Friday, May 28, 2010

Did Keynes Recant on his Death Bed?

Monty Pelerin writes (27 May) in The American Thinker HERE


Keynes' deathbed conversion to capitalism’

‘Wait, stop the Economics. There has been a terrible mistake.

Even John Maynard Keynes recognized his central planning approach to economics could not work. Ten days before his death he stated:

"I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago."

The reality is that Keynes not only removed the concept of markets (the invisible hand) from economic thinking, he also set economic thinking back centuries.
Markets work, governments do not. That is not to suggest there is no role for government in policing or overseeing markets. It merely means that government cannot perform the functions that markets do. They do so easily, efficiently, costlessly and invisibly, at least in comparison to states
.'

(Monty Pelerin www.economicnoise.com)

Comment
First if Keynes did say this, the significance for Lost Legacy is its date. Keynes died on 21 April 1946, so his ‘deathbed conversion’ to ‘capitalism’ occurred on 11 April 1946 and reverses what Keynes claims to have done 20 years earlier, i.e., 1926.

[I cannot vouch for the provenance of this claim as I do not know Monty Pelerin, but I shall enquire about his sources.]

This is interesting. I don’t know how widely Keynes’s statement circulated – was it published in newspapers? – though I am not surprised at Keynes’ – and anybody else’s – reaction to the war economy, state-dominated, highly regulated, management of rationing of consumer and production goods by governments and civil servants that characterized 1946 Britain at the time.

A privileged man, brought-up among the upper classes and living among the genteel and socially pampered milieu of the Bloomsbury set, was bound to revolted by the mean, drabness of state-controlled Britain, one step ahead of the wartime destruction of Europe. From that perspective, open markets must have looked tasty.

Similar thoughts across the Atlantic seemed to be stirring at MIT in the thinking of Paul Samuelson, prompted, perhaps, by Oscar Lange and his plans to substitute what he believed was ‘an invisible hand’ with intentional socialist co-ordination by state planning. Samuelson set out to ‘re-claim’ the ‘invisible hand’ for capitalism, unfortunately creating myth instead.

US wartime controls reached nothing like the level ‘enjoyed’ by rationed Britain until the 1950s. I remember well the powdered substitute for fresh eggs that came in large tins with the US Flag stamped on the side, making me wonder at the distant land that had such ‘luxury’ to spare (though I remain grateful for it).

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6 Comments:

Blogger Gavin Kennedy said...

testing

5:47 a.m.  
Blogger Gavin Kennedy said...

I tested comments an it went straight through.

There have been no comments since I arrived in France and connected to the Internet, admittedly a long process.

Any reason for this?

Gavin

5:49 a.m.  
Blogger entech said...

Just a test really.
I can clearly remember that is was 1954 that I was first able to buy a packet of sweets without a ration book.
david

12:44 a.m.  
Blogger entech said...

Just a test really.
I can clearly remember that is was 1954 that I was first able to buy a packet of sweets without a ration book.
david

12:44 a.m.  
Blogger Gavin Kennedy said...

En Tech
I remember at nursery school (1944-5) there were cartoon pictures on the walls telling us pictorially not to throw banana skins on the pavements because somebody could slip on them - I didn't know what a banana was and had never seen one!

Also, ration coupons were needed to buy '5-Boys chocolate'. My grandmother gave me 2p and a coupon and I bought a bar. By the time I was outside the shop I had eaten the '5-boy' and at home I asked my Grandmother why Mr Ramsbottom sold chocolate - why didn't he eat them? (!).

The logic of a child, for which my economics 101 class on marginal utilities provided the answer.

2:01 p.m.  
Blogger Stuart Berman said...

Read the April 11, 1946 entry on the Keynes site.

http://www.maynardkeynes.org/john-maynard-keynes-world-bank-imf.html

Over lunch at the Bank of England, Keynes tells Henry Clay of his hopes that Adam Smith's 'invisible hand' can help Britain out of the economic hole it is in:

"I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago."

6:27 p.m.  

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