Sunstein writes, about his source for the concept of implied author:
Booth finds William Butler Yeats to be terrific company. He singles out the Irish poet’s exuberant “The Fiddler of Dooney”…
As if Yeats were a leprechaun.
But Yeats can be brutal:
Parnell came down the road, he said to a cheering man:
‘Ireland shall get her freedom and you still break stone.’
When Yeats was angry, he let you know it.
What Sunstein views as a praiseworthy implied voice is one that is genial, thoughtful, perhaps amused or concerned from time to time. One that doesn’t actually encourage you to do anything. What he’s writing about is civility. No matter how evil, corrupt, thieving, or stupid people are, it’s not really proper to say so.
The best thing I have read this year is “The Age of Capital: 1848-1875” by Eric Hobsbawm. There is no better book for understanding both the sheer power of modern economic growth to transform lives and societies and the opportunities and problems that such growth and transformation create for those who are lucky/unlucky enough to get caught in the process.
Tyler Cowen writes:
The new Thomas Nagel book: The title is Mind and Cosmos: Why the Materialist Neo-Darwinian Conception of Nature Is Almost Certainly False…. My bottom lines on it: (1) He is good on attacking the hidden hypocrisies…. He fully recognizes the absurdities (my word, not his) of dualism, and thinks them through carefully and honestly. Bryan Caplan should beware…. The most typical sentence I found in the book was: “We can continue to hope for a transcendent self-understanding that is neither theistic nor reductionist.”… He doesn’t take seriously enough the view: “The Nagel theory of mind is simply wrong.” People will dismiss his arguments to remain in their comfort zone, while temporarily forgetting he is smarter than they are and furthermore that many of their views do not make sense or cohere internally…
And here Tyler appears to me to have gone off the rails. Thomas Nagel is not smarter than we are--in fact, he seems to me to be distinctly dumber than anybody who is running even an eight-bit virtual David Hume on his wetware.
A provocative discussion with Marc Andreessen and William Janeway
Tuesday, November 27 5:00 - 7:00pm
Join Marc Andreessen and influential economist, investor and entrepreneur William H. Janeway for a provocative conversation about the intersection of economics and innovation. Based on a lifetime of invaluable experience, Janeway, a self-described “theorist-practitioner”, will discuss his new book, Doing Capitalism in the Innovation Economy, and challenge entrenched ideas about the role of financial bubbles, busts and rebirths in fueling economic growth.
Marc has described Doing Capitalism in the Innovation Economy as "essential to anyone who wants to understand technology and how its creation will be financed for decades to come."
Kindly RSVP by November 15. Space is limited.
$30 for a Kindle edition, yes. $100 no:
The mind of the publisher remains inscrutable to me...
One side effect of having the text of 10,000 books from Project Gutenberg newly-downloaded onto your laptop is that you can read the introduction to Chaucer's Canterbury Tales while proctoring your undergraduate exam. But I just ran across a passage that puts a shiver in my spine, a passage about the KNIGHT'S son, the SQUIRE:
With him there was his son, a younge SQUIRE,
A lover, and a lusty bacheler,
With lockes crulle as they were laid in press.
Of twenty year of age he was I guess.
Of his stature he was of even length,
And wonderly deliver, and great of strength.
And he had been some time in chevachie,
In Flanders, in Artois, and Picardie,
And borne him well, as of so little space,
In hope to standen in his lady's grace.
"...had been some time in chevauchee..." (as it is usually spelled).
The Ancient University and Distance Learning: A visit to the Getty's manuscript collection revealed another unexpected expense, sheep. Sheep skins for parchment or vellum were used. One sheep skin could be used to make approximately 4 pages for a normal sized book. So a 400 page book required 100 sheep. There was a short explanation for this dependence on parchment attached to the display which attributed it to the fall of Egypt to the muslims and the consequent blocking of the papyrus/paper trade to Europe. Combine all these costs (and I thought a book took a year's labor), and each book's costs were probably equivalent to the production of a movie today. So if you see it like that each book purchased meant purchasing a large flock of sheep and the services of highly skilled labor for a substantial mount of time, you certainly needed to share. How dull that course instruction must have been.
I'd like to introduce three keywords that need defining before you can understand Amazon: Disintermediation…. Monopoly…. Monopsony….
[T]he peculiar evil genius of Amazon is that Amazon seems to be trying to [take advantage of disintermediation to] simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector….
So with the death of Eric Hobsbawm I decide that I should load up his Age of Revolution and Age of Capital on my Kindle for my Magellen-like trip next week...
Can there really be no purchasable ebooks of either!?
So now I am on the lookout for some WareZ...
Information wants to be free!
Let me correct the late Tony Judt, who said:
If he had not been a lifelong Communist, [Eric Hobsbawm] would be remembered simply as one of the great historians of the 20th century.
