My last post, arguing that the left needed to offer a transformative vision as an alternative to rightwing tribalism has drawn lots of interesting responses, and generated some great comments threads, both here and elsewhere (Some of them: Matt Yglesias,DougJ at Balloon Juice, Democracy in America at the Economist,Aziz Poonawalla at BeliefNet,Geoffrey Kruse-Safford |, and Randy McDonald).
Since my idea was to open things up for discussion, I don’t plan to comment on particular responses. I do want to respond to one theme that came up repeatedly, a combination of discomfort with words like ‘transformation’ and ‘vision’, and a feeling that a politics in which such words are employed is inconsistent with the pursuit of incremental reforms. Even though I stressed the need to learn from such critics as Burke, Hayek and Popper about the need for reform to arise from organic developments in society and to avoid presumptions of omniscience, the mere use of words like ‘vision’ set off lots of alarm bells.
To me, the difficulty of getting this right reflects my opening point in the previous post. After decades of defensive struggle, we on the left no longer know how to talk about anything bigger than the local fights in which we may hope to defend the gains of the past and occasionally make a little progress. But the time is now ripe to look ahead.
My main point in this new post is to reject the idea that there is a necessary inconsistency between incremental progress and the vision of a better society and a better world. (I’ll link back here to my earlier post on Hope, which might be worth reading at this point, for those who have time and interest.)
The liberal and social democratic reforms of the New Deal and its counterparts in other developed countries were incremental changes. But they weren’t presented as mere technocratic adjustments to social and economic mechanisms. FDR’s New Deal and Four Freedoms, the Beveridge Report, the Swedish Folkhemmet, Ben Chifley’s “light on the hill”, Michael Savage in New Zealand, all presented their reforms in the context of a broader vision that could inspire mass support.
Combining day-to-day advocacy of immediately feasible reforms with mobilization for a broader vision of a better world implies some constraints. Most obviously, the kind of vision I’m talking about needs to be realistic rather than utopian. As I said in my post on Hope, the goals
ought to be feasible in the sense that they are technically achievable and don’t require radical changes in existing social structures, even if they may set the scene for such changes in the future. On the other hand, they ought not to be constrained by consideration of what is electorally saleable right now.
On the other hand, the kinds of incremental change we should be looking for must be informed by these goals.
An example, one of the few topics where Obama has maintained the rhetoric of hope that inspired support in his campaign is his advocacy of the goal of a world free of nuclear weapons. Obviously, this can’t be achieved at a stroke, and it may never be fully achievable. Nevertheless, (as I plan to argue in more detail soon) we seem more likely to make incremental steps away from the precipice on which we are standing if we have such an ultimate goal in mind than if we think in terms of adjustments to a balance that depends, in the end, on mutually assured destruction.
Conversely, articulating a goal like this (as compared, say, to non-proliferation) implies the need for much sharper questioning of the positions of the long-established nuclear powers. Are essentially frivolous considerations of national pride sufficient to justify Britain and France in maintaining a capacity for genocidal war? Assuming the perceived need for a strategic deterrent is going to persist for some time, can the US and Russia justify keeping tactical nuclear weapons. And so on.
Similar points can be made about the other goals I suggested in my ‘Hope’ post as well as those put forward by commenters and other bloggers. A moral imperative to end extreme poverty in the world seems more likely to overcome parochial tightfistedness than a desire to promote economic growth in less developed countries. But it also implies different policies, with more focus on action that will directly meet human needs for better health, education and nutrition, and less on large-scale development projects, which might be better left to the market sector.
I’ll repeat the endings of my previous posts. Writing this kind of thing, I can sense the feeling that it’s naive/utopian/pointless. But I think it’s precisely this kind of feeling, hammered into us by years of retreat that we need to overcome. And I’m keen for better ideas and analyses than what I’ve offered. So, comments please.
