Political judgement

PDT is extraordinary in so many ways, not least of which is his political judgement. This is from, Trump Compares Ocasio-Cortez To Nazi Sympathizer, AOC Takes It As A Compliment.

The book, “American Carnage,” states that Trump saw Ocasio-Cortez on a cable news show and said: “I called her Eva Perón. I said, ‘That’s Eva Perón. That’s Evita.”

Trump reportedly told his team to contact then-Rep. Joe Crowley (D-NY) — who Ocasio-Cortez upset in the Democratic primary — to tell him that “he better get off his fat ass and start campaigning.”

No one else saw it then but Trump did. And he saw her danger as well. Nancy Pelosi and other Dems are seeing it as well, and who knows how electable she will be when she finally turns 35. Political madness is a contagion and as mad as AOC is, she is far from a discredited entity among her own constituency. In her own political judgement she may be the same kind of phenomenon as PDT.

Responses to The General Theory

From The HET Website. A typical revolution from below, led by the young who knew nothing but wished to make the presence felt. A conceptual disaster, along the lines of Aristotle’s arguments on the charging of interest.

The response to the publication of John Maynard Keynes‘s General Theory of Employment, Interest and Money (1936) was immediate and controversial – and a cleavage between young economists and their older counterparts was immediately carved.

From Cambridge, Keynes’s students rushed to publication to further explain his ideas: Joan Robinson (1937) and James E. Meade (1936, 1937), two of the members of Keynes’s “Circus”, produced particularly able “restatements” of the General Theory. The exposition of a third member of the Circus, Austin Robinson (1936, The Economist), reached a wider audience. Two of Keynes’s tutorial students also rushed to publish reviews:  W.B. Reddaway (1936, Economic Record) and D.G. Champernowne (1936, RES), with the latter being slightly more critical.

However, among the Cambridge professors, the consequences were grievously divisive (for an account, see Kahn, 1984; Skidelsky, 1992). J.M. Keynes almost completely ruptured his relationships with his old Cantabrigian colleagues – Arthur C. Pigou, Hubert D. Henderson, Dennis H. Robertson and Ralph G. Hawtrey. Although the strife was confined largely to personal exchanges within the Cambridge halls, some anger found its way into the printing presses. A.C. Pigou (1936, Economica), portrayed as the “villain” by the General Theory, tried to go immediately on the counterattack but his counterblast was feeble. H.D. Henderson (1936, Spectator) fired off an even more personally vindictive fusillade. In contrast, Dennis Robertson‘s (1936, QJE) reply had a bit more of substance and engendered a short journal debate with Keynes.

The generational differences in reception were also evident outside of Cambridge. Elsewhere in Britain, the youthful Abba Lerner (1936, Int Lab Rev),  John Hicks (1936, EJ) and Roy Harrod (1937, Econometrica) produced quite sympathetic reviews.

Surprisingly, neither of Keynes’s old rivals at the London School of Economics, Friedrich A. von Hayek and Lionel Robbins, reviewed or even responded to Keynes’s new book. But the damage was permanent: the enthusiasm for the General Theory by their most promising students – particularly  LernerHicks and, eventually, Kaldor – was the beginning of the end of the L.S.E.’s attempt to steal the crown of English economics from Cambridge.

From America, the initial response was cold: the main reviews by Jacob Viner (1936, QJE), Alvin Hansen (1936, JPE), Joseph Schumpeter (1936, JASA), Frank Taussig (1936, QJE), Wassily Leontief (1936, QJE), C.O. Hardy (1936, AER) and Frank Knight (1937, Canadian JE) were almost uniformly negative. Of all his reviewers, Keynes only deigned to respond to Viner’s in his now-famous article, “The General Theory of Employment” (Keynes, 1937, QJE).

With the unfortunate exception of Nazi Germany (where a translation was published “on paper rather better than usual and the price not much higher than usual”, as Keynes put it), Keynes’s General Theory was largely ignored on the European continent. The few reviews that emerged from there, particularly those by Gustav Cassel (1937, Int Lab Rev) from Sweden and Gottfried Haberler (1936, ZfN) from Austria, were quite hostile.  In France, the professional (and personal) hostility of influential conservative economists such as Jacques Rueff guaranteed that the book would not even be translated until 1948.

