General

Re: What did Mises think of the General Theory?

Raoul — Fri, 28 Dec 2012 12:01:55 GMT

Yes, it's this one. But I'm just realizing Fegeldolfy had already mentioned it above.

Re: What did Mises think of the General Theory?

excel — Fri, 28 Dec 2012 10:06:54 GMT

Interesting (if it's true). I have never heard of it. I only know that Keynes reviewed the Theory of Money and Credit in 1914. He wrote the book was unoriginal.

That's the one he read in german, right?

Re: What did Mises think of the General Theory?

Raoul — Fri, 28 Dec 2012 09:13:12 GMT

Interesting (if it's true). I have never heard of it. I only know that Keynes reviewed the Theory of Money and Credit in 1914. He wrote the book was unoriginal.

Re: What did Mises think of the General Theory?

fegeldolfy — Fri, 28 Dec 2012 06:02:57 GMT

Bringing this thread back because of something I saw in a review of Human Action at Goodreads.

" Although people often view this book as a refutation of macro-economic theories such as that of John Maynard Keynes, the book in its original version and ultimately what we read today are primarily focused on more traditional kinds of socialism and Marxism. The Majority of Mises economic writings were aimed at bringing down that view of economic thinking. Keynes tried to have a correspondence with Mises when he was still a somewhat respected professor in Austria and he didn't even bother replying if I remember correctly. Mises didn't think such economic theories would ever be mainstream or seen as important, so he didn't bother refuting them."

Has anyone heard anything about Keynes's supposed attempt to correspond with Mises?

Re: What did Mises think of the General Theory?

Conza88 — Wed, 19 Dec 2012 09:36:23 GMT

"To be honest, Keynesianism has been taken apart by numerous people, including Austrians. It still persists. It isn't for its academic soundness that it survives."

Spot on. Hoppe on that point...

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Re: What did Mises think of the General Theory?

fegeldolfy — Tue, 18 Dec 2012 22:50:56 GMT

In Mises:The Last Knight of Liberalism, Jorg Guido Hulsmann says Mises was present at Keynes's speech that became The End of Laissez-Faire.

In his Notes and Recollections, Mises talks about Keynes "reviewing" The Theory of Money and Credit and then later revealing that his German was inadequate.

Re: What did Mises think of the General Theory?

Jon Irenicus — Tue, 18 Dec 2012 13:59:13 GMT

To be honest, Keynesianism has been taken apart by numerous people, including Austrians. It still persists. It isn't for its academic soundness that it survives.

Re: What did Mises think of the General Theory?

Raoul — Tue, 18 Dec 2012 13:29:16 GMT

Rothbard on Keynes:

While the Keynesian system is a tissue of fallacies, it is a mistake to dismiss it brusquely, as many conservative economists have done, as nonsense. It is nonsense, in the last resort; but failure to deal with its fallacies in detail and in depth has left the field of ideas open for Keynesianism to conquer.

Re: What did Mises think of the General Theory?

Jon Irenicus — Tue, 18 Dec 2012 13:14:10 GMT

2. Even if the price level was perfectly static wages would have some trouble falling quickly. In a world of fallible individuals there will always be a predisposition towards higher money wages instead of real wages. I agree that a deflationary economy would experience less of this tendency.

Yes, this is correct, however remember that wages are currently inflation-adjusted. They cannot be reviewed daily or even monthly but medium-term intervals, like quarterly (well they can actually, especially if utilising contractos), could certainly work. In the opposite scenario, where prices steadily decrease employers will have to formulate deflation-adjusted contracts to ensure they remain profitable operators. There may not even be deflationary adjustments since gold's purchasing power increasing due to heightened productivity isn't deflation per se but obviously this depends on wage-earner (since I consider the word "worker" to be nonsense) productivity.

Bear in mind that things like unemployment insurance increase the reluctance of employees to accept lower wages when unemployed. For some people this might be acceptable but at the moment this insurance is both compulsory and provided at highly subsidised costs. This alone should suffice to curtail a tendency to sacrifice earnings even when though nominally lower, they are really identical or higher to what they were before.

Again, I don't think Mises felt the need to bother with Keynes. It may be disappointing that he didn't, but he left enough knowledge behind to counter Keynesian postulates.

Re: What did Mises think of the General Theory?

Wheylous — Tue, 18 Dec 2012 02:30:47 GMT

They're sticky downards because the expectation is that prices overall will increase.

I had never considered that before.

Re: What did Mises think of the General Theory?

Neodoxy — Tue, 18 Dec 2012 01:50:50 GMT

Doubt it. I have a distinct suspicion that Keynes would've gotten capped...

Anyway, Mises spent pretty much all of his time, to my knowledge, in either Austria or in America. Both of these are places that Keynes spent very little time since I don't believe he left the island much, although I do know that he met with Roosevelt and took part in Bretton Woods, but I don't think that Mises was in that neck of the woods much of the time. And then Keynes died :P

Re: What did Mises think of the General Theory?

fegeldolfy — Tue, 18 Dec 2012 00:44:27 GMT

I wonder if Mises and Keynes ever met.

