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: //

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.

Amadeus discussed at Ace of Spades

Probably my favourite movie of all time. This is a complete steal of TheJamesMadison’s discussion of Amadeus at Ace of Spades. If you don’t know the movie, it’s time you did yourself a favour. Reading what Madison wrote will not spoil a second of the actual film.


65. Amadeus 01.jpgI’ve revisited the first six films in my personal Top Ten of all time chronologically from The Passion of Joan of Arc to Apocalypse Now, so now we get to the 80s, the single most represented decade in my list. And the first movie in that decade is Milos Forman’s Amadeus.

Re-Introductions and Introductions

When I first discovered Amadeus, I loved it, and I showed it to my father. We watched it together (one very nice thing about him was that he’s willing to watch almost whatever I try to put in front of him), and his reaction was much more tempered than mine. He said, “You’ll like it less as you get older.” Not that he didn’t like the film, but he just didn’t love it like I did.

I didn’t watch this movie for at least seven years until this week when I finally revisited it. I was a bit terrified. Was my dad right? Would I finally rewatch the film and decide that it’s simply not as good as my younger self had determined?

Thankfully, I loved the film as much as before, and that started with one particular moment about ten minutes into the film. Salieri, having attempted suicide, is sitting alone in a cell in a sanitarium playing some small tunes on a harpsicord. A priest comes to hear his confession. Salieri wants nothing to do with the priest until the priest insists that all men are equal in God’s eyes. That attracts Salieri’s attention.

He starts by trying to draw the priest into his story by playing some of Salieri’s old tunes, music that the priest should be familiar with because he studied music in Vienna in his youth. The first tune passes over the priest’s head, much to Salieri’s distaste. And then we see this:

It’s a simple cut to a tracking shot, and it completely pulls me into the film.

Salieri plays the first few bars of the music. He takes his fingers off the keys to revel in the sound in his head. We, of course, hear it, but the priest does not. The cut takes us to a live performance of the music sung by a woman, gaudily dressed, on stage. The camera pulls back to reveal a man conducting an orchestra. As this man turns, the camera changes focus from the woman to him, revealing Salieri, decades younger, and at the height of his influence and power.

It’s such a simple cut and dolly, and it sells two things. The first is the basic structure of the movie. We’re going to see what he’s talking about. The other is character based. His telling of his story really starts with Salieri at the height of his influence and popularity. He’s adored by music lovers, and he’s firm in his commitment to his art. That simple cut and dolly puts such a smile on my face every time.


65. Amadeus 02.jpgAntonio Salieri is the protagonist of the film, and Mozart is the antagonist. Not to say good guy and bad guy, but Salieri is obviously the one driving the plot in the film. He hinders and helps Mozart, driving him from success to failure.

Mozart, though, is a delight and played by Tom Hulce (who lost the Best Actor Oscar to F. Murray Abraham for his performance as Salieri). He’s an effortless genius who’s been spoiled to the point that he can usually get away with any manner of vulgarity. This is evident when he first approaches the Emperor Joseph II and admits that his idea for an opera (in German!) he will set in a harem. The courtiers around the emperor gasp at the mere thought, but the emperor hides a small smile. He’s obviously entertained by Mozart’s brashness, eventually giving in to every wish Mozart has in terms of his art.

The scene that that plays out in is where Salieri begins to truly hate Mozart. Not only is Mozart vulgar, as opposed to Salieri’s own reserved modesty (which he offers up to God, along with his chastity, in order to praise Him through music), but Mozart is also effortlessly gifted. The second scene that I want to highlight is below (the clip is chopped up from a larger scene, but it contains everything necessary for this discussion):

Salieri worked hard on that little march of his. He played with the harpsicord for every note, trying to craft something as an appropriate welcome to the wunderkind. Then, presented with the music sheet, Mozart waves it off. He’s already memorized it after one hearing. Not only does he then prove that he can recreate Salieri’s simple tune perfectly, but he, on the fly, improves it tremendously (eventually turning it into something that actually comes from The Marriage of Figaro). Salieri had worked diligently and reverentially to produce the piece that this creature (as Salieri calls Mozart) instantly turns into something so much better.

