Wednesday, June 20, 2012

The Fantastic Keynesian Endgame

I really dislike fawning Keynesians because I used to be one when I was a TA for Hyman Minsky back in college (he was a Post-Keynesian). As such I was enamored with Keynes, and read many biographies about him. There's no greater ire than that of early infatuations, in part because we feel tricked, and these objects remind us of a naive earlier self that wasted part of our precious finite life on a wrong road. Anyway, I can't can read the familiar Keynesian tropes (eg, 'Keynes wanted to save capitalism') without rolling my eyes.

 A good indicator of a failed vision is a fanciful endgame.  If that endgame is clearly wrong the vision is wrong.  Marxists and their ilk thought the rate of profit would continually fall, until the proletariate took over and the state withered away.  In the 1940's economists thought that while capitalism offered greater liberty, the higher productivity of socialism would overtake capitalism.  And then there's Keynes' famous 1930 essay The Economic Possibilities of our Grandchildren, in which he imagined that in 100 years or so, the greatest problem would be how to spend our leisure.  Note that Frank Knight, Ludwig von Mises, and Freiderich Hayek never considered this possibility, highlighting their more accurate understanding of human nature.

Anyway, the latest Keynesian thumbsucker to take on this essay is biographer Robert Skidelski and son:
The irony, however, is that now that we have at last achieved abundance, the habits bred into us by capitalism have left us incapable of enjoying it properly. The Devil, it seems, has claimed his reward... The point to keep in mind is that we know, prior to anything scientists or statisticians can tell us, that the unending pursuit of wealth is madness. The first defect is moral. The banking crisis has shown yet again that the present system relies on motives of greed and acquisitiveness, which are morally repugnant.
This pompous blowhard grew up part of Britain's upper class (he's a Baron, whatever that means), and watching one's status fall stings.  Now he wishes money, and the market skill generally associated with it, weren't so important for determining one's social status anymore (though it was fine when gramps made the family fortune that bought his peerage).

 He asserts that because Westerners got rich because we are intrinsically greedy, we now are rich but do not enjoy it because we are greedy: a Faustian bargain indeed! Yet, looking at hunter gatherers or hippies, both anti-materialists, I hardly see a more cultured, meaningful, or higher levels of existence.  Mark Zuckerberg, meanwhile, seems centered, nice, intelligent, and interesting.

 As per greed being repugnant, I don't see what is intrinsically wrong with greed if such people are not hurting me. Minding my business under the rubric of safety or fairness, in contrast, is a much more common sort of intrusion in my life, and extremely unwelcome. Greedy people who pay for themselves by creating things of great value to others are both more fun and virtuous than do-gooders who spend all day thinking about new ways to force other people to work for other people.  Of course, there's a lot of luck and skulduggery involved in any market economy too, but it's more fair than anything else I've seen.

Skidelski assumes that we should be egalitarians, and so, anyone wealthier than me hurts me via my now lower relative wealth, regardless of what he does with the wealth. That's not society's problem, that's his problem.

He imagines the standard Marxian utopia of people engaged in thoughtful, productive, artistic activities, and notes we don't seem geared that way right now:
The pleasures of urban populations have become mainly passive: seeing cinemas, watching football matches, listening to the radio, and so on. This results from the fact that their active energies are fully taken up with work; if they had more leisure, they would again enjoy pleasures in which they took an active part.
So, he advocates we all become artisans of some sort, making homebrew, tending gardens, writing poetry.  Yet he notes people like to relax by just watching a movie.  If they didn't have a job, would they then more actively partake in their leisure?  I doubt it.  As Henry Ford said, I can think of nothing less pleasurable than a life devoted to pleasure.

People get most of their pleasure, and meaning, being useful to others, which includes inspiring the admiration or happiness of others by one's actions. Every time I make my daughter squeal with delight makes me thankful to be alive, because I know she really loves me, and I work to provide her with things and habits that will make her prosper, and hope that at some point after I'm gone she will remember me with sincere gratitude. A healthy wage is a strong correlate with one's usefulness to non-family members, especially if you work in field without a lot of regulation.

Our valuations are not just internal, which is why in Robert Nozick's famous experience machine thought experiment where one is asked if they could spend their life in some sort of holodeck that offered incredible but fake experiences,  most people don't want the fantasy life. This is because living in a morphine high of solipsistic pleasure isn't estimable, but rather, pathetic. A satisfying life affects other people in a positive way, which is why those 'flow' advocates really don't understand what they are talking about--it's not the flow, its the feeling that one's focused actions are banking esteem in some communal credit bank, even if it is in some future world.   It's paradoxical that those focused on mandating altruism seem to think satisfaction can and should come purely from within.   

