Some revealing excerpts from “Keynes, the Man,” by Murray Rothbard (thanks to the Mises site), which describes the intellectual roots of Keynes’ discounting of empirical evidence or principle. Perhaps this explains Paul Krugman.
DISREGARDED EMPIRICAL EVIDENCE
“To destroy any possibility of applying general rules to particular cases, Keynes’s Treatise [On Probability] championed the classical a priori theory of probability, where probability fractions are deduced purely by logic and have nothing to do with empirical reality. Skidelsky makes the point well: Keynes’s argument, then, can be interpreted as an attempt to free the individual to pursue the good…by means of egotistic actions, since he is not required to have certain knowledge of the probable consequences of his actions in order to act rationally. It is part, in other words, of his continuing campaign against Christian morality..
By limiting the possibility of certain knowledge Keynes increased the scope for intuitive judgment.
Suffice it to say that Keynes’s a priori theory was demolished by Richard von Mises (1951) in his 1920s work, Probability, Statistics, and Truth. Mises demonstrated that the probability fraction can be meaningfully used only when it embodies an empirically derived law of entities which are homogeneous, random, and indefinitely repeatable. This means, of course, that probability theory can only be applied to events which, in human life, are confined to those like the lottery or the roulette wheel. Incidentally, Richard von Mises’s probability theory was adopted by his brother Ludwig, although they agreed on little else
VENERATED EXPEDIENCE AND ELITES
“What Keynes took from Burke is revealing……There is, first, Burke’s militant opposition to general principles in politics and, in particular, his championing of expediency against abstract natural rights. Secondly, Keynes agreed strongly with Burke’s high time preference, his downgrading of the uncertain future versus the existing present….. ……..
Thirdly, Keynes admired Burke’s appreciation of the “organic” ruling elite of Great Britain. There were differences over policy, of course, but Keynes joined Burke in hailing the system of aristocratic rule as sound, so long as governing
personnel were chosen from the existing organic elite…..
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LIED AND MISUSED STATISTICS
….Indeed Keynes displayed a positive taste for lying in politics. He habitually made up statistics to suit his political proposals,
and he would agitate for world monetary inflation with exaggerated hyperbole while maintaining that “words ought to be a little wild—the assault of thoughts upon the unthinking.” But, revealingly enough, once he achieved power, Keynes
admitted that such hyperbole would have to be dropped: “When the seats of power and authority have been attained, there should be no more poetic license”
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ARROGANT, BOMBASTIC AND IRRESPONSIBILE
One striking illustration of Maynard Keynes’s unjustified arrogance and intellectual irresponsibility was his reaction to Ludwig von Mises’s brilliant and pioneering Treatise on Money and Credit, published in German in 1912. …The book, he wrote condescendingly, had “considerable merit” and was “enlightened,” and its author was definitely “widely read,” but Keynes expressed his disappointment that the book was neither “constructive” nor “original” (Keynes 1914). This brusque reaction managed to kill any interest in Mises’s book in Great Britain, and Money and Credit remained untranslated for two fateful decades. The peculiar point about Keynes’s review is that Mises’s book was highly constructive and systematic, as well as remarkably original. How could Keynes not have seen that? This puzzle was cleared up a decade and a half when, in a footnote to his own Treatise on Money, Keynes impishly admitted that “in German, I can only clearly understand what I already know—so that new ideas are apt to be veiled from me by the difficulties of the language”…
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CORRUPT IN PUBLIC OFFICE
In the fall of 905, he wrote to Strachey: “I find economics increasingly satisfactory, and I think I am rather good at it. I want to manage a railroad or organize a Trust or at least swindle the investing public”
Keynes, in fact, had recently embarked on his lifelong career as investor and speculator. Yet Harrod was constrained to deny vigorously that Keynes had begun speculating before 1919. Asserting that Keynes had “no capital” before then, Harrod explained the reason for his insistence in a book review six years after the publication of his biography: “It is important that this should be clearly understood, since there were many ill- wishers . . . who asserted that he took advantage of inside information when in the Treasury (1915–June 1919) in order to carry out successful speculations”. In a letter to Clive Bell, author of the book under review and an old Bloomsburyite and friend of Keynes, Harrod pressed the point further: “The point is important because of the beastly stories, which are very widespread . . . about his having made money dishonorably by taking advantage of his Treasury position.”
Despite Harrod’s insistence to the contrary, however, Keynes had indeed set up his own “special fund” and had begun to make investments by July 1905. By 1914, Keynes was speculating heavily in the stock market and, by 1920, had accumulated £16,000, which would amount to about $200,000 at today’s prices…..
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INDIFFERENT TO IMPERIAL EXPLOITATION
Maynard,” Skidelsky points out, “always saw the Raj from Whitehall; he never considered the human and moral implications of imperial rule or whether the British were exploiting the Indians.” In the grand imperialist tradition of the Mills and Thomas Macaulay in nineteenth-century England, moreover, he never felt the need to travel to India, to learn Indian languages, or to read any books on the area except as they dealt with finance. Keynes praised the Indian standard [Lila: a gold exchange rather than a gold standard] as allowing a far greater “elasticity” (a code word for monetary inflation) of money in response to demand. Moreover, he specifically hailed the report of a U.S. government commission in 1903 advocating a gold-exchange standard in China and other Third World silver countries—a drive by progressive economists and politicians to bring such nations into a U.S. dominated and managed gold-dollar bloc
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MANIPULATED, SLANDERED, AND HARASSED COLLEAGUES
But Keynes used tactics in the selling of The General Theory other than reliance on his charisma and on systematic deception. He curried favor with his students by praising them extravagantly, and he set them deliberately against non-Keynesians on the Cambridge faculty by ridiculing his colleagues in front of these students and by encouraging them to harass his faculty colleagues. For example, Keynes incited his students with particular viciousness against Dennis Robertson,his former close friend. As Keynes knew all too well, Robertson was painfully and extraordinarily shy, even to the point of communicating with his faithful longtime secretary, whose office was next to his own, only by written memoranda. Robertson’s lectures were completely written out in advance, and because of his shyness he refused to answer any questions or engage in any discussion with either his students or his colleagues. And so it was a particularly diabolic torture for Keynes’s radical disciples, led by Joan Robinson and Richard Kahn, to have baited and taunted Robertson, harassing him with spiteful questions and challenging him to debate……
[Note: I’ve created subtitles, omitted citations and cut out intervening passages for the sake of clarity].
Comment:
Keynes was one of Time Magazine’s top 100 Men in 1999. They claimed he was the man who saved capitalism. And yet, from his writing, it’s clear that Keynes was clueless about the dynamism of genuine free enterprise. His vision is static, rigid, almost feudal. He divides the world into 4 classes: the consumer (driven mechanically by consumption, as though he had no free will); the evil saver (who embodies all the despised middle-class and Christian virtues of hard work, thrift, foresight*) whom he conflates with the rentier class; the admirable but boisterous entrepreneurs, also driven to and fro by swings in moods; and at the top, the only really virtuous and reasonable class – the intelligentsia, which rules through intellect, the philosopher-kings – of which he, of course, was one. This is a feudal and essentially medieval viewpoint, for surely one of the great achievements of modernity was to understand that money indeed has a rightful price – the interest rate, which is the price of time and deferred gratification. Keynes instead clung to an ossified pre-modern collectivist mind set. He’s the very antithesis of progressive thinking and yet he is a hero to progressives.
*Protestant Christian virtues, I should add.