The Politics of Keynesianism

By Vipin Veetil, on June 1st, 2009

A Business Standard editorial today says “We just may have the makings of a painful trade-off between sustaining growth and fiscal discipline”. Essentially that we may have to “government spend” our way out of the economic crisis.

Keynesiansim is now rampant in the press, more often implicit than explicit. The doctrine however is not somehow “purely economic” (if there is such a thing), but manifests itself in society through politics of a particular kind. Here are some wise words from W H Hutt

Mises contention that “inflation is the fiscal complement of statism and arbitrary government…a cog in the complex of policies and institutions which gradually lead towards totalitarianism” has been recently confirmed by one who obviously welcomes this result.  In what is probably the most effective recent defense of Keynesianism, Bronfenbrenner has argued that the great virtue of the doctrine has been that, through its influence upon policy – through the consequent secular inflation – the “peaceful acceptance” of Marxian aims has been secured. Where the drastic measures which Marx himself contemplated would have failed, Keynesian methods have quietly succeeded. “Secular inflation” has, in fact, proved to be the “principal weapon for extortion of surplus value”, and has had “the net effect of permitting all active pressure groups to gain at the expense of the dead hands of the salaried, the rentier, and the pensioner”. Bronfenbrenner describes inflation as a “social mollifier” which permits the politically dominant groups, like the trade union movement and organized agriculture, to increase their share of national income “without decreasing money income of anyone else, and therefore without arousing the volume or vehemence of opposition which might be expected”.

This triumph of Marxian aims by more subtle methods than Marxs own, this gradual process which we are currently witnessing of the euthanasia of the politically weak classes is, according to Bronfenbrenner, to be preferred to what he apparently regards as the inevitable alternative, expropriation on orthodox Marxian lines.

- page 48, Keynesianism – Retrospect & Prospect, 1963



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People Need Someone To Blame

By Dan McLaughlin, on January 23rd, 2009

Why doesn’t the truth win out over fallacy? It would seem that the hard hand of reality would smash every fallacy and make the truth obvious to everyone. The struggles between truth and falsehood, however, often seem to be won by the purveyors of false doctrines and misguided politics. It is a bit disconcerting and difficult to understand until you get to the root of the issue.

Economist Henry Hazlett had one answer 60 years ago. His view was that bad policy is the result of the special pleadings of selfish interests. While that seems to be part of the answer, and explains why people push unsound policy to help their own cause, it doesn’t explain why so many people gather behind the causes, even when they are fundamentally flawed. The missing part of the answer is that people crave a scapegoat. They need someone to blame so they don’t have to take responsibility for their own lives.

Even back in early biblical times, there is evidence of the blame game. The account of Moses describes the people continually complaining and blaming him, even though he was leading them out of brutal slavery. They couldn’t understand the freedom they had been called to. They had gotten too used to servitude and dependency and the small level of security that slavery offered. Freedom is not easy. It has a price that they didn’t like paying.

Down to this very day, people have always been on the lookout for a convenient person or group or thing to blame everything on. The vast majority of people don’t believe they are where they are today because of the decisions they made in the past. They refuse to be responsible for their lives. It is always someone else’s fault.

The entire philosophical structure of Karl Marx’s movement was based on fallacies, yet that philosophy became one of the most significant movements in history. It is still pervasive in many forms today, in spite of the fact that it’s underpinnings have been repeatedly demolished as false. When you recognize the powerful urge to blame someone else, it becomes clear why Marxist ideas refuse to go away. Like the thousands of fallacies that find their way into laws, textbooks, classrooms and newsrooms, the heart of Marxism and socialism lies in blaming others rather than taking responsibility. The more people willing to blame the same target, the more powerful the movement will be.

Scapegoats come in many different sizes, shapes and colors. Other races, other classes, other political parties, other businesses, other countries, other ______ (fill in the blank). There is always someone or something to fill the bill for every perceived wrong.

Freedom is the concept that individuals are capable of making their own decisions for their own lives. The early settlers and pioneers were free and, luckily for us, they chose the hardship that comes with it. Freedom is the natural state of human beings and is the state in which humankind is most able to find prosperity and progress and happiness. It is the reason that America prospered and surpassed all other countries in a very short period, on the historical scale of time.

The corollary to freedom, however, is responsibility. The chooser is free to make a choice, but he is not free to choose the consequences of that choice. He must live with the results of the choices he makes. If people don’t take responsibility and pay the consequences, they are inviting others to make the choices for them. The more responsibility people relinquish to “authorities”, the less freedom those people possess.

Today’s politicians give lip service to freedom, encourage patriotism and flag waving, and then take actions that bleed the life out of our founding ideal of liberty and justice for all. Most contemporary laws have the effect of making some group of people dependent on “Father Government” rather than encouraging independence and responsibility. Politicians generate support for the laws by finding an appropriate villain and recruiting a large enough chorus of blamers to show that the need for intervention is “genuine”.

Liberty has been having a very difficult time in this country for decades. It’s identity is being confused with democracy, either out of ignorance or intentionally, out of malice toward the very concept of individual freedom. Freedom and tyranny of thd majority are poles apart and have vastly different consequences.

Let us all demand real liberty, not lip service. But first, let’s take responsibility, reject paternalism and quit the blame game.



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