In contrast to the Keynesian vision of us all trying to figure out how to spend our endless vacation, there's Eric Hoffer, the enigmatic philosopher who appeared out of nowhere around 1934 in California at age 34, and claimed to be an autodidact longshoreman. I suspect he was a German immigrant who at one point was a rabbinical student, and wanted to avoid immigration restrictions so he made up some story about growing up in Brooklyn.  

Tom Bethell's recent biography of Hoffer notes   his vision of the future was prescient, not fanciful, highlighting a much greater profundity.  Hoffer himself didn't take much to make him happy: a well-written book to read, and evidence someone thought well of him.  He thought intellectuals found free societies a threat because such societies didn't need mandarins directing them, and if not flattered would help incite the masses to some sort of revolution.  A man is likely to mind his own business when it is worth minding, and so those unhappy with their own meaningless affairs will focus on minding other people's business. Hoffer noted one must not merely provide for those without meaning in their lives, but provide against them, because in a democracy and market economy their preferences will have power. Those who see their lives as inferior and wasted crave equality and fraternity more than they do freedom, and this can cause a Republic to fall to a democracy, and ultimately a tyranny.

In other words, Hoffer describes the essence of the Liberal desire to micromanage society into perfect equality at the expense of liberty. A coalition of intellectuals and the underclass, both of whom feel unappreciated.  We haven't figured out a good outlet for these do-gooders, or a good way for those without a purpose to find life rewarding, so they continue to plague us with their plans and angst. That's a realistic vision of society, a future problem that is real yet potentially soluble. 


LetUsHavePeace said...

Eric: Your writing is always interesting and valuable, but you are also a hopelessly "progressive" thinker. No one else could write a sentence that says "we haven't figured out a good outlet for these do-gooders." There can be no "we" to do such a thing; the establishment of a committee is the first step on the road to the liberal notion that "the public good" is always more important than someone's liberty. The American Revolution was fought by people who truly believed that no one had the right to tread on "me" - not us. As for the "truly untalented", shouldn't they have as much right to liberty as anyone else? Defining them as a "social problem" is itself a problem because it presumes that somewhere, someone is keeping the ultimate score that measures us all and that there should be remedial education - at public expense, of course - for the failures.

Eric Falkenstein said...

I think a coalition of the unappreciated intellectuals and those with little meaning in their lives endangers freedom, because they get together to mandate obligations on other people. People without meaning are often untalented, they don't have anything that generates esteem from others. They have a right to everything, I'm just saying they will ask for more rights, which is why welfare is often sold with the mantra "it's not charity, its a right". They are a social problem because of the way they degrade Republics, and its happened several times before (Rome, Minoans, perhaps the Mayans).

Eric Falkenstein said...

I do agree that 'untalented' is a bad word (and changed it), because it brings in subjective valuation of talent. That was Hoffer's term, but I think he really meant those without meaning or purpose, what the Japanese call ikigai, in their life.

Mike Taylor said...

Really enjoyed this post. The "those without purpose" coalition exists on so many levels from countries, states, cities, companies, and even message boards like StackOverflow. They do infect a culture. Have yet to see an organization that can properly deal with them. Did Hoffer offer a solution or option for providing against this coalition?

Tim Worstall said...

"This pompous blowhard grew up part of Britain's upper class (he's a Baron, whatever that means),"

Not quite. He's the son of British Russians who leased a coal mine in China before the war. The Baron part is a life peerage, offered in 1991. It's a not unusual award for those who climb the political greasy pole but don't quite reach the top.

Akin to the Canadian idea of life senators rather than being a member of the aristocracy (being born a Baron is of course the very definition of aristocracy).

I despise Skidelsky just as much as the next rational man but this little part of it doesn't ring quite true.

Eseentially, he's an academic who dabbled in politics. Haute bourgeois made good, not an aristocrat.

Jack said...

"A good indicator of a failed vision is a fanciful endgame."
Great point - very quotable, too.

Eric Falkenstein said...


Well, I was presuming that Skidelski was born into privilege, and that his 1991 peerage was a non-event for his actual status. Nonetheless, it highlights he was born into the upper class, and as a rather pedestrian writer, he hasn't vaulted upward, but rather sank downward.