John Quiggin 
Vision might sound too ambitious but having a sense of direction, the direction in which you ought to be heading, is always needed, and to get that sense of direction you have to clearly have an idea of which way to something better than you already have, and that may involve a touch of utopian thinking, hopefully tempered by a grounding in reality, plenty of understand of potential obstacles, and of what is realistically achievable.
Ah yes, the politics of vision.
The first thing Labor in SA has done back from the election is to pass more pro developer legislation, this time as to removal of significant trees. The Advertiser has gleefully inserted a photo of large river redgum due to go down immediately the legislation has been processed.
God grant me releif from the Labor right wing and their apologists, when it comes to right wing tribalism-even more than the poor silly Hansonists, because Labor should and does know better and must therefore be rotten to the core.
Nicely thought out there. My first impression is that vision is for frontiers, fairly obvious. Second instinctive reaction is that the acceptance of another’s vision is optional. I particularly like the Obama’s vision example. To have some “m’s” to add to the visionary list. I suggest Mandella, Muldoon, and Mugabe. From a visionary point of view you could talk of the good, the bad, and the ugly, but Muldoon was only half bad, he had some very good concepts which if relived today would make New Zealand the talking point of the post financial crisis global warming abatement world.
I think that you nailed it with……Vision and Method.
and…..Timing.
This is just a repeat of a previous thread.
Still not addressing the problem of capitalism.
I certainly have more than discomfort as words like ‘transformation’ and ‘vision’, in the absence of a rigorous analysis of underlying political and economic forces.
We have been down this path before – Stuart Holland’s “The Socialist Challenge” (1975) is an example (which includes, centralised planning, that John seems to, illegitimately, attach to every mention of socialism).
The problem is capitalism – not the vision of capitalism.
We have to exit this fog.
Is Stuart Holland worth revisiting, as an alternative to the above?
Is Stuart Holland an example of “superior analysis” (excluding centralised planning)?
Chris, I think that is about the goal of every conscious rational person, to find a way thru the tangles that the describe, it may also be so , that to get to the base you must dismantle a bit of infrastructure. Thus, you must be able to “see”, to find.
Whether a person chooses to do that is another question, which could involve “bad faith”.
Waleed Aly writes in the latest Quarterly Essay: ‘What’s Right? The Future of Conservatism in Australia’:
“… liberalism and conservatism will have their best chance of thriving through the disavowal of neo-liberalism. If that is to happen, the time is now. The political logic of climate change and the global financial crisis suggest that an ideological retreat would not only be philosophically coherent, but politically fashionable. The common thread connecting these political issues is a widely held view that the untamed operations of the market were a major contributing factor in the creation of such problems. The short-term goals of profit that prevail in the marketplace have thus far proven incompatible with the long-term challenges of conserving the environment, and the long-term desirability of fostering economic (and with it, social) stability.
If the conservative link with neo-liberalism can be severed, this will free conservatives to accept and then confront the biggest political issues of the day, including climate change. …”
Megan, #7, with accurate Waleed Ali comment,
Maybe that’s what the Clegg phenomena in GB is?
The two neoliberal parties have finally burnt out, beyond recovery, in the eyes of many Britains, first the Thatcherist
Tories, now the soul less dregs of New Labour.
But it will take a while to burn out under the weight of its own contradictions. The question is, can the Greens gather sufficient critical mass to eventually see the back of the Abbott dry right and then the rightist, tribalist Philistines of Ned Rudd, who will also surely implode on the spike of their own delusions, against reality.
JQ – of all the statements in your above comment the following carries the greatest hope of all…
“a world free of nuclear weapons.”
Its been a long fight (a ling long fight) and one we should never give up on and if that means avoiding nuclear energy facilities….so be it…it is no accident that nuclear weapons storage facilities across the globe are situated very close to nuclear power plants.
We need to recognise the connection.
Recycling warheads into power stations appears to have some political attractions.