It should read:
Even though he was a lifetime Communist, Eric Hobsbawm was one of the greatest historians of the 20th century.
A thousand years from now people are likely to still read The Age of Revolution and The Age of Capital. I have tried to write reviews of those two books, and so far I have failed--I have been unable to write anything that conveys just how good they are.
Hobsbawm's 19th century "Age" trilogy is great. His 20th century Age of Extremes is less good--profitable as a work of history, but also, alas, profitable as an index of the impact decades of doublethink can leave on a good mind…
Hoisted from the Archives from back in 1995, in that decade between the Fall of the Berlin Wall and the Fall of the Towers:
In the beginning was Karl Marx, with his vision of how the Industrial Revolution would transform everything and wash us up on the shores of Utopia. Marx saw the economy as the key to history: every forecast and historical interpretation must be based on the economy's logic of development. Sometimes--as in much of Eric Hobsbawm's previous work on the history of the nineteenth century--this functioned relatively well.
But sometimes it led to very bad results indeed. And when Marx and Engels's writings became sacred texts for a world religion called Communism, things passed beyond the absurd: the belief that the logic of development of the economy was the most important thing about society became entangled in the belief that Joe Stalin was our benevolent master and ever-wise guide.
Now it is over. The red stars of the Soviet Union no longer shine from the tops of the Kremlin towers at night. Radicals still seek Utopia, but they no longer think the road leads through the economy. Instead, they study culture--as if to change the world just by understanding it. It is difficult to see a future in which authors with the intelligence, industriousness, and audience of Eric Hobsbawm are disciples of Karl Marx in anything like the sense that Eric Hobsbawm is a disciple of Marx.
Now Eric Hobsbawm has written a history of the twentieth century, The Age of Extremes. It has by and large received good reviews: Stanley Hoffman in the New York Times Book Review; Eugene Genovese in the New Republic; Edward Said in the London Review of Books.
But my reaction to The Age of Extremes was different. It struck me as history gone awry: a sketch of the twentieth century not as it has been lived here on earth but as it might have been lived somewhere else, on some "planet Hobsbawm" that might be found in one of those parallel universes often visited in Star Trek episodes, where what looks familiar at first glance turns out on close examination to be alien indeed.
In my email inbox:
Go into your Kindle settings on the Amazon.com website (under your general account stuff), and change your country of origin. You need a UK address to link your new settings to. Then save it, and then buy whatever you want. Then change it back.
Nick Dunbar is just as much of a rockstar as his mother, and has written probably the best single book about exactly how the financial crisis happened. It came out quite late, in large part because of protracted legal fights with the Fed, and not remotely enough people have read it. But he's amazing
Matthew Yglesias gives his view of the level of technology in A Game of Thrones and A Song of Ice and Fire.
I say that immortality via ice-zombiehood is an impressive technology that would really lower Medicare cost growth…
Michael Hiltzik August 18th, 2012 at 1:55 pm: Hello, everyone. This is Michael Hiltzik, author of The New Deal: A Modern History, and I’ll be moderating our discussion with Mike Grunwald, author of The New New Deal, which updates progressive policy-making in times of economic stress to our own times. I’ll launch the forum with an invitation for Mike to start by talking a little about your voyage of discovery that the Obama stimulus worked—did you have that sense before starting work on the book, for example—or did the book result from your feeling that this story wasn’t being told?—did you have that sense before starting work on the book, for example—or did the book result from your feeling that this story wasn’t being told?...
Michael Grunwald August 18th, 2012 at 2:10 pm: I spent nine years in DC at The Washington Post, but I now live in the public policy paradise of South Beach. (My last book was about the Everglades – and I met a girl.) And I have to say: I don’t think I could have written this book if I still lived in DC. The groupthink was just too strong. It’s just totally uncool to talk about the stimulus without rolling your eyes and snickering. But 1000 miles away, I was only vaguely aware of the conventional wisdom that the stimulus was an $800 billion joke.
And because I write a lot about energy and the environment, I became aware that there was $90 billion in the stimulus for clean energy, when we were spending just a couple billion a year. It looked like a typo: order-of-magnitude increases in funding for renewables, efficiency, the smart grid, advanced biofuels, electric vehicles, the factories to make all that green stuff in the US, the entire low-carbon food chain. It was the biggest energy bill in history, by far.
And it got me thinking: What else is in the stimulus? So as a dogged investigative reporter, I did a Google search. And the first thing that came up was Race to the Top. I knew that was a landmark education reform, but I had no idea it was part of the stimulus. Ditto for $27 billion to drag our pen-and-paper health care system into the digital era, so that doctors stop killing us with their chicken-scratch handwriting. And high-speed rail, the largest transportation initiative since Eisenhower. And high-speed Internet for undeserved communities, a modern take on the New Deal’s rural electrification. And new ways of doing unemployment insurance, homelessness prevention, financing of local infrastructure. And the largest research investments ever. And so on, and so on. It became obvious that there was a gigantic story hiding in plain view.