Mercury said...


The otherwise excellent FT Alphaville has been running a series on Skidelski and related “post-scarcity” themes, even going so far as to suggest that this perception/theory explains the current financial crisis. And just like the tired argument that pure Marxism/communism has never been implemented, we are told that “A universal reduction of work has never been attempted, so we do not know for sure what its consequences would be.” (Ahhh….see Greece). Good grief.

If we are wallowing in abundance why does the government want so much from me and why are they looking to ration things like medical care? If greed and materialism are so bad perhaps these people should instead take on socialist minded governments who are always looking to expand entitlements to more stuff.

The ulterior motives of people like Skidelski -to control and restrict the actions and lives of other people- is laughably transparent anyway. As everyone is already aware, if you want more leisure and less stuff, stop working and you will quickly achieve both goals.

Anonymous said...

Good stuff.

But another important point is that morons like this author assume that we've already had all the productive innovation, up until NOW (this second), so stop, nothing left to do but enjoy it (equally of course). They could have said that at any time, and they can't imagine the wonders that free people have yet to create. They are true socialist idiots.

Alex said...
This comment has been removed by the author.
Anonymous said...


Are you familiar with the work of post-Keynesian Steve Keen? He's advanced much of the work of Minsky and others. Like you, I have developed an ire of my first infatuation - Austrian school - after discovering Keen and Minsky. Like you, I still think mainstream Keynesian economics (Krugman et al) is bunk, but am surprised to see someone with a post-Keynesian upbringing go Austrian.


Tim Worstall said...

It's also true that he gets the change in working hours entirely wrong.

It is simply incorrect to measure working hours as beng only market working hours. We need to consider hours in household production as well. And the reality there is that household production hours have slumped leading to very large increases in leisure.

We are doing what Keynes thought we would do. It's just that it's all happening in non-market instead of market hours.

Aaron Brown said...

This is a great post, except you miss one essential point at the end. Do-gooders, for all their annoying behavior and harm, actually do a lot of good as well. We do have "a good outlet" for them. The problem is most do-gooders aren't good at doing good, instead they wrap themselves in the mantles of previous do-gooders and metastasize their achievements into pathological conditions.

When I was growing up, banks were not only allowed, but required by regulation, to discriminate on the basis of race in lending decisions. Nowhere was it a crime for a husband to rape or chastise (i.e. beat without causing significant physical harm) his wife. Schools had wooden implements to beat children of all ages, usually to the point of severe bruising and often to the point of broken and blistered skin, administered without due process or right of appeal. These are just three random examples of things that 40 years ago were accepted as matters of course, that are inconceivable today.

Back then, only crazy leftists even thought about these things. It wasn’t that the practices had strong constituencies defending them, it’s that 95 percent of people didn’t give them a second thought. It was do-gooders who spoke, wrote and protested until people paid attention and changed things for the better. Not by laws, although laws were passed as well. Public opinion changed so that almost no one wants any of these things any more.

Once the heavy lifting was done by talented do-gooders who endured public ridicule and scorn, lots of untalented do-gooders rushed in to expand government power to wildly counterproductive extremes: mandatory loans to people who cannot repay them, “rape” defined not as any sexual act either person regrets afterwards, witch-hunt prosecution for imaginary child abuse and a huge federal law enforcement effort to fight computer crime which is almost entirely devoted to eliminating Internet transmission of child pornography.

The overkill efforts are not pushed by passionate, courageous advocates whose moral sensibilities are a few decades ahead of the rest of us, but by smug opportunists devoid of passion, courage or moral sensibility. They are the mirror image of crony capitalists who wrap themselves in the mantle of successful innovators and invoke free-market rhetoric to defend their mooching and looting. Sadly, a coalition of the two groups, which is incoherent philosophically but quite comfortable in practice, makes up the political center.

Eric Falkenstein said...

Aaron: "All movements go too far" ~ Bertrand Russell

Wynne said...

Fine writing!

Aaron Brown said...

That's a great Russell quote. In the same essay, he wrote, "The money rewards and widespread though ephemeral fame which those agencies [parroting fashionable opinions] have made possible place temptations in the way of able men which are difficult to resist. To be pointed out, admired, mentioned constantly in the press, and offered easy ways of earning much money is highly agreeable; and when this is open to a man, he finds it difficult to go on doing the work that he himself thinks best and is inclined to subordinate his judgement to the general opinion."