What theory can we use to get us out of the impending slump quickly and reliably? To use the 'new classical' theory of fluctuations begun at Chicago in the 1970s – the theory in which the "risk management" models are embedded – is unthinkable, since it is precisely the theory falsified by the asset price collapse. The thoughts of some have turned to John Maynard Keynes. His insights into uncertainty and speculation were deep. Yet his employment theory was problematic and the 'Keynesian' policy solutions are questionable at best.... At the end of his life Keynes wrote of 'modernist stuff, gone wrong and turned sour and silly'. He told his friend Friedrich Hayek he intended to re-examine his theory in his next book. He would have moved on. The admiration we all have for Keynes's fabulous contributions should not sway us from moving on.
Edmund PhelpsRelated topics
begin best book classical deep embed end friend john modernist moving next problematic risk should silly slump sour speculation tell use wrong yet 1970s Keynes Keynesian HayekRelated quotes
Capitalism should not be condemned, since we haven't had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It's not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!
Ron Paul
In fact, the only person to rival Friedman for policy influence in the twentieth century is John Maynard Keynes, who had a strikingly different view of the role of government. Keynes was influential because he advocated more government intervention into what he perceived as poorly functioning private economies caught up in the Great Depression. In contrast to Keynes, Friedman put the main blame for the Depression on government failures, especially of monetary policy. Hence, the Depression did not make Friedman a fan of big government. He also found in the Federal Reserve's failure to prevent deflation an argument in favor of monetary rules. As the world evolved- with low inflation becoming the major mission of central banks and free markets and secure property rights becoming the main policies to promote economic growth-Friedman surely won the intellectual battle.
Robert Barro
It is said we go about the world waging war to promote peace, and yet the price paid is rarely weighed against the failed efforts to make the world a better place. Justifying conscription to promote the cause of liberty is one of the most bizarre notions ever conceived by man! Forced servitude, with the risk of death and serious injury as a price to live free, makes no sense. What right does anyone have to sacrifice the lives of others for some cause of questionable value? Even if well motivated it can't justify using force on uninterested persons. It's said that the 18 year old owes it to his country. Hogwash! It just as easily could be argued that a 50 year-old chickenhawk, who promotes war and places the danger on innocent young people, owes a heck of a lot more to the country than the 18 year-old being denied his liberty for a cause that has no justification.
Ron Paul
The need for a fundamentally different approach to the study of physical processes at the molecular level motivated the development of relevant statistical methods, which turned out to be applicable not only to the study of molecular processes (statistical mechanics), but to a host of other areas such as the actuarial profession, design of large telephone exchanges, and the like. In statistical methods, specific manifestations of microscopic entities (molecules, individual telephone sites, etc.) are replaced with their statistical averages, which are connected with appropriate macroscopic variables. The role played in Newtonian mechanics by the calculus, which involves no uncertainty, is replaced in statistical mechanics by probability theory, a theory whose very purpose is to capture uncertainty of a certain type.
George Klir
In my tender years and bairn-age, at schools, having on the one part contracted a loving familiaritie with a certain gentleman a papist, and on the other part being attentive to the sermons of that worthy man of God, Maister Christopher Goodman, teaching upon the Apocalyps, I was moved in admiration against the blindness of papists that could not most evidentlie see their seven hilled Citie of Rome, painted out there so lively by Saint John, as the Mother of all Spiritual Whoredome: that not onlie bursted I oute in continuall reasoning against my said familiar, but also from thence forth I determined with myself by the assistance of God's spirit to employ my study and diligence to search out the remanent mysteries of that holy booke (as to this houre praised be the Lord I have bin doing at all such times as convenientlie I might have occasion) &c.
John Napier