One of the many advantages of nuclear power, is that suitably irradiated, at night, the recipient is able to light their own way. Indeed, nuclear power offers the potential to light our way out of the horror of the climate change hoax.
@Freelander
Freelander….ahh but you jest again (and how I laughed!). The glow on the hill that will lead us all forward…
Well, John, yesterday I bought Mungo’s Canberra (Mungo MacCallum’s contemporary reflections on the Gorton and Whitlam governments) and James Walters’ new book, about ideas in Australian politics. And together they’re an interesting read.
We consider Whitlam something of the epitome of the visionary in Australian politics, yes? A coherent vision, capable of inspiration — hope, even — of social and economic change? I know you’ve written about Whitlam as the first economic rationalist but that’s certainly the way he’s been assimilated into the public discourse — and certainly the way Walters reports on him, as an inspirational figure with a coherent liberal-progressive-social democratic outlook.
Well, at the time, Whitlam was considered, by many on the left at least, as basically Kevin Rudd with a cockatoo hairstyle. Opportunistic. Compromising. Conservative, naysaying, and frequently using appeals to xenophobia and prejudice to try and shore up support amongst the ‘Bazza McKenzie’ voters.
So maybe ‘vision’ only makes sense in hindsight. Maybe we try to rationalise away the past in terms of hectoring the present — the Whitlam discourse’ as we understand it is largely a series of anti-Hawke discourses, whereby this past ‘inspirational’, ‘radical’ figure was built up to attack Hawke’s manifest failings thereof.
So maybe our problem is one of perspective — we’re still so close to Rudd that he doesn’t make sense unless we draw back a bit. Maybe in 20 years we’ll see, in things like national healthcare reforms, and the BER, and the Apology, that he was a mite more inspirational and possessed a more over-arching ‘vision’ for social change — even one badly sold to the public, as arguably Whitlam’s was — than we think at current, as events flood by.
So you’re saying “Vision is in the eye of the beholder”?
How bleak a future, for some of the grim realists here. Can’t stop smirking at the black humour, which is probably a shame.
My unpleasant vision for the Australia of the next decade has a story like Britain’s over the last.
As to “nookula”weapons,
I wonder if places like Israel or Pakistan will willingly surrender their little treasures, let alone the Chinese.
So the US will then just unilaterally disarm?
When you think about, heaps of things could go wrong as bad as that, involving germ warfare or whatever other shit they are dreaming up in their underground labs, or something as drastic as the Aceh tsunami, in hubs like Tokyo or Los Angeles; places where quake intensity can very high.
When does the one day in a billion come?
As someone who was 30 when Whitlam came to office, Black Mage, I’d differ on that contemporary interpretation you’ve suggested. I’d say there was vision going back to at least the 1969 campaign and somewhat refined by the time of the 1972 It’s Time campaign. Though I’d agree that the difference between the two campaigns was not the vision but the fact that by 72 the entrenched Left in Victoria (who were a massive electoral liability) had been removed from control there.
As to mistrust from the Left, there was a little of that in the 60s. Partly that reflected the battle for control of the machine, where Whitlam favoured wresting it away from the unaccountable ones (the Faceless Men) who were mostly from the Victorian Left and Joe Chamberlain forces. In a sense it was vision vs entrenched interests.
Some of the more idealistic leftists mistrusted Whitlam’s position on Vietnam where he refused to back immediate withdrawal. But as his position became better known he was widely accepted by the left, if not loved as much as Cairns. Mungo might even cover that in his book because he was such a convert. Tom Uren was another. So was Clyde Cameron, although much later they fell out.
I don’t doubt that there was some pandering to populism. And some of his Program had both vision and popular appeal (eg urban and regional development, education).
Maybe the appointment of Doug McClelland as Minister for the Media (nicknamed privately as Minister for Bobby Limb) was an example. But mostly I think it was incidental to The Program. In fact, some have argued that an obsessive commitment to The Program may have hastened his downfall, although personally I think it was a combination of events -global inflation and oil price hikes, incompetence and inefficiency at cabinet and caucus, obstructionism by coalition parties in the States and Senate – that led to it.