Salieri’s dismissive attitude towards the priest’s contention that all men are equal in God’s eyes comes into full view in an instant. Salieri isn’t equal to Mozart. God obviously prefers Mozart considering the difference in talent and perceived holiness between the two men.


65. Amadeus 03.jpgThe last scene I want to highlight is the writing of the requiem mass as Salieri assists Mozart after the production of The Magic Flute (quick aside, Ingmar Bergman made an absolutely marvelous production of The Magic Flute, and you should find a copy at your local library).

Salieri, a lover of music who understands the stark contrast between his ability and Mozart’s, wants Mozart to write his own Requiem mass and then to take credit for it. Left alone with him, Mozart’s wife having left Vienna in disgust at Mozart’s inability to focus on making money in favor of potentially empty promises, Salieri dictates Mozart’s work. Together, they compose a few bars of music for every instrument in the piece. They build it layer by layer. Voices, horns of different types, strings. It all comes together, sometimes just sounding like noise, but once it all comes together the audience can hear the confluence of the different pieces to create the harmonious music in its entirety.

The fact that Salieri is behind and can’t understand until it’s spelled out for him is marvelous. He knows enough to aid Mozart, but he’s obviously completely out of his depth. Mozart seems to speak in a different language the deeper into the composition they get. Let’s take a look!

The Movie Entire

65. Amadeus 04.jpgThe movie itself is obviously much more than the three scenes I’ve highlighted, and what really carries it is Salieri himself. He’s such a wonderfully complex character who balances his hatred of Mozart the person with his love of Mozart the artist.

He often lies to Mozart. He lies about trying to help Mozart at court, only to be thwarted by circumstance. He lies about how he’ll try to help him with an appointment. But he can never lie about how he feels regarding Mozart’s music. Whenever Mozart asks Salieri what he thought of Mozart’s newest work, all pretense falls from Salieri and he tells the honest truth, that it was magnificent.

In addition to Salieri, Constanze, Mozart’s wife, looks like someone who would be completely out of her depth in regards to anything serious, but the fact that she’s the one who sees things clearly offers Mozart a firm base from which to operate. When she leaves, Mozart loses all of the support she offered and falls into the hands of Schikaneder and Salieri.

The court is a joyful little comic delight. Most of them are as opposed to Mozart as Salieri. They use every ounce of their power to keep Mozart in check, but the Emperor Joseph will walk in and completely overturn anything with the smallest of suggestions (“Let me hear the scene with the music.”) that put Mozart back on top.

The movie really is not what one would expect from a three hour film about a classical composer (side note: The Director’s Cut really is a Director’s Cut and probably is the superior version of the film). It’s light and joyful where it needs to be. It’s got surprising contemporary touches like Mozart’s pink wig which evokes mid-80s punk rock. The movie really does fly by, never feeling like three hours, and is one of the most fun times I ever have had at the movies, so to speak.

A Small Note on Historical (In)Accuracy

Thank you, Lisa. If I didn’t think of you as a joyless scold before, I certainly do now.

Some may remember, but I don’t insist much on historical accuracy from films. I don’t expect history lessons from movies, but I do expect to be entertained.

Amadeus is bad history. Mozart had six kids, not one. Salieri didn’t help Mozart write the Requiem. Salieri wasn’t a celibate. There’s so much in this film that’s not historically accurate.

And yet, the movie is filtered through Salieri the character. It’s a telling of the events through an unreliable narrator. It really gives the film credence to be as historically inaccurate as it wants to be. And, probably because of its complete disregard for actual history, the movie is a fantastic entertainment and explores what it means to be an artist.

It’s all about power


That’s in some third world backwater where the elections are fixed and you cannot get rid of the left even when they are ruining everything about your lives. Wouldn’t happen in any of the established Western democracies, would it? We shall see.

I hereby demand, and will do so officially tomorrow, that the Department of Justice look into whether or not the FBI/DOJ infiltrated or surveilled the Trump Campaign for Political Purposes – and if any such demands or requests were made by people within the Obama Administration!

FBI Informant Comforted Trump Adviser...
REPORTS: Cambridge professor outed...
NYT: Was investigating, not spying...