While procrastinating this morning--delaying sending in the data points for Figures 2.1, 4.1, 4.2, and 4.3 to my editor Mike Treadway (yes, it's done now)--I ran across Evan Soltas commenting on Matthew Yglesias commenting on me.
Evan Soltas writes:
The Recession and Its Causes: In a post today, Matt Yglesias borrows Brad deLong's graph to show that[:]
the back-and-forth swing of business investment has been the main motor of the recession...But the chart also shows us that contrary to a lot of myth-making, the recession is not identical to the downturn in housing.
Nevertheless, Yglesias says, the lack of recovery in housing has kept the level of real output below what would be consistent with full employment.
This is a very important point… economists, journalists, and other observers assign excessive blame to the housing bubble as the cause of the recession. The "housing story" seems, at face value, to work. But the support in the data is weaker than the proponents of the housing story admit….
Private residential fixed investment peaked in 2006, whereas the rate of growth in real output did not begin to decline sharply until 2008…. Why did macroeconomic conditions seem able to withstand significant contraction in residential investment for two years, and then suddenly it could not?… Structural problems "lurking" under the surface make for a good movie or novel -- but no so much for cogent economic reasoning….
The direct contribution of residential construction to the rate of real output growth never exceeded +/- 1 percent from 2000 to 2012….
To make housing their sufficient cause of the recession, they often end up incorporating in other causes through the back door… transmission mechanisms -- the financial system, wealth effects, expectations for nominal income growth, unemployment, etc. -- and though they are not incorrect in doing so, they fail to appreciate that they've diluted their own argument…
‘Bailout,’ by Neil Barofsky: Barofsky refers throughout to the $700 billion bailout, never clarifying that less than $300 billion of that amount went out the door by the time TARP expired; that not a penny went to banks during the Obama administration; and that the big banks repaid taxpayers with interest.
As ugly and flawed as the rescue process was… an economic collapse was averted, and that Main Street is recovering: slowly, but typically so for recessions brought on by credit crises….
To the extent that Mr. Barofsky acknowledges that neither big losses nor big fraud cases occurred, he credits the anti-fraud measures he pressed Treasury to include in programs and contracts. Yet his book is a chronicle of complaints that Treasury undercut, blindsided and ignored him. Perhaps the biggest criticism of Treasury Secretary Timothy F. Geithner suggested by Mr. Barofsky’s account is that Mr. Geithner should have been a lot more conciliatory toward this zealous inspector general, if only to avoid becoming the biggest villain in Mr. Barofsky’s morality tale….
While Mr. Barofsky pointedly describes the Wall Street background of every Washington player who has one, he never notes that Mr. Geithner does not fit the theme, having served in the public sector, starting at Treasury a quarter-century ago, despite lucrative offers during the Street’s boom years.
Mr. Barofsky’s book adds little of substance to the mini-library on the worst financial crisis since the Depression….
Mr. Barofsky, now a senior fellow at New York University School of Law, does a good job of describing the complex financial products at the core of the crisis. And he does open windows into how Washington works, though not always those he intended…. [He]develops backdoor relationships with the offices of friendly [and highly, highly partisan] Republican lawmakers like Senator Charles E. Grassley of Iowa and Representative Darrell Issa of California, leaking information back and forth to shape news coverage. Then he wonders why Treasury keeps him in the dark?
Mr. Barofsky justifiably spends time on Treasury’s failure to get banks to stem home foreclosures. But he charges that Treasury helped give birth to the Tea Party “by rolling out a hurried and poorly thought-out mortgage modification program,” when what actually spawned that movement was conservatives’ opposition to the very idea of bailing out troubled homeowners, which Mr. Barofsky so favors....
If Treasury has been making policies exclusively “by Wall Street for Wall Street,” as Mr. Barofsky says, why then has a once friendly Wall Street turned so hostile to President Obama’s re-election?
Jason de Parle's article would have been considerably stronger for an engagement with Naomi Cahn and June Carbone, Red Families v. Blue Families: Legal Polarization and the Creation of Culture...
It is here:
Francis Spufford, Red Plenty, conclusion:
There was a bench by the wall at the end of the dacha's grounds, overlooking a wheat field. Sometimes tourists came walking along the field path, and wanted to have their pictures taken with him, when they found the former First Secretary [Nikita Sergeyevich Khrushchev] sitting there. Nobody was on the path today. There was only the grey heat of August, and himself sitting in his shirt and his hat, with his shortwave radio and the tape recorder his son had given him to record his memoirs….