@Don Wigan
The incomptentence you speak of Don Wigan…can be traced directly to Commonwealth Treasury, who, by the time of Whitlam’s leadership had become infected with the Friedman virus. Whitlam tried to fight it..valiantly..by trying to avoid Commonwealth Treasury officers and hiring his own team of economic advisers..but they won in the end..and went on to lead us to the GFC. The debutante ball of neoliberalism…but Australia as ususal were just followers…(sheep)..not thinkers. Humphrey McQueen detailed our propensity to follow international trends rather than think. The aspirational “lost isolated continent”.
When will we grow up?
It should be remembered that Whitlam only scraped into office with a majority of 9 seats after a 2.64 per cent swing in 1972.
His opponent was dopey old Billy McMahon and a tired and smelly government of 23 years vintage. Defeating such a rag-tag bunch does not say much for the political skills of Whitlam, or his success in persuading voters to his cause. Whitlam happened to benefit from the electorate throwing the other side out because once more was too much.
@Jim Rose
and dont forget a concerted media atack by the right wing media owners…fallen under the spell (wrong spell…Friedman and vested interests)…Jim Rose.
@Jim Rose
A round about way of saying that you vote for the other side of politics…
Right wing media blitz known as the Khemlani affair…for those of us old enough to recall the Khemlani affair…and had the Whitalm govt borrowed the middle eastern surplus available. (lots of it)..we may have been better off for the investment. We always relied on the UK and it helped. What difference an investment by middle eastern financiers? A scandal over what appeared to be nothing but niggardliness on the part of an opposition that hasnt had a vision of public investment since.
Just a bunch of austerity merchants..
Friedman would have been flattered that he had any influence on policy in Australia in the 1970s. Reviews of textbooks, journal articles and newspaper reports will show that the 1960s and 1970s were the zenith of Keynesian economics in Australia. Little wonder the economy collapsed in stagflation in Australia and overseas in the 1970s.
Edward Nelson published a paper in 2005 studying the Great Inflation in Canada, Australia, and New Zealand using newspaper coverage and policymakers’ statements made at the time to analyse the published views of the day on the inflation process that led to the 1970s macroeconomic policies. Nelson undertook similar studies of the USA, UK, Japan, Germany, Ireland and Switzerland.
Nelson’s paper is called “Monetary Policy Neglect and the Great Inflation in Canada, Australia, and New Zealand.” Nelson argued that to understand the course of policy in each country, it is crucial to use the monetary policy neglect hypothesis. This claims that the Great Inflation occurred because policymakers delegated inflation control to non-monetary policy devices. This hypothesis helps explain why, unlike Canada, Australia and New Zealand continued to suffer high inflation in the mid-1980s.
Australian monetary policy was tightened at the end of the 1980s because the current account fallacy was riding high. Nothing much happened to the current account, but inflation went from double digits at the end of the 1980s to about 2 per cent in 1991.
It is hard even for conspiracy buffs to argue that the Treasury was infected by Friedman in 1972 when inflation was not accepted to be a monetary phenomenon until 20 years later, through the brute force of unintended events, and Australia was very much a latecomer to inflation targeting.
Friedman probably was flattered.
The zenith of his career was the holiday he took in Chile, in the 70s, to watch people he didn’t like being thrown out of helicopters.
He was such a charming humanitarian.
Sad that he left no legacy of unrefuted ideas. Nevertheless, all though specious nonsense, “Free to Choose” is great entertainment, full of unintended humour. I thoroughly recommend it, even if it is one of those books that you shouldn’t put in the hands of young impressionable and otherwise shallow and superficial minds.
It is not like the typical Aryan Rand novel, so boring that Jack Kevorkian is rumoured to intend using them for his patients. [But surely there must be less painful means?]