It’s official: NO collusion


It’s now official. There was never any collusion between Russia and the Trump Campaign. But everyone knew that, and has always known that. This was just a device to undo the election result. The most interesting outcome at this stage is to appreciate just how well PDT has played this out. He could have brought it to an end at any time, fired Mueller and taken the heat, but let it work itself through to the end.

The media and the left have shown that the media is the left. The Democrats have demonstrated their utter lack of morality. But for all that,there are still immense forces at work that might yet pull the US down, that would make it an ungovernable mess.

Free Market Economics vs Keynesian macro

I realise how tedious all this maundering on about Keynesian economics is for some people, which I do go on about. But the thing is, you will not find this discussed anywhere else in the world. This is said more in amazement than anything else, but there is virtually no one else anywhere that I can see who is as focused on the damage caused by modern macro, with the reality being that virtually no one, even among economists who think they are non-Keynesian, can see the problem with macroeconomic theory unless they also understand Say’s Law and the classical theory of the cycle.

All this has come to mind with the publication of The Elgar Companion to John Maynard Keynes for which I received notice just yesterday. This may be compared and contrasted with my own What’s Wrong with Keynesian Economic Theory? which was published in 2016.

With this in mind, let me again mention the article I did for the March Quadrant on The Dangerous Persistence of Keynesian Economics. It is in my view the best short statement I have ever managed to put together to contrast the classical approach to economic theory with the modern. If you are at all interested in these kinds of issues, you should read it. And let me emphasise that to understand classical economics properly you must understand Say’s Law in its true meaning, which you will not find by reading Keynes or any mainstream economist since the 1930s. One of those who does understand Say’s Law is Arthur Laffer – the Laffer of the Laffer curve – whose comment on my book is found below.

His comment is found in the advertising notice sent out just yesterday by Edward Elgar on my Free Market Economics. They describe the book as “Austrian”, which is accurate enough since Austrian economics is the last variant of classical theory that remains alive today. My approach, however, comes through a different line of descent, from the greatest economist who has ever lived, John Stuart Mill. That is why there is no other book in the world like mine. Don’t take my word for it; this is from just yesterday in the comments:


Steve I bought a copy of your book a few years back and thoroughly enjoyed it. It gave me clear lines of argument to use against the mob when they tell me how awesome the NBN is, or how 27 years without a recession is a great thing etc. great book, keep on fighting the good fight

This was the notice put up by Elgar.

It’s not too late to order your exam copies.

If you’re teaching Austrian or Public Choice Economics next semester and you’re planning the course reading list, take a look at the textbook offering below from Edward Elgar.

Email us to order your examination copies, or access the online version on Vitalsource.

Free Market Economics, Third Edition

An Introduction for the General Reader

Steven Kates, RMIT University, Australia

‘This book presents the very embodiment of supply-side economics. At its very core is the entrepreneur trying to work out what to do in a world of deep uncertainty in which the future cannot be known. Crucially, the book is entirely un-Keynesian, restoring Say’s Law to the centre of economic theory, with its focus on value-adding production as the source of demand. If you would like to understand how an economy actually works, this is one of the few places I know of where you can find out.’

– Arthur B. Laffer, Laffer Associates, US

In this thoroughly updated third edition of Free Market Economics, Steven Kates assesses economic principles based on classical economic theory. Rejecting mainstream Keynesian and neoclassical approaches even though they are thoroughly covered in the text, Kates instead looks at economics from the perspective of an entrepreneur making decisions in a world where the future is unknown, innovation is a continuous process and the future is being created before it can be understood.

The aim of this book is to redirect the attention of economists and policy makers towards the economic theories that prevailed in earlier times. Their problems were little different from ours but their way of understanding the operation of an economy and dealing with those problems was completely different.

Free Market Economics, Third Edition will help students and general readers understand classical economic theory, written by someone who believes that this now-discarded approach to economic thought was superior to what is found in most of our textbooks today.