It was worst if he was stupid enough ever to watch a war film…. [T]here were things to be proud of, after all, about the war. All those brave boys they had bludgeoned on toward the enemy--well, the bravery had been real as well as the bludgeoning; real enough to make you weep. And they had rid the world of a great evil. That was true….
It was later that it would all turn poisonous: in the night. He would dream… out would come the other memories…. [T]he groaning trees in the western Ukraine in '45, when the NKVD hangmen had done their work, and the sight through an incautiously opened door in '37 where an interrogator had been demonstrating the possibilities of a simple steel ruler, and the starveling child vomiting grass during collectivization. And more. And worse.
So much blood, and only one justification for it. Only one reason it could have been all right to have done such things… if it had been all prologue, all only the last spasms of death in the old, cruel world…. Today the radio was reporting that Budapest had come round again, just like the time he sent the tanks in; only this time it was Prague…. He fumbled with the tape machine… found the RECORD key….
"Paradise", he told the wheat field in baffled fury,
is a place where people want to end up, not a place they run from. What kind of socialism is that? What kind of shit is that, when you have to keep people in chains. What kind of social order? What kind of paradise?…
And then… the retired monster sat very still on the bench by the field….
Three thousand kilometers east it is already night… Leonid Vitalevich [Kantorovich] is sitting by himself optimizing the manufacture of steel tubes. Five hundred producers. Sixty thousand consumers. Eight hundred thousand allocation orders to be issued each year. But it would all work out if he could persuade them to measure output in correct units…
Walter Jon Williams:
Year One: It’s been roughly a year since I started making my backlist available in epub formats, so this seems a good time to shuffle through the records and come to some kind of conclusion.
And the conclusion is this:
Thank God for Amazon!
Even if Amazon is yet another megalomaniacal Internet company bent on annihilating all competition and achieving total world domination in its chosen field (250 points!), Amazon has still provided more options for writers than anyone since Gutenberg. The Kindle broke open the world market for ebooks, and created opportunities for people like me, with considerable backlist, to find new readers for their work.
So far I’ve made 11 novels available, along with two novellas and a novelette. Books are available on Amazon, via Barnes & Noble, and on Smashwords, which distributes to Apple, Kobo, and Sony, among others. Sales have been growing month by month...
This is a milestone of some sort:
Robert Skidelsky's Biography of John Maynard Keynes: Archive Entry From Brad DeLong's Webjournal; August 06, 2004: Robert Skidelsky (1983), John Maynard Keynes: Hopes Betrayed (London: Macmillan: 033357379x). Robert Skidelsky (1992), John Maynard Keynes: The Economist as Saviour (London: Macmillan: 0333584996). Sitting next to Lord Skidelsky in the Sala Maggioranza of the Italian Treasury (after they turned off the air conditioning, I took off my tie when he took off his jacket) impelled me to reread his Keynes biography. And, after rereading, I find that I cannot improve on what I wrote about them three years ago: my thoughts then were totally enthusiastic and totally adulatory. And my thoughts are the same now. (I haven't yet reread volume three, about which I am less enthusiastic). In his first two volumes, Skidelsky gives us John Maynard Keynes's life, in all its dimensions. And he does so with wit, charm, control, scope, and enthusiasm. You read these books and you know Keynes--who he was, what he did, and why it was so important.
The place to start is with Skidelsky's observation that John Maynard Keynes appeared to live more lives than any of the rest of us are granted.
Keynes was an academic, but also a popular author. His books were read much more widely outside of academia than within it. Keynes was a politician--trying to advance the chances of Britain's Liberal Party between the wars--but also a bureaucrat: at times a key civil servant in the British Treasury. He was a speculator, trying to make his fortune on the stock market, but also at the core of the "Bloomsbury Group" of artists and intellectuals that did so much to shape interwar culture.
For the litterati it is Keynes of Bloomsbury--his loves, enthusiasms, acts of patronage, and wit--who is the most interesting. For economists like myself, it is Keynes the academic who is the real Keynes: he was the founder of the half-science half-witchcraft discipline of macroeconomics. For those interested in the political and economic history of the twentieth century, it is Keynes the author and politician who is primary. In either case, John Maynard Keynes is the man who has the best claim to be the architect of our modern world--whether it is how our central banks think about economic policy, what our governments believe that they must try to do, the institutions through which they work, or the habit of thought that views the economy not as Adam Smith's "system of natural liberty" but as a complicated machine that needs adjustment and governance, all of these trace large parts of their roots to the words and deeds of John Maynard Keynes.
How did this man come to be?
That is the question answered by the first volume of Skidelsky's biography: Hopes Betrayed. Hopes Betrayed is a bildungsroman, a story of growth and development. Skidelsky writes the best narrative interpretation of growing up as a smart and privileged children of academics in late Victorian Britain than I can ever conceive of being written. He writes of how Keynes was one of a relatively small number of brilliant students thrust as a leaven into the mass of Britain's upper class at Eton, and thus became part of "an intellectual elite thrust into the heart of a social elite" (HB, page 77). An entire cohort of Britain's upper class thus learned before they were twenty that Keynes could be very smart, very witty, very entertaining--and very helpful if there was a hard problem to be thought through or something to be done.