And you certainly wouldn’t want to forget about this: Former US Attorney: Obama’s CIA Director John Brennan Led Group Trying to Frame Trump

AND THEN THERE’S THE ALEXANDER DOWNER CONNECTION: From Stopping Robert Mueller to protect us all wherein we find:

They started by telling the story of Alexander Downer, an Australian diplomat, as having remembered a bar conversation with George Papadopoulos, a foreign policy adviser to the Trump campaign. But how did the FBI know they should talk to him? That’s left out of their narrative. Downer’s signature appears on a $25 million contribution to the Clinton Foundation. You don’t need much imagination to figure that he was close with Clinton Foundation operatives who relayed information to the State Department, which then called the FBI to complete the loop. This wasn’t intelligence. It was likely opposition research from the start.

I hope it was his own money he was spending.  

What seven year old doesn’t need to know this?

View image on Twitter


Now, you might be asking yourself why a seven-year-old girl needs to learn about sexual desire at all, let alone homosexual sexual desire; you might be asking yourself why a seven-year-old should be indoctrinated about children being “assigned male or female at birth” when such language is the language of anti-scientific nonsense.

But according to Valenti, you would be the degraded one. After all, school teachers should certainly inform pre-pubescent children about matters of moral and scientific controversy. But, you might answer, young children don’t have the critical thinking skills necessary to ask important questions about this framework.

That, of course, is entirely the point. Children are supposed to be indoctrinated with left-wing views regarding gender and sex — they’re supposed to be told that sex and gender are utterly disconnected, that every sexual activity is equally valid. Children are supposed to be confused about matters of deep philosophical and lifestyle importance, so that later, they feel free to follow whatever feelings they have. We can’t teach children nothing — then their parents might teach them the wrong things. They might teach their children that men were men and women were women, for example, which could create preconceived notions about sex. And if parents were to teach children about the societal value of heterosexual lifestyles, or about the mere biological advantages of heterosexual activity, that could lead to discrimination.

Let me therefore mention a book I have come across by accident that could not be published today but is in print and shows it is still possible to access sanity even in the world the left is creating at every turn: William Kilpatrick’s Why Johnny Can’t Tell Right from Wrong, for which the link will get you to a pdf copy you can download for yourself.

Also available through the net but with certainty will not be found on the shelf in any bookshop anywhere in the world. I wonder if you can find it in a public library.

It was originally published in 1992 where he was warning us about the kind of world that was forming at the time. Only publishable even then because he no doubt looked like an extremest way out on a limb. In fact, the most prescient book I have ever come across. He describes everything you see today, explaining what is wrong, but was then only describing what was to come.

I cannot recommend a book more highly. Probably too late anyway, but worth having a deeper grasp of the horrors surrounding us now with no doubt worse to come in a world now completely out of control.

What’s next?

From Drudge and I assume everywhere else. The one thing no one will do is ask Hillary or Obama what they would do. And this is not an American problem, it is a problem for us all.


“The left knows no bounds for its hatred of others”

A comment at Instapundit in response to this article: The obscene effort to shame ‘Trump’s Jews’.

The left knows no bounds for its hatred of others. None.

What we are seeing is the historical and slow-motion collapse of an American political party – the Democrat Party.

In the past decade they have lost 1,000 elective seats in federal and state governments. They have lost much of the working middle class, and the labor union members. They have called a vast swath of voters “deplorable and irredeemable”. They have happily told formerly reliable Democrat voters that thy are going to end their jobs and raise prices.

They have lied about health insurance, and those lies have cost millions of voters a LOT of money, and the Democrats are utterly dismissive about helping fix the problem they created. They support anarchists who riot in the streets. The support and enforce social justice warriors. They demand that grown perverts use the same bathrooms as voters’ children. They protect criminals and despise the police. The cities they govern have become horrible and expensive places to live. The schools they run are failing.

The newly-elected party leaders hate American history, love Islam, hate democracy.

And now they are attacking their own, and for no good reason, but simply to further the hatred of a properly elected President.

They have no economic policy, no foreign policy, no great dream for America. All they have is hatred, hatred, and more hatred.

They pretend to be nice people but there is no evidence other than what they say about themselves.