Freelander,
Friedman also visited China and other socialist states, giving lectures and meeting with top officials. Friedman stressed the importance of unfettered markets, pointing to China’s neighbour, Hong Kong, as a model to be followed. Does that make him a communist fellow traveller? Perhaps a candidate member of the gang of four and an unindicted co-conspirator in the great leap forward?
But he didn’t go there (China) to watch people he didn’t like being dropped out of helicopters.
Freelander,
Good to see we agree again. Friedman visited many countries including tin-pot dictatorships and totalitarian states. He gave the same lectures and same advice.
After the out cry over his Chilean holiday, he may have tried to cover his tracks by visiting China. Anyway, his lauding of HK as unfetterred free market was just a good example of his unintentional humour. He gave a lot of people a belly laugh about that one. He probably thought that a fairly light extraction of revenue also went on in HK. Pity they live in such little places all cramped in together. Just another market outcome I suppose.
Freelander,
you seem to be unaware that Hong Kong is a small place with many mountains and hills, little land and no resources; its size sums to 1100 square km in all.
Its residents could have defected to the workers’ paradise across the border before 1997, but why leave one of the richest countries in the world? A free country too with that old enemy of socailists one and all – the rule of law.
China now imposes residency restrictions to stop its own citizens moving to Hong Kong. They must be attracted by the hell on earth of no sales tax, no capital gains tax, and no GST. Income tax is set at 2% for those earning less than HK$35,000 a year, 8% for HK$35,000-HK$70,000, 14% for HK$70,000-HK$105,000 and 20% for anything exceeding that. There is a flat tax of 17.5 percent on corporate profits, and 16 percent on property owners and unincorporated enterprises. Public housing, health and other social services are well-targeted to minimise middle-class welfare.
Wow! I accidentally started something with this Keynes vs Friedman thing, which was not where I’d intended to take things. I was mostly keen to correct the impression from Black Mage that the vision/idealism might have been a more post hoc recollection and nostalgia. It was real enough at the time, and just remembering the reform legislation passed then should be additional evidence.
In deference to Alice, I could have mentioned a few other contributing factors to the general impression of chaos at the time. The attitudes of business, the banks (how about flooding consumers with credit cards at the height of inflation?) and the unions (who seemingly could not understand that raising the social wage meant raising monetary wages was less important and potentially reckless) who were all caught up in their own agendas and parochial interests.
As Nicholas Gruen and others have often posted on, the Hawke-Keating Governments were more competent in ministerial personnel and in terms of enacting legislation politically successfully. One reason for this was that many of the Hawke ministers had been inspired to enter politics by the idealistic examples of Whitlam and Dunstan.
So back to topic: yes idealism and raising hopes is important.
Don,
On Keynes vs. Friedman, Keynesian macroeconomics fell out of favour because it could not explain stagflation in the 1970s. Stagflation was supposed to be impossible.
Keynesian macroeconomics reinvented itself as the new Keynesian marcoeconomics.
It the course of reinventing itself, new Keynesian marcoeconomics co-opted so much of the economics of its critics that in more candid moments, prominent new Keynesians admit that the correct label should be new monetarist economics! New Keynesian economics is preoccupied with how to best run monetary policy and operate inflation targeting. They are like high Anglicans, Catholics all but in name.
@Jim Rose
Keynesian economics should be dismissed because it cannot explain ongoing per capita increase in debt, and it cannot balance its own circular flow under equilibrium conditions – assuming capitalism.
Keynesian economics may be possible if you exclude capitalism.
Friedmanite economics may be possible if you exclude capitalism and monopoly.
You can take some right-wing theories and produce a progressive alternative from them.
@Black Mage
Re the Left dismissal of Whitlam, the most notable example was MacFarlane & Catley, From Tweedledum to TweedleDee. MacFarlance stayed on the left, but Catley was an undistinguished Labor MHR for a few years, en route to the free-market right. Throughout his career, he was a reliable follower of fashions that were about to go out.
