Friday, December 19, 2008
In Keynes And Friedman Were Both Wrong, I argued the two most widely-followed economists both misdiagnosed the fundamental problem which led to the Great Depression and both prescribed the wrong medicine for getting out of such a slump.
This essay will show that, in addition to being wrong on the economics, they were both cheerleaders for tyranny.
Naomi Klein documents in the Shock Doctrine that Milton Friedman advocated a kind of "disaster capitalism". Specifically, whenever a natural, economic, war-related, or other disaster strikes, the Friedmanites pounce and use the opportunity to quickly impose a brand of economic policy which benefits the elite at the cost of everyone else (by increasing unemployment, pushing the cost of essential goods through the roof, and otherwise increasing poverty), while people are still in shock and before they can react.
Publishers Weekly's review of the Shock Doctrine puts it this way:
The neo-liberal economic policies—privatization, free trade, slashed social spending—that the Chicago School and the economist Milton Friedman have foisted on the world are catastrophic in two senses, argues this vigorous polemic. Because their results are disastrous—depressions, mass poverty, private corporations looting public wealth, by the author's accounting—their means must be cataclysmic, dependent on political upheavals and natural disasters as coercive pretexts for free-market reforms the public would normally reject.
And Amazon's review states:
"At the most chaotic juncture in Iraq'' civil war, a new law is unveiled that will allow Shell and BP to claim the country's vast oil reserves… Immediately following September 11, the Bush Administration quietly outsources the running of the 'War on Terror' to Halliburton and Blackwater… After a tsunami wipes out the coasts of Southeast Asia, the pristine beaches are auctioned off to tourist resorts… New Orleans residents, scattered from Hurricane Katrina, discover that their public housing, hospitals and schools will never be re-opened." Klein not only kicks butt, she names names, notably economist Milton Friedman and his radical Chicago School of the 1950s and 60s which she notes "produced many of the leading neo-conservative and neo-liberal thinkers whose influence is still profound in Washington today."
Keynes himself viewed the Nazi efforts with favor. In his preface to the German edition of The General Theory, dated September 7, 1936, Keynes indicated that the ideas of his book could more readily be carried out under an authoritarian regime: "Nevertheless the theory of output as a whole, which is what the following book purports to provide, is more easily adapted to the conditions of a totalitarian state, than is the theory of the production and distribution of a given output under conditions of free competition and a large measure of laissez-faire."
Whether or not Keynes himself actually liked authoritarianism, he did not speak out against it. Rather, he helpfully told fascists that his system would do wonders for them.
The two most influential economists of the 20th century were both servants to those in power, be they neoliberal "disaster capitalists" or potential practitioners of Keynesian economics who just "happened to be" totalitarians. Put another way, economists who called for programs which benefited the majority of citizens and a government which respects individual liberties have been sidelined and marginalized, and ignored by government and academia.
It is time for a new economics. One which benefits the people and understands the centrality of their freedoms.