Skidelsky then writes of Keynes at Cambridge, his joining the secret society of the Apostles, and his eager grasping with both hands of the philosophy of the aesthete common among the students of the philosopher G.E. Moore. As Keynes put it in 1938, he believed that one should arrange one's life to achieve the most good, where "good" was nothing more or less than
states of mind... states of mind... not associated with action or achievement or with consequences [but]... timeless, passionate states of contemplation and communion…. a beloved person, beauty, and truth.
Thus Keynes left Cambridge convinced that "one’s prime objects in life were love, the creation and enjoyment of aesthetic experience, and the pursuit of knowledge. Of these love came a long way first..." (HB, page 141).
This embrace of aestheticism was and remained the key to the "Bloomsbury" avatar of John Maynard Keynes, for whom the lodestars were to "be in love with one’s friends, with beauty, with knowledge" and who was and remained an enthusiastic member of the Bloomsbury group, sharing "its intellectual values and its artistic enthusiasms," and participating "in its wild fancy dress parties" (HB, page 234). Keynes was a man who could celebrate this appointment to the British Treasury with
…a party for seventeen… at the Café Royale.... Afterwards they went back to 46 Gordon Square for Clive [Bell]’s and Vanessa [Bell, the sister of Virgina Woolf]’s party. There they listened to a Mozart trio... and went upstairs for the last scene of a Racine play performed by three puppets made by Duncan [Grant], with words spoken by the weird-voiced Stracheys. ‘The evening ended with Gerald Shove enthroned in the center of the room, crowned with roses...’ (HB, page 300).
But at the same time Keynes's pursuit of knowledge was shading over into politics and policy as well. For Keynes it was never enough to pursue knowledge in order to achieve a good state of mind, one had also to be sure to cause the knowledge to be applied to make the world a better place. And how one could act in politics and policy was greatly constrained by the limits of our knowledge. One argument from Edmund Burke, especially resonated with Keynes. As he wrote:
Burke ever held, and held rightly, that it can seldom be right... to sacrifice a present benefit for a doubtful advantage in the future.... It is not wise to look too far ahead; our powers of prediction are slight, our command over results infinitesimal. It is therefore the happiness of our own contemporaries that is our main concern; we should be very chary of sacrificing large numbers of people for the sake of a contingent end, however advantageous that may appear... We can never know enough to make the chance worth taking... (ES, page 62).
Keynes's industry and intelligence thus made him a trusted and effective member of Britain's intellectual and administrative elite well before the eve of World War I. Sir Edwin Montagu, especially, pushed him forward both before and during the war. Before the war Keynes decided that he wanted the life of an academic rather than of an administrator: Cambridge rather than the India Office or the Treasury. Yet he kept a strong presence in both worlds, writing his practical and policy-oriented book Indian Currency and Finance in spare moments as he worked on the deeper and philosophical project that was his Treatise on Probability.
Thus it was no surprise that Keynes found an important and powerful job at the Treasury during the national emergency that was World War I. How do you mobilize the financial resources of Britain to support the war effort? How large a war effort could the British economy stand? How could an international trade system geared to consumer satisfaction be harnessed as an instrument of national power? These are all deep and complicated questions. These are what Keynes worked on. But as the death toll from World War I mounted up toward ten million, Keynes became angrier and angrier at this monstrous botch of human lives and social energy that was World War I--and angrier and angrier at the politicians who could see no way forward other than mixing more blood with mud at Paaschendale.
Keynes's friend David Garnett wrote him a letter condemning his work for the government, calling Keynes
an intelligence they need in their extremity.... A genie taken incautiously out... by savages to serve them faithfully for their savage ends, and then--back you go into the bottle.... Oh... our savages are better than other savages.... But don’t believe in the profane abomination.
The interesting thing was that Keynes "agreed that there was a great deal of truth in what I had said..." (HB, page 321). And then the whole project of post-World War I reconstruction went wrong at Versailles--when the new German government was treated as a foe rather than a democratic ally, when the object seemed to be to extract as much in plunder and reparations from Germany as possible ("until the pips squeak").
Skidelsky quotes South African politician Jan Christian Smuts on the atmosphere at Versailles:
Poor Keynes often sits with me at night after a good dinner and we rail against the world and the coming flood. And I tell him that this is the time for Grigua’s prayer (the Lord to come himself and not to send his Son, as this is not a time for children). And then we laugh, and behind the laughter is [Herbert] Hoover’s horrible picture of thirty million people who must die unless there is some great intervention. But then again we think that things are never really as bad as that; and something will turn up, and the worst will never be. And somehow all these phases of feeling are true and right in some sense... (HB, page 373).
