The MSM Rediscovers the Classics

The rediscovery of Keynes is one of the official storylines of the financial crisis and global recession. The problem is that Keynes was, in my judgment, a charlatan, a clever man obsessed with his own cleverness who never paid serious, thoughtful attention to economics (or any subject). You have to learn a little about Keynes to be well-educated and — because of his vast influence — to understand contemporary macroeconomic thought, but otherwise there is little intrinsic value in his writings.

Happily, the mainstream media is rediscovering other writers too. Last week the WSJ ran a nice piece on Mises, “The Man Who Predicted the Depression,” focusing on Mises’s 1912 Theory of Money and Credit (the book dismissed by Keynes as unoriginal, with Keynes admitting, a few years later, that he understood German well enough to comprehend things he already knew, but not to grasp anything new). “With interest rates at zero, monetary engines humming as never before, and a self-proclaimed Keynesian government, we are back again embracing the brave new era of government-sponsored prosperity and debt,” writes Mark Spitznagel. “And, more than ever, the system is piling uncertainties on top of uncertainties, turning an otherwise resilient economy into a brittle one. . . . How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten.” Yesterday, Reuters ran Rolfe Winkler’s piece urging readers to study Mises and Hyman Minsky while Investor’s Business Daily featured an item on Schumpeter.

Today, Don Sull’s Financial Times column focuses on Frank Knight, whom Sull calls “an American Socrates.” (OK, it’s a blog, not a column, and Sull is a management professor at LBS, not some hack journalist, but you get the point.) “In these unsettled times,” Sull writes, “it worthwhile revisiting the contribution of Frank Knight, an economist who was among the earliest and most penetrating analysts of what uncertainty and risk meant, and how they influenced a firm’s ability to make a profit.” Knight is one of the greats, a brilliant and idiosyncratic thinker who could be spectacularly right (on profit) and spectacularly wrong (on capital). Sull’s blog entry today is a teaser, with a promised follow-up to deal more specifically with the risk-uncertainty distinction (my take is here). Watch for it!

[Cross-posted at Organizations and Markets]

Peter G. Klein is a Research Fellow, Associate Editor of The Independent Review, and Member of the Board of Advisors of the Center on Culture and Civil Society at the Independent Institute.
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