The benefit of Friedman was that he observed the difference between east and west germany but he mistakenly extended from that to the conclusion that “all market was good” and “all state control was bad”. He observed the vibrancy of a market economy and assumed the market could deliver it on its own. He missed the point that there was state management and he missed the point that you dont correct the error of oppression with the error of uncontrolled freedom.
Balance – the eternal problem for economists.
Should I suggest Friedmans followers extrapolated Friendman’s view and direction to an extreme even Friedman wouldnt have gone to??
Followers misinterpreters and extremist remedy peddlers…the absolute bane of economics.
@Jim Rose
Ah ha…the mistake everyone makes
“Keynesian macroeconomics fell out of favour because it could not explain stagflation in the 1970s.”
Keynesian economics could then in the 1970s, and did explain the stagflation of the 1970s.
Core dispute here. Core misprepresentation. The US expanded into the Viettnam war when it was close to full employment. Classic Keynesian crisis of overtsimulation of aggregate demand….coupled with a supply shock (oil crisis)…which came first?…the true Keynesian error came first…excess aggregate demand in the US sent manufacturing commodity prices and wages through the ceiling.
The middle east just saw an opportunity to cash in. It wasnt unions…that explanation was a load of codswallop. It was a reaction to excess profits being made by metals industries (war industries) and set across the board so other labour could deal with the excess demand fuellecd prices.
Jim…youve got it wrong… Keynes didnt fail. The US policy merchants dumped Keynesian caution and went to Vietnam come hell or high water when they didnt need to and shouldnt have.
That war duped us all and sent policy haywire. Keynes didnt fail. US economic policy failed and its been failed ever since, going down extremist avenues…
and ending up with the sackful of extremely wealthy lying Goldman Sachs executives that have impoverished whole nations with their “too big to fail and obviously too big to shut down massive… banker bets”.
@Jim Rose
Ah ha…the mistake everyone makes
“Keynesian macroeconomics fell out of favour because it could not explain stagflation in the 1970s.”
Keynesian economics could then in the 1970s, and did explain the stagflation of the 1970s.
Core dispute here. Core misprepresentation. The US expanded into the Viettnam war when it was close to full employment. Classic Keynesian crisis of overtsimulation of aggregate demand….coupled with a supply shock (oil crisis)…which came first?…the true Keynesian error came first…excess aggregate demand in the US sent manufacturing commodity prices and wages through the ceiling.
The middle east just saw an opportunity to cash in. It wasnt unions…that explanation was a load of codswallop. It was a reaction to excess profits being made by metals industries (war industries) and set across the board so other labour could deal with the excess demand fuellecd prices.
Jim…youve got it wrong… Keynes didnt fail. The US policy merchants dumped Keynesian caution and went to Vietnam come hell or high water when they didnt need to and shouldnt have.
That war duped us all and sent policy haywire. Keynes didnt fail. US economic policy failed and its been failed ever since, going down extremist avenues…
and ending up with the sackful of extremely wealthy lying Goldman Sachs executives that have impoverished whole nations with their “too big to fail and obviously too big to shut down massive… banker bets”.
oops – double post
Sorry Jimbo. You’ve got yourself all in a muddle. You’re talking about the Phillips curve, not Keynesianism. Keynes was dead when the Phillips curve was invented. Its the Phillips curve that was inconsistent with stagflation. Keynesianism has no problem at all explaining stagflation. In fact the explanation is regularly taught to first year students. The Phillips curve was always a bit shakey. A stock standard stimulus is why Australia is fine at the moment while NZ is still in the mud. As I stated earlier, poor Milton has left no legacy. None of his ideas seem to have been left unrefuted. He was an excellent BS artist though, could talk the legs off a donkey apparently and often did. He was lucky that PETA formed later. Never let facts inhibit his creative juices. And he still has a cult following, just like L Ron Hubbard, Joseph Smith, and JC. Yet he didn’t even offer his followers the story of Xenu or the option of polygamy or everlasting life floating on a cloud.