Under this unbearable pressure, Keynes exploded. Keynes exploded with a book called The Economic Consequences of the Peace. It condemned the political maneuvering of Versailles and the treaty that resulted in the strongest possible terms. He excoriated short-sighted politicians who were interested in victory rather than peace. He outlined his alternative proposals for peace: "German damages limited to £2000m; cancellation of inter-Ally debts; creation of a European free trade area… an international loan to stabilize the exchanges...."
And he prophesied doom--if the treaty were carried out and Germany kept poor for a generation:
If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for long that final civil war between the forces of reaction and the despairing convulsions of revolution, before which the horrors of the late German war will fade into nothing, and which will destroy... the civilization and progress of our generation... (HB, page 391).
The Economic Consequences of the Peace made Keynes famous. His horror at the terms of the peace treaty won him friends like Felix Frankfurter, a powerful molder of opinion in the United States. In his book, propelled by "passion and despair," Keynes "spoke like an angel with the knowledge of an expert" and showed an extraordinary mastery not just of economics but also of the words that were needed to make economics persuasive. Before The Economic Consequences of the Peace Keynes was primarily an academic (with some government experience) with a lot of influential literary friends. Afterwards he was a celebrity. He was not only the private Keynes: "the Cambridge don selling economics by the hour, the lover of clever, attractive, unworldly young men, the intimate of Bloomsbury." He was also--because of what he had done with his pen after Versailles--"the monetary reformer, the adviser of governments, the City magnate, the feared journalist whose pronouncements caused bankers and currencies to tremble... conferences jostled with holidays, intimacy merged into patronage. In 1925 the world-famous economist would marry a world-famous ballerina in a blaze of publicity..." (HB, page 400).
So after World War I Keynes used what power he had to--don't laugh--try to restore civilization. In Skidelsky's--powerful and I believe correct--interpretation, Keynes before 1914 "believed (against much evidence, to be sure) that a new age of reason had dawned. The brutality of the closure applied in 1914 helps explain Keynes’s reading of the interwar years, and the nature of his mature efforts... to restore the expectation of stability and progress in a world cut adrift from its nineteenth-century moorings..." (ES, page xv).
Skidelsky's narrative of the mature Keynes--Keynes in the 1920s--is far from being a one-note recounting of the brave but losing struggle against the approaching Great Depression, against political insanity, and against the Nazi Party's attempted revenge for the German defeat in World War I. Bloomsbury takes up a good chunk of the narrative. Skidelsky's book includes love letters from Keynes to his future wife Lydia Lopokova:
In my bath today I considered your virtues—how great they are. As usual I wondered how you could be so wise. You must have spent much time eating apples and talking to the serpent! But I also thought that you combined all ages—a very old woman, matron, a debutante, a girl, a child, an infant; so that you are universal. What defence can you make against such praises? (page 181).
But when he tries to paint a picture of what it was like to be a member of the Bloomsbury culture group in the 1920s, even Skidelsky cannot quite reach the full range. So he resorts to the imaginings of one of the characters of novelist Anthony Powell, who thinks that Bloomsbury must have been "...every house stuffed with Moderns from cellar to garret. High-pitched voices adumbrating absolute values, rational statse of mind, intellectual integrity, civilized personal relationships, significant form…. The Fitzroy Street Barbera is uncorked. 'Le Sacre du Printemps' turned on, a hand slides up a leg.... All are at one now, values and lovers" (page 11).
Virginia Woolf had a different, less happy and romantic view. She wrote of her "vivid sight of Maynard by lamplight--like a gorged seal, double chin, ledge of red lip, little eyes, sensual, brutal, unimaginate. One of those visions that come from a chance attitude, lost as soon as he turned his head. I suppose though it illustrates something I feel about him. He’s read neither of my books..." (page 15). There is a clear lesson: if your circle includes Nobel Prize-winnning caliber novelists with wicked pens, read their books and praise them as often as possible.
The bulk of this second volume--The Economist as Saviour--is, however, devoted to Keynes's political and intellectual struggle for stable money and full employment, and against deflation, overvalued exchange rates, and the sacrifice of the happiness of today's populations in the hopes of regaining the imagined benefits of the classical gold standard at some time in the distant future. Keynes spent more than a decade arguing against central bankers who "think it more important to raise the dollar exchange a few points than to encourage flagging trade." He tried to prevent Britain's return to the gold standard in 1925 at an overvalued exchange rate, for by overvaluing the exchange rate Britain's Treasury Minister, Winston Churchill, was willing
… the deliberate intensification of unemployment. The object of credit restriction, in such a case, is to withdraw from employers the financial means to employ labor at the existing level of prices and wages. This policy can only attain its end by intensifying unemployment without limit, until the workers are ready to accept the necessary reduction in money wages under the pressure of hard facts.... Deflation does not reduce wages 'automatically.' It reduces them by causing unemployment. The proper object of dear money is to check an incipient boom. Woe to those whose faith leads them to use it to aggravate a Depression! (page 203).
