unproductive, antisocial spending.

[NickDanger3]

@Nintendomanwill, this is the top Hayek scholar in the world giving the talk, but YOU understand this stuff much better than he does, I suppose.

[freedomthrough]

@Nintendomanwill Keynes had a clue as to the "why of the business cycle". He called it the "animal spirit" and it has been followed up on by many after him. It's a matter of mass-mentality. So far, we haven't had working capitalism without accelerating debt accumulation in the private sector, apart from a few examples (post WW2 Australia) and the "true" Keynesians of today wish to correct this by downsizing the financial sector and stabilizing private debt.

[freedomthrough]

@Nintendomanwill Although i agree much of what has passed as "Keynesian" after he dies is utter garbage.

[Nintendomanwill]

@loverofbeats

Indeed, because Keynes never understood the causation of the business cycle (which suggests that he WOULD have been surprised by the crash of 1929 considering that it was caused by the very unsound inflationist policies that Keynes advocated and was made worse by the New Deal and the very interventionism he advocated) he led the spurious theory that deflation, when caused by the market, must be combated with deliberate inflation. He never realised WHY the market deflates currency.

[Nintendomanwill]

@loverofbeats

Had he understood why the market tendentiously saves and increases the value of money after an inflationary boom then Keynes would have realised the fight against deflation is a tyrannous fight to prop-up the fallacious, misdirecting fraud of the boom.

Keynes' interventionist philosophy is both epistemologically ugly and and an elaboration of backward theories on increasing wealth through accelerating exchange, through governmental force and Fiat. He was no economist.

[Nintendomanwill]

@loverofbeats

To believe that worthy exchange can be accelerated by helicopter drop, or quantitative easing or fiddling with interest rates or bailing out bust Fractional Reserve banking cartels designed by the (oh-so-wise!) central-banks to steer the (oh-so fallible!) market, is to believe that the market does not react to an inflationary boom with prudent reason but with 'animal spirit' which isn't science, nor is it science to suggest government steering of money supply against such spirits.