If you want to talk about an economist with a legacy how about PT Barnum? Phineas had some powerful reality based insights that haven’t been refuted. How about his inspiring the observation “There’s a sucker born every minute.”? Now that is profound, and demonstrated his deep understanding of markets! Like Keynes, he actually knew enough about markets to make money; Miltie was at least wise enough to not even try. Miltie remembered what happened to Irving Fischer. More recently some other similarly hewn fantasists also tried their luck in an outfit called Long Term Capital Management. Unlike Miltie they didn’t seem to understand that they really didn’t know what they were talking about. They revisited Irving’s experience.
Yes. But despite being so large, as you have suggested HK is, some 11000 sq kms. or whatever you found on the net, that is, given they have plenty of land, apparently the people live in very tiny appartments all crammed together; most of the buildings, so I’m told, are 30 stories high; it is very very crowded, everyone is crampted together, in shops, in schools, in all the facilities; and the price of properties and accommodation is simply outrageous. Also, its smelly, and its very easy to catch an infection, so I’m told. So, what explains all this? The unfettered market at work I wonder? And why is tax so low, as you suggest it is? How have they acheived that marvel? Is it all an example of the best that could happen with the resources available? All just the unfettered market resulting in the best of all possible worlds? Can you explain? Or to use the words of the red headed Howard, ‘please explain’?
Whitlam had no one but himself to blame to his dismissal as PM.
The Senate passed supply quickly after the dismissal because the Labour senators did not know of the dismissal and did not get suspicious about the sudden back-down of the coalition senators.
A great parliamentarian like Whitlam should have known that the House of Reps. should have withdrawn the supply bills from the Senate as soon as the Senate has deferred considering them pending a promise of a double dissolution so the house always had control of the passing of the bills.
After his dismisaal, Whitlam could have telephoned his Senate leadership and told them to vote against the supply bills. Fraser would have had to resign because he could not secure supply as he had promised.
What did Whitlam do? He retired to the lodge for lunch – a very famour steak. With tactical skills like this, little wonder that he just beat Bill McMahon and lost seats to Snedden.
Whitlam seemed to recognise his tactical errors when a few years later he proposed that supply bills include an enactment clause that they take effect on a day appointed by a resolution of the house of representative rather than at the time of royal assent. The House could not be dissolved during a supply crisis with this procedural safeguard.
@Freelander
Correct Freelander – keynes paper on prices in the war years accomodated it well…trouble is the right didnt read it properly.
“Keynes’s health collapsed circa 1938. When World War II broke out in earnest, Keynes re-emerged and published his 1940 pamphlet, How to Pay for the War. In that small tract, he identified the “inflationary gap” created by resource constraints during the war effort, and promoted the device of “compulsory saving” and rationing to prevent price inflation, proposals that were adopted in 1941. The 1940 piece is notable for it provided the seeds of a theory of inflation to complement the “depression economics” of the General Theory.”
Go read it. It worked well in the post war inflationary period (and yes we had strong government intervention that worked).
It was the economic mandarins of the 1960s/1970s under the influence of the now questionable Chicago school…. that dropped Keynes (baby out with bathwater). Young turks wanting to steal the thunder of the king. Keynes never failed anyone. Younger economists just went astray with fashion; an ideology; a promise of a future equilibrium if only enough of us subscribed, technology that suitably programmed could produce mathematics on tap any way you want the numbers to go (too bad no-one could understand the output)…
That didnt work that well. Decades later when we are still waiting for the optimum long run nirvana to arrive…but we cant help noticing a lot are becoming impoverished and dying on the way to the promised land.
In the long run….etc
Freelander,
Another agreement! Neither Keynes nor Keynesian economics could explain stagflation.