Economic theory has been hollow for a long long time

The secret is getting out. Modern economic theory is a pseudo-science. So let me give you some recent discussions of what ought to be obvious to anyone living in an economy in which economists are advising governments. First this: The new astrology: By fetishising mathematical models, economists turned economics into a highly paid pseudoscience. From which:

The economist Paul Romer at New York University has recently begun calling attention to an issue he dubs ‘mathiness’ – first in the paper ‘Mathiness in the Theory of Economic Growth’ (2015) and then in a series of blog posts. Romer believes that macroeconomics, plagued by mathiness, is failing to progress as a true science should, and compares debates among economists to those between 16th-century advocates of heliocentrism and geocentrism. Mathematics, he acknowledges, can help economists to clarify their thinking and reasoning. But the ubiquity of mathematical theory in economics also has serious downsides: it creates a high barrier to entry for those who want to participate in the professional dialogue, and makes checking someone’s work excessively laborious. Worst of all, it imbues economic theory with unearned empirical authority. . . .

Romer is not the first to elaborate the mathiness critique. In 1886, an article in Science accused economics of misusing the language of the physical sciences to conceal ‘emptiness behind a breastwork of mathematical formulas’. More recently, Deirdre N McCloskey’s The Rhetoric of Economics (1998) and Robert H Nelson’s Economics as Religion (2001) both argued that mathematics in economic theory serves, in McCloskey’s words, primarily to deliver the message ‘Look at how very scientific I am.’ . . .

Romer believes that fellow economists know the truth about their discipline, but don’t want to admit it. ‘If you get people to lower their shield, they’ll tell you it’s a big game they’re playing,’ he told me. ‘They’ll say: “Paul, you may be right, but this makes us look really bad, and it’s going to make it hard for us to recruit young people.”’

There was then this in The Wall Street Journal a couple of days ago: The Great Economics Debate. Here is the bit before the paywall.

Friedrich Hayek and John Maynard Keynes worked at a time when the study of economics was concerned with society and its values. Richard Vedder reviews ‘Hayek vs Keynes’ by Thomas Hoerber. By Richard Vedder

Today economics is a fundamentally quantitative pursuit, dominated by abstract mathematics and complex modeling, largely removed from the realities of human interaction. But it was not always thus. Economic theory . . .

You can undoubtedly guess the rest. Meanwhile, here at RMIT, Imad Moosa, one of my professorial colleagues, has just had a book published with the quite direct title: Econometrics as a Con Art. Here is a summary of the book:

Imad Moosa challenges convention with this comprehensive and compelling critique of econometrics, condemning the common practices of misapplied statistical methods in both economics and finance.

After reviewing the Keynesian, Austrian and mainstream criticisms of econometrics, it is demonstrated that econometric models can be manipulated to produce any desired result. These hazardous analyses may then be relied upon to support flawed policy recommendations, ideological beliefs and private interests. Moosa proposes that the way forward should instead be to rely on clear thinking, intuition and common sense rather than to continue with the reliance upon econometrics. The mathematization of economics has limited the accessibility of and participation in economic discussion by converting the area into a complex ‘science’ when it should not be.

Economic theory has been hollow for a long long time, but good economics exists. Unfortunately you would have to go back near a hundred years to find a time when economic theory was consistently sound. Nor is it just the maths that has ruined theory but the diagrams as well. That, however, is for another day.

In the meantime, I have just sent out a final draft of an article I have written to a number of colleagues and friends with this note attached.

I have written that it is almost impossible for an economist raised on Keynesian models and presuppositions to understand how classical economists approached economic issues. I also say, which is a bit more provocative, that they understood the processes of an economy better than we do, which of course implies that I think I understand how an economy works better than most economists today. Which, to tell the truth, I do. This is the article in which I try to explain why I think that in less than 2000 words. It is therefore not long, and I also think not very hard to understand, but then I think that about everything I write on classical theory which turns out to be immensely difficult.

I will just bring this joke out of the paper since I think it’s clear what I’m saying, but perhaps it is a bit too enigmatic. In any case, I think this is also true if you see my meaning:

Grieve mentions that I must think of myself as the only one in step. The joke I actually see myself in the midst of is about the impossibility that there could be a twenty dollar bill on the ground because if there were someone would already have picked it up. But there are others [who understand Say’s Law and classical theory], with Bylund (2017) a particularly fine example.

And if you would like to look at Bylund’s article, you will find it here: Rick Perry — and His Critics — Still Don’t Understand Say’s Law.”