But in the end Keynes failed in the 1920s. He was unable to persuade British governments that economic policy should be decided upon by rational thought rather than by obedience to old poorly-understood verities. He failed to achieve any material easing of the terms of the Versailles treaty. He failed to prevent deflation and high unemployment in Britain. He failed to convince people that the Great Depression was a man-made catastrophe that could be cured relatively easily. His pen--though strong--was not strong enough. His allies were too few. And among central bankers and cabinet ministers, understanding of the situation in which they were embedded was rare.
So the 1930s saw a change of emphasis. Fewer short polemical articles were written. Instead, Keynes concentrated his attention on writing a book, a book which he thought
…will largely revolutionize--not, I suppose, at once but in the course of the next ten years--the way the world thinks about economic problems. When my new theory has been duly assimilated and mixed with politics and feelings and passions, I can’t predict what the upshot will be in its effects on actions and affairs. But there will be a great change... (pages 520-521).
And he was right.
His General Theory of Employment, Interest, and Money did change the world. It ends with a bold claim for the importance of ideas rather than interests that, in context, has to be read not as a considered judgment but as his desperate hope:
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.... But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil... (page 570).
The extraordinary thing is that Keynes was right.
The other extraordinary thing is that Skidelsky has told the story so well.
Skidelsky is superb at getting at the heart of what the key contribution of Keynes's General Theory. As Skidelsky puts it, Keynes's key contribution was to find not a middle way but a genuine Third Way between "laissez-faire and central planning... conservatism and socialism." His proposals did not split the difference, but instead promised to achieve the benefit each of the traditional poles of politics had claimed but had never been able to deliver. Socialists promised full employment without economic freedom. (And Communists promised full employment without either economic or political freedom.) Conservatives promised economics (and sometimes political) freedom without full employment. Keynes, by contrast, promised both. His doctrines were thus politically irresistible: they would have been extraordinarily attractive to politicians and bureaucrats even if the doctrines and theories had not been true. Fortunately for all of us, they were true--or at least true enough to be very useful indeed in their historical context.
Skidelsky is also very good at focusing on the underlying liberal--classical liberal, that is--nature of Keynes's thought. Brought up in the laissez-faire classical liberal tradition, Keynes came to see it as a con: based on false claims about the world. But, Keynes believed, a good and smart government could make the claims of laissez-faire true enough.
Keynes saw the market economy as having two great flaws. The first was that demand for investment was extraordinarily and pointlessly volatile, as business leaders and investors attempted the hopeless task of trying to pierce the veil of time and ignorance. The second was that the fluctuations in the wage level that classical economic theory relied on to bring the economy back into balance after such an investment fluctuation either did not work at all or worked too slowly to be relevant for economic policy. (No, I am not going to be drawn into a debate about "unemployment disequilibrium.") But Keynes believed that if these problems could be fixed, then the standard market-oriented toolkit of economists would once again be worthwhile and relevant. And he showed a way to fix them or at least come close enough to fixing them, a way that we still use today--as you can see if you watch what Alan Greenspan's Federal Open Market Committee does next week.
So buy these books. Read these books. These are great books. Time spent with them is time well-spent. Robert Skidelsky deserves great honors for having devoted so much of his life to writing down the story of John Maynard Keynes, and writing it down so well.
Posted by DeLong at August 6, 2004 08:01 PM
Lacey (a retired U.S. Army officer and current writer on defense matters) describes the bureaucratic fights between civilian experts and military staff over the extent and speed to which the American economy -- hardly firing on all cylinders as war began in Europe -- could be reoriented to produce the munitions necessary for a serious military effort. At the center of Lacey's story are three economists who, he shows, had far-sighted views of the true capacity of the American economy: the reasonably well known Simon Kuznets and two nearly forgotten figures, Robert Nathan and Stacy May.
Lacey capably uses archival and secondary sources to show that these three men, along with a small group of other civilians inside the federal bureaucracy, were able to use social-scientific methods, including, crucially, statistical techniques, to assess how large the U.S economy could grow, how quickly that growth could occur, and how much war materiel the economy could produce for use by the U.S. and Allied militaries. Lacey persuasively shows that Kuznets, Nathan, and May were able to forecast in late 1942, before the first anniversary of Pearl Harbor, that June 1944 would be the moment at which the American “arsenal of democracy” would be able to produce sufficient materiel to launch a substantial invasion of Europe.