That explanation required the introduction of aggregate supply curves into macroeconomic analysis over the course of the 1970s – into analysis that was previously all about aggregate demand. Why would aggregate supply concepts enter into Keynesian analysis that explained high unemployment as the result of deficient aggregate demand against a background of sluggish wage and price adjustment?!
Out went is IS-LM analysis and in came aggregate supply curves and aggregate demand curves incorporating Friedman’s natural rate hypothesis for unemployment and the rational expectations hypothesis for aggregate demand shifts.
BTW 1: do you know of any OECD area central bank that disagrees that inflation is a monetary phenomena?
BTW 2: The minutes of central banks’ monetary policy meetings are available as well as their public statements and policy decisions. They were Keynesians to their bootstraps, adopting all sorts of non-monetary explanations for high inflation. That was why wage and price freezes and controls were popular back then. The Keynesians were the intellectual bodyguards of Hawke, Keating, Fraser, and Muldoon to name but a few. Wages pauses, wage indexation discounting, the Accord and other interventionist nonsense to blame ordinary workers for the inflation caused solely by loose monetary policies. They are your fellow travellers. Friedman was a champion of full wage indexation so that workers’ wages did not fall behind inflation. He specifically rejected wage and price controls as a solution for inflation.
@Jim Rose
So wrong Jim. Did you actually read Freelander at 38 before you declared “agreement” with him?
Running persitent budget deficits and easy monetary policy during periods of growth and inflation had nothing to do with Keynes’ theory. The traditional Keynesians understood Keynes theory as poorly as his many critics.
The IS/LM model is Hicks attempt at describing Keynes. It falls well short.
Inflation is simply a monetary phenomenon is just another one of Friedman’s totally refuted canards. The reality is much more complex and money is almost impossible to define in a satisfactory way.
Alice, good to see that we are in agreement too.
Neither Keynes nor Keynesian economics could explain stagflation. Keynes was dead. Keynesian economics, with its Phillips curve trade-off between unemployment and inflation, could not explain both high inflation and high unemployment at the same time.
Freelander should reflect more deeply on what he recalls in those first year classes.
He was looking at a long-run vertical aggregate supply curve – vertical because of the predictions of Friedman’s natural rate of unemployment hypothesis. He was then looking at a family of upward sloping short-run aggregate supply curves – these reflecting rational expectations as per the Lucas supply equation. The downward sloping aggregate demand curve was increasingly built on or was always qualified by the permanent income hypothesis developed by Friedman, or less frequently, the lifetime income hypothesis. The leads and lags on monetary and fiscal policy were standard in his lectures.
The mad monetarist Brash was responsible for most of the damage done to the NZ economy since the “great leap” forward [not]. The various ‘reforms’ did a lot of damage but Brash probably did the most. I imagine you are an NZ policy advisor from the fanciful stuff you are talking. I do know that some people still do believe that nonsense. But I am always amused when I meet one more.
The Phillips curve was dreamed up after Keynes was dead. “Natural rate” is complete nonsense. There is nothing ‘natural’ about a rate of unemployment. This was simply an invention because the nonsense that Friedman believed was refuted by the reality of unemployment even if his sort of silly policies were in place. This required redefining reality. Seeing as zero unemployment wouldn’t happen, as the theory predicts, you simply define the unemployment you see as the natural zero and call that the ‘natural rate of unemployment’. Friedman was such a sophist.
And Lucas very pretty and elegant all his nonsense was achieved something truely amazing.
Most of those undeserving who have received faux nobels got them before their ideas had conclusively been shown wrong. Lucas managed to get one well after his nonsense had been refuted by reality. That is indeed an achievement.
Freelander, if Friedman is so refuted, why is inflation targeting so widespread?
Why require central banks to deliver low-inflation, within a narrow publicly announced and agreed band, if the chosen instrument – monetary policy – is ineffective and will fail?
How well did wage and price controls go in the 1970s as an anti-inflation measure? What were the implications for workers’ wages?