I came across a book in one of the still remaining second hand book shops I frequent by two Nobel Prize winners, George Akerlof and Robert Shiller. It’s title was Animal Spirits with the basic premise stated on the cover, that “human psychology drives the economy and why it matters for global capitalism”. So far, so ordinary but since this is all part of the new direction in economics, I thought I would give it a go.
Well, what a farrago of vacuous ideas and empty nonsense. I had always thought it was ridiculous that Keynes had made such a fetish about “animal spirits” himself, seeing as how every classical economist was perfectly aware of how crucial business confidence is to economic outcomes. If nothing else, Frank Knight had published his Risk, Uncertainty and Profit in 1921, a book I am pretty certain Keynes raided in writing the General Theory published in 1936. That Akerlof and Shiller write as if they have introduced some new conceptions into economics was astonishing, but given the low level of historical knowledge within the profession, you can just about get away with anything.
But what really did get to me was this book, published in 2009 at the height of the GFC and as the stimulus programs were getting into full swing, were not just advocating such public spending but made it clear how much economists had learned from Keynes and how fortunate we lot were that economists such as themselves were now on the watch and in control of policy.
A repeat of the Great Depression is now a possibility because economists, the government and the general public have in recent years grown complacent. They have forgotten the lessons of the 1930s. In those hard times we learned how the economy really works. . . .
In the middle of the Great Depression John Maynard Keynes published The General Theory of Employment, Interest and Money. In this 1936 masterwork, Keynes described how creditworthy governments like those of the United States and Great Britain could borrow and spend, and thus put the unemployed back to work. [My bolding]
I have an article on this book at Quadrant Online, Phlogiston with a Keynsian Twist. I think of it as a contender for the worst book on economics ever written. Lots of bad books on the subject, of course, but you don’t normally find two people at the highest level of the profession conspiring to write such stuff. Read the review, but spare yourself the trouble of reading the book, unless you would like to see just how empty economics can be in this day and age.