The Myth of Functional Finance: Mises vs. Lerner
Those familiar with the history of twentieth 20th-century economic thought know of the dominance of "Keynesian economics" following the Second World War. While John Maynard Keynes typically receives credit for transforming economics, much postwar Keynesian economics was actually developed by his interpreters and followers.
Perhaps the single most important one of these followers was the Romanian born economist Abba P Lerner. Keynes's book The General Theory of Employment, Interest, and Money popularized the notion that market economies were prone to persistent unemployment. Keynes often receives credit for promoting government deficit spending as a means of combating unemployment. However, Abba Lerner developed this part of the Keynesian program.
Keynes did suggest the socialization of some investment by elected officials. This would solve the problem of unemployment within the framework of a democratic society. Yet Keynes did not work out the details of how this would work. Lerner (1943) proposed a program of "functional finance" to counteract the business cycle.
DW MacKenzie
Perhaps the single most important one of these followers was the Romanian born economist Abba P Lerner. Keynes's book The General Theory of Employment, Interest, and Money popularized the notion that market economies were prone to persistent unemployment. Keynes often receives credit for promoting government deficit spending as a means of combating unemployment. However, Abba Lerner developed this part of the Keynesian program.
Keynes did suggest the socialization of some investment by elected officials. This would solve the problem of unemployment within the framework of a democratic society. Yet Keynes did not work out the details of how this would work. Lerner (1943) proposed a program of "functional finance" to counteract the business cycle.
DW MacKenzie
posted by Anonymous | 11:05 AM
2 Comments:
Leave it to you, Tucker, to impose some jingoist nonsense on this article. Congratulations. The brainwashing committee up at North Stokes would be so proud.
The article is the product of the Mises institute. Ludwig von Mises was a free-market libertarian of the Austrian school, the same group of economists that produced Milton Friedman and F.A. Hayek. The author is of the Mises school as well and the point of the article was to show the inevitable pollution of Keynesian economics that produced the current politically controlled economic climate and how von Mises predicted it. The author is not a Republican or a conservative. He is a libertarian capitalist. He used the word Republican once, as an adjective. It had no partisan context and he didn't even mention Bill Clinton.
Only a spite-filled partisan like you would see this article in terms of a Democrat-Republican dichotomy. Well, at least you're consistent.
Nice try, Tucker. You read the article with your standard (and genetic) liberal Democrat bias and when it was revealed that polemics had nothing to do with the article you tried to weasel out.
Your assertion that he mentioned "almost every other president of the 20th century" is as ridiculous as it is pointless. But since you're so anal on the topic of "fact and figures," let's examine:
The article mentions Harding, Coolidge, Hoover, Roosevelt (FDR), Truman, Nixon, and Bush (43). It does not mention McKinley, Roosevelt (Teddy), Taft, Wilson, Eisenhower, Kennedy, Johnson, Ford, Carter, Reagan, Bush (41), or Clinton. Furthermore, Nixon is only mentioned in passing and not with respect to any policy or action. In short, there is nothing more "striking" about the ommission of Clinton's name than there is with regard to the ommission of Reagan's, or even Taft's.
Of course, the executive in charge is completely beside the point here, as is the partisan relationship to deficit spending. The article's assertion is that politicians, regardless of party, will find Lerner's evolution of Keynesian economics too tempting to resist As should be obvious to anyone with post-elementary school reading ability, the thesis of the article is that von Mises predicted this effect in his criticisms of Keynesian theory.
You tried to create a partisan slant to the article where none exists. Come back when your capacity for comprehension escapes the bounds of jingoism ingrained into you from birth and reinforced up at the good old People's Republic of North Stokes.
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