Re: What did Mises think of the General Theory?

Neodoxy — Tue, 18 Dec 2012 00:26:33 GMT

1. I'm not asking for Mises to have write on every topic under the sun. I'm saying that it would have been highly beneficial if he wrote anything substantial criticizing the third most influential economic doctrine to have ever existed rather than just denouncing it without providing much of a substantial criticism.

2. Even if the price level was perfectly static wages would have some trouble falling quickly. In a world of fallible individuals there will always be a predisposition towards higher money wages instead of real wages. I agree that a deflationary economy would experience less of this tendency.

Re: What did Mises think of the General Theory?

Jon Irenicus — Mon, 17 Dec 2012 23:18:52 GMT

For instance I think that it is easy to see why wages would be particularly sticky downwards over a short period of time and why this would have negative repercussions in short term adjustments. While this may be better in the free market society, I still believe that it does a good job of explaining the economy under certain circumstances, particularly those of our day.

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They're sticky downards because the expectation is that prices overall will increase. Again, regarding Mises, what do you want of him? I sometimes do not understand people. No, it's not sufficient that the man wrote a treatise on economics and countless other subjects, he had to have stuck his nose in every single debate under the moon. Perhaps he thought Hazlitt did a good enough job disposing of Keynes. Who knows. I don't think you need to deal with the Keynesian system on its own terms if you reject its premises. Friedman did try to refute it based on its own premises but he didn't really need to do so, however it's another way of attacking Keynesianism, though I consider monetarism false too.

Regarding convenience, think of a restaurant menu. Prices for it are not perfectly flexible. Nor would there necessarily be any efficiency gains in establishing perfectly flexible prices on such a menu. Energy providers also try and ensure price stability for their customers via futures contracts. There's plenty of scenarios where individuals trade-off flexibility for predictability, and this is to them an efficient allocation of resources. I do not consider wages to be a good example of this. To the extent that they're contractually determined with no reference to inflation or deflation, they might remain where they were for a period of time. However, if people knew there were a trend for the economy to continue propelling towards lower prices, that bias would have to be disputed.

Re: What did Mises think of the General Theory?

Neodoxy — Mon, 17 Dec 2012 21:02:36 GMT

Conza,

No U.

Jon,

"the convenience of predictable future prices and the efficiency that brings with it cause it."

What do you mean by this?

As for price stickiness, I think that it's true that in a society which is more prone to deflation that people will more readily accept lower nominal wages. But with this said i think that any belief in perfectly sticky prices is foolish. My entire point here is that while Keynes takes his own argument too far and ignores essential aspects of the production structure, he does indeed do a good job of rebuking many of the "classical" arguments which seemed to indicate perfect price flexibility. Once again I think it all comes down to whether or not Keynes' view and corresponding modern mainstream view of the classical economists is generally a straw man or not. If it is (I'm not talking about Say's law although this is a good example of an argument of Keynes' which was a straw man) then Keynes did a good job of introducing some realistic assumptions about price flexibility, investment (to a much lesser extent), and demand.

For instance I think that it is easy to see why wages would be particularly sticky downwards over a short period of time and why this would have negative repercussions in short term adjustments. While this may be better in the free market society, I still believe that it does a good job of explaining the economy under certain circumstances, particularly those of our day.

"Mises had his hands full with the socialists. He probably considered them to be a bigger threat, in part at least because of the Austrian School's prior run ins with Marxism. Perhaps because some of what Keynes said made sense and some of it was sheer contrived nonsense, Mises felt no need to deal with it. So what? Hazlitt and others took pains to do so. Was Mises meant to take on the whole world by himself? My view is both Hayek and he underestimated Keynes's appeal to fashionable intellectuals at the time, and more importantly, politicians."

No, I don't understand why neither Mises nor Hayek ever dealt in depth with the Keynesian system after it became clear that it had dominated policy and the economics profession. Mises was alive long enough to see this happen and Hayek was alive long enough to see it subside slightly and be replaced with... Other forms of Keynesianism ><

Yet neither of them did an indepth critique. I agree fully that both of them totally underestimated the influence of Keynes, but it would seem that both of them would have seen it as a great evil which needed to be slain.

Dave,

I have no idea what happened to your post, but I read it before whatever happened happened. I have little gripe with Mises' article. My biggest complaint is that he doesn't deal with the essence of Keynes' framework. while his claims about inflation are true, they do not deal with the essence of Keynes' model. He is perfectly right that Keynes misunderstood the real implications of Say's law, but I would argue that this isn't by itself a death knell for Keynes' system. Mises is on the right track but he doesn't go far enough in depth.

Edit

Also, did anyone know that according Samuelson Henry Hazlitt was one of the writers who convinced him to become an economist?

Epic fail :(