Key features:

  • analysis derived from the theories of pre-Keynesian classical economists, as this is the only source available today that explains the classical pre-Keynesian theory of the business cycle
  • a focus on the entrepreneur as the driving force in economic activity rather than on anonymous ‘forces’ as found in most economic theory today
  • introduces a powerful though simplified model to explain the difference between modern theory of recession and classical theory of the business cycle
  • great emphasis is placed on the consequences of decision making under uncertainty
  • offers an introductory understanding, accessible to the non-specialist reader.

And if you would prefer a digital copy of the book you can locate one here.

If orangutangs can work it out why can’t socialists?

You know, that incentives are necessary to promote productive activity and that an economy must encourage the supply-side of the economy if output is to grow. The article is about how Orangutans make complex economic decisions. As they conclude:

“Optimality models suggest that orangutans should flexibly adapt their foraging decisions depending on the availability of high nutritional food sources, such as fruits,” said Josep Call, researcher at the University of St. Andrews. “Our study shows that orangutans can simultaneously consider multi-dimensional task components in order to maximize their gains and it is very likely that we haven’t even reached the full extent of their information processing capabilities.”

Meanwhile Alexandria O-C and her Green New Deal think this is a worthwhile idea: if you are “unwilling to work” they will still pay you an income.

Interestingly this particular proposal is unanimously rejected by the students in this video, once they are told what’s in the GND.

The students interviewed are big on buzz-word ideologies they know virtually nothing about, but still with a few elements of common sense if more is explained. There is hope for us after all, slim as it may be. Perhaps these kids are smarter than the average orangutang, but they would be a rare breed on the left.

Gary North’s Keynes Project

Not to be missed: The Keynes Project: A Critical Analysis of the Economics of John Maynard Keynes from an Austrian School Perspective.

John Maynard Keynes was the most influential economist of the twentieth century. This speaks poorly of the twentieth century. 

In October 2009, I wrote an article for Lew Rockwell in which I outlined a plan to refute Keynes, line by line. Austrian economists are not found on major university campuses. I wrote it for a younger, untenured academic economist at some private college or obscure university who is willing to devote his career to the task. I still hope such a person takes up my challenge. I am not optimistic, however.

I have shifted focus here. The Keynes Project is a model for a multimedia effort. It focuses on his 1936 book, The General Theory of Employment, Interest, and Money, but it is not limited to this volume. It considers his earlier writings as a prelude to The General Theory.

The Keynes Project project will be both offensive and defensive, as any comprehensive critique should be. It will show what was wrong with Keynes’ economic theory, but it will use these critiques to provide an introduction to what is correct in economics — specifically, Austrian School economics.

The project must be guided by a single principle, a single theme: to refute Keynes’ single theme. The project must ask two questions.

1. If the problem is insufficient demand, where does the state confiscate the resources necessary to increase demand?
2. What would the original resource owners have done with these resources?

Keynes made the mistake that Bastiat warned against: the fallacy of the thing not seen. It is the broken window fallacy.

It goes back to one source: Bernard Mandeville’s poem, The Grumbling Hive (1705). This is why Keynes in The General Theoryquotes from it. Refute it. Start here: //www.garynorth.com/public/13333.cfm.

Then go to J. B. Say. Defend him. Show that Keynes misrepresented Say’s law.

Then go to the classic refutation of Keynes: Henry Hazlitt’s The Failure of the “New Economics” (1959).

Always return to these two questions. Never let the reader forget these two questions.

This project is governed by this presupposition: You can’t beat something with nothing. It is not just that Keynes was wrong. It is that he was wrong in specific ways, violating specific insights of generations of previous economists, but especially those of Ludwig von Mises and F. A. Hayek, Keynes’ chief rival in 1935.

It’s no joke

From Paul Johnson’s wonderful Humourists: From Hogarth to Noël Coward. Having now flown from Budapest to London, where I finished the book on the flight, I find it both eerie and appropriate that this is how Johnson’s book ends.

In an attempt to put down ‘racism,’ the concept of ‘hate terms’ was introduced into English law for the first time. This makes many words and expressions unlawful, and punishable by fines and imprisonment. It is the most comprehensive system of censorship since the days of Hitler’s Germany and Stalin’s Russia, and means there are more restrictions on freedom of expression in England than at any other time since Hogarth’s days.

