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Source link: http://archive.mises.org/10590/you-dont-want-to-read-this/

You don’t want to read this

September 3, 2009 by

It’s Krugman’s lastest manifesto in the NYTMag. It’s all here: how economists were in love with capitalism before the Great Depression (?), how Keynes was the only one who saw the failures of laissez-faire (!), how economists fell in love again with markets in recent years (!!), and how the popping bubble has startled them whereas the great Keynesian Krugman knew it all along (??). Oh, and by the way, there is no one who ever existed named Hayek or Mises or Haberler or their students.

The whole thing reads like a big fairytale, and the author is the hero in the end.


GilesS September 4, 2009 at 9:30 pm

Randy, you’re sort of missing my point. Yes, Krugman reaches some conclusions (that aren’t necessarily the point of the article) that you disagree with (as do I, for that matter). But the substance of his article doesn’t concern what policies he would advocate or what conclusions he agrees with, but the way other economists have reached different conclusions and advocated other policies.

I disagree with Krugman’s conclusions as much as the next person on this blog, but I don’t disagree with the way he reaches them. Or at least not as much as other economists reach theirs, and that was the point of this article. You may dislike Krugman, but at least what he is saying is relevant the world in which we live.

Look, I daresay I could take the time a replace 100 words in that essay to make in entirely compatible with what Austrians have been saying since Menger wrote “Principles”. There’s no need to throw the baby out with the bathwater, this is good piece on the problems of contemporary macro, nothing more.

fundamentalist September 5, 2009 at 8:50 am

GilesS, The problem with Krugman’s article is that he provides a false history of economic thought. He acts as if Keynes had no opponents but calcified old farts who couldn’t learn anything new. He pretends that no intelligent person had any legitimate disagreements with Keynes.

And he pretends that nothing but Friedman’s rantings caused the decline of Keynesian econ. In fact, all mainstream econ was Keynesian as late as the 1970′s. Those old enough will remember Nixon’s famous “We’re all Keynesans now” talk. In fact, the stagflation of the 1970′s killed Keynesian economics, not Friedman. Friedman merely offered something to fill the vacuum left the demise of Keynesianism. Krugman completely ignores the soul searching that mainstream econ went through in response to its failures in the 1970′s, only to reach the wrong conclusions again.

Krugman should have included Austrian econ because 1) he is familiar with it even though he has rejected it and 2) it offers criticisms of mainstream econ that he ignores and 3) he needs to be honest.

Jeffrey Tucker September 5, 2009 at 11:11 am
GilesS September 5, 2009 at 10:53 pm


I think you’re holding Krugman to unfair standards. He’s a Keynesian, so no doubt he will tell you to look to Keynes for the answer. Just as an Austrian will say the same about Mises.

I didn’t really get the notion that Keynes was absolutely correct all of the time and I found (upon a second reading) that very little of the essay was actually devoted to Keynes. No, the impression I got was the Krugman correctly critiques mainstream, neoclassicals for being obsessed with style at the expense of substance. A critique made by numerous Austrians.

What Krugman is saying, as far as I can tell is that we need to return to macro as it was in the mid 20th C and as far as Austrian economics goes that’s not so bad. Even ignoring the importance of Hayek at that time, Keynes was far better than most macroeconomists that have come since.

I just don’t get the point of criticising *this* piece by Krugman when he, and others, have written far worse.

Vanmind September 6, 2009 at 2:23 am

Economics, like art, is a process not a product. While it may be disappointing to limited intellects who can’t think outside the “hard science” framework, economics, like art, can never, ever be quantified with “hard data.” Only catallactic history can be studied, in retrospect, to glean data that is mostly useless for future analysis (except in a general business cycle way).

Beau September 11, 2009 at 2:44 pm


I’m also a physics Ph.D. However, I wouldn’t judge an economic theory by the number of equations in their work. I’d take a qualitatively correct theory over a quantitatively incorrect theory. Equations don’t mean a whole lot if they’re not the right ones.

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