Monty Pelerin's World

Economics, Finance and Politics Through The Prism of Classical Liberalism

September 2010 - Posts

Keynes as "Useful Idiot"
The milk of American politics may be money, but the fuel for American socialism is Keynesian economics. Keynesianism’s inherent bias toward bigger government has made it the indispensable tool for statists around the globe. Politicians' natural wont to spend and control benefited immensely when John Maynard Keynes published the General Theory in 1936. His work initially provided rationale for the ad hoc efforts to fight the Great Depression. Subsequently, it provided support for growth in government. The “Keynesian Revolution” represented a massive paradigm shift. Paradigm shifts in scientific fields were dealt with by Thomas Kuhn in his famous book, The Structure of Scientific Revolution. The change process is generally characterized by an older paradigm being discarded after a newer one demonstrates its superiority. That is the evolutionary process of progress. Kuhn dealt only with the natural sciences, although the same process applies elsewhere. Greater verification problems, vested personal interests and political considerations ensure that the process will be less smooth in the social sciences. The adoption of Keynesian economics provides an excellent example. Classical economics, the prior paradigm, had developed over centuries. Its body of knowledge evolved as a result of trial and error, itself a form of the Kuhnian evolutionary process. Classical economics argued for a limited role for government. This constraint was an impediment to politicians’ natural desires to increase power. Keynesian theory never “earned” the right, at least in a Kuhnian sense, to replace its predecessor. It did not demonstrate relative superiority. It was simply ordained by the ruling Continue Reading at [Sorry but I cannot find way to link]