It is, of course, fatal to humour, if enforced and persisted in. For one vital quality of humour is inequality, and striking visual, aural, and physical differences. Differences in sex, age, colour, race, religion, physical ability, and strength lie at the source of the majority of jokes since the beginning of human self-consciousness. And all jokes are likely to provoke discomfort if not positive misery among those laughed at. Hence any joke is liable to fall foul of those laws. The future for humourists thus looks bleak, at the time I write this [2010]. The ordinary people like jokes, often crude ones, as George Orwell pointed out in his perceptive essay on rude seaside picture postcards. But are ordinary people, as opposed to minor officials, in charge any more? Democracy doesn’t really seem to work, and people are insufficiently dismayed at its impotence. Noël Coward made the point more than half a century ago:

There are bad times just around the corner,
We can all look forward to despair.
It’s as clear as crystal
From Birmingham to Bristol
That we can’t save democracy
And we don’t much care.

We visited The House of Terror on our last full day in Budapest, which is a memorial museum about Nazis and Comms by people who know quite a bit about it first hand. It is sickening to find that the principles that once made England great are rapidly disappearing, and most truly don’t much care among “officials”, and it’s no longer just the minor ones.

And for more on the same, there is this today from Steve Hayward at Powerline: Liberals and the Death of Comedy. It’s about whether Monty Python could be produced by the BBC today. I won’t tell you his conclusion so you will have to read it yourself.

Evert Schoorl 1940-2018

Let me add to the reminiscences of Evert Schrool with whom I had corresponded but had met only a couple of times, the distance between Europe and Australia being as wide as it is. What I am however able to say is that he was an engaging person and wonderful company, as well as being a great scholar whose work I enjoyed, especially his biography of J.B. Say, my review having been published on these pages in 2013. You may find the review here.

I do not think I am giving away anything personal if I include his response to my review as well as my reply to him. He wrote:

Dear Steve,
Thank you for your extremely kind and positive review of my Say biography. I’ve been eagerly waiting for the first reviews,
and yours is the very first coming to my attention. As I am retired since 2005, I have to carefully consider which conferences to attend, but I hope we’ll meet again in the circuit.
Very best regards,

To which I replied:

Dear Evert

You know the only thing that I regret about the review was that I was constrained to 1000 words. There was more to say and I hope to say it elsewhere. Most economists, I suspect, specially in the modern world, have no seriously interesting personal biography. We graduated from X, took our PhD from Y and then taught for Z years at some place or another publishing this and that. Not so in days gone by where a Say, Mill, Ricardo or even a Schumpeter lived quite exotic lives with more to tell than a mere intellectual history. Just the map he drew that you mentioned at the start was quite extraordinary being as I understood a unique event and first of its kind. And I had even seen sacks of sugar with the name Say on it but had not realised that it was that Say and how J-B was instrumental in setting him on the right path. I do hope lots of people read it. Every word I wrote I meant. And I will only add that you may not get around as much as you used to but European conferences in these days of austerity are looking fewer and farther between for us Australians. But I do hope we catch up some time soon and if I am in your vicinity I will definitely let you know.

With kind regards


Happily we did catch up that one more time at the first J-B Say Conference at Auchy-les-Hésdin in 2014. And I do wish to add how much I agreed with him that one of the main purposes of studying the History of Economic Thought is to influence the economic theories of the present. The note by Prof Tieben states the following: “Evert wore a T-Shirt with Say’s portrait and the text: Set markets free. That, of course, was an example of how not to study the history of economic thought.” So I will say, if I might, that this is the way to study the history of economic thought. I will just take one excerpt from my review that might help emphasise the point.

I am compelled to note that Schoorl has brought me into the story but should you be concerned that my positive review is in return for his own positive discussion of my own work, let me first note this: where Schoorl has written ‘he has given the best explanation of the law of markets’ the ‘he’ referred to is Murray Rothbard. Well I might dispute this, but not here; all is forgiven since what we find is the most judicious short discussion of two centuries of debate over the law of markets to be found anywhere, with myself found at the extreme end of the pro-Say spectrum, which I fear is actually the case.

And my fear was and is that no one any longer understands the nature of Say’s Law properly and how great a misfortune it is to the study of economics that this pivotal principle has been all but totally suppressed.

I join you in mourning his passing, but am happy to be able to contribute to his memory among our colleagues in HET.