This date, of course, coincides with D-Day, which -- in Lacey's telling -- is due straightforwardly to the fact that the economists won their battle with their adversaries in the military. In what might now be termed “data-driven decision making,” Army Chief of Staff George C. Marshall (and his lieutenants) duly altered his plans for a cross-channel invasion to reflect the forecast realities of American industrial production….
Lacey's contribution to economic history consists of his ability to plumb these debates, at least up to late 1942, more deeply than previous scholars. Much of the material in this study is covered more accessibly in other scholarship, such as Paul A.C. Koistinen's specialist-oriented "Arsenal of World War II: The Political Economy of American Warfare, 1940-1945" (2004) or David Kennedy's popular "Freedom from Fear: The American People in Depression and War", 1929-1945 (2001)…. Lacey's narrow focus is a strength insofar as he uncovers new documentary evidence to support his arguments, and makes considerable effort to debunk several “myths” of the war, including General Albert Wedemeyer's claim to have developed the “Victory Plan” that matched American industrial production to Allied military needs…
Red Plenty: Crooked Timber: Lovely take. But it’s exactly that effect on you which distinguishes Spofford’s muse from those of other novelists/critics of the Soviet debacle. The academicians believed, at least for a time, that they could do it, and they probably felt very much like your misguided reader self felt as, slowly, they were disabused of those beliefs.
Couldn’t happen here, of course.
He is talking about technocrats who believed that they were part of a caste that understood the laws of motion of society and could educate politicians and policymakers to adopt measures that would bring us materially closer to utopia.
I was one such confident technocrat.
Only four short years ago.
Timberman is commenting on John Holbo's very creative reading of Francis Spufford's Red Plenty:
Red Plenty – My Brush With Brezhnevism — Crooked Timber: Apparently some readers have been confused about Red Plenty, thinking it is non-fiction. I had the opposite problem, or possibly it wasn’t one. I knew it was fiction but I had the wrong idea about what kind. This error persisted, uncorrected. I actively avoided all reviews or summaries. I solicited no assistance, along the way, from “the panther-footed Mr. Google,” as he is described in Spufford’s “Acknowledgement” section. As a result, I didn’t know what the hell was going on – at all – until the end. Because the one thing I thought I knew about the book – no, I don’t know where I mis-acquired this notion – was that it is a fictional alternative history of how Red Plenty, the fairytale dream, came true.
WARNING: Contains plotspoilers. (It turns out the Soviet Union lost the Cold War!)
I thought the premise of the book was: technical-political obstacles to an efficient Soviet-style planned economy somehow overcome. Some Platonically profound mathematico-industrial linear-programming la-dee-da alternative to the price mechanism is discovered that is, stipulatively, consistently superior, in practice. The first chapter, ‘The prodigy’, about Kantorovich’s bright plywood notion (read it yourself!), confirmed for me that this was indeed where we were going. Now you tell the story of how, just as Krushchev predicted, the USSR buries the West – in washing machines. How would the West have reacted if, in 1980, the income of the average Soviet worker passed that of his Western counterpart? How would the philosophical defense of capitalism and Western democracy have held up if the Soviets had managed to keep the growth rate up around 6-8%, year on year on year. I imagined, on the Soviet side, we might be treated to the fictional spectacle of some Steel-and-Concrete Glass Bead Game cybernetician Magister Ludi thrillingly shuffling all the productive pieces around, to the appreciative oohs and aahs of an audience of knowing fellow academicians.
Oh, to be an economist who can perfectly, rationally, plan a whole economy! Such sensitivity! The music of the spheres is a tin whistle to this! Ah, the delicious counterpoint that shall play out if this PNSh-180-14s continuous-action engine for viscose production is placed just so, its twin output streams of sweater yarn and tire cord marching and braiding, one over the other, joining this yet-more-harmonious overall stream, flowing on into a vast ocean of production and distribution!
The less lovely counterpoint to this would, naturally, be an inevitable degree of oppressive, Soviet-style unfreedom, or at least political/cultural alienation of the average workers from the planners, whose heads are in the Marxist clouds. But lots of washing machines! Would you prefer Western freedom and inequality to rule by genuine Soviet Philosopher Kings, if the philosophers could provide cheaper, better washing machines?
Again: why did I imagine the book was going to go this way? As I said, I don’t know where I picked up the idea, but it really fired my imagination. I was kind of jazzed to read about it.
So I was reading and reading and, like Mr. Khrushchev, started to feel a bit confused that things weren’t working out. Bad harvest in ‘63. But I figured the followers of Kantorovich were going to pull off some tremendous last-minute technical save. How not, if we were actually going to get to what the title promised? With Mr. K. sidelined, it was going to have to turn out the Brezhnev of this, fictional world, was a go-getting reformer, and the linear programming would deliver the goods, just like Mr. Scott always manages to get the engine running on Star Trek. (The basically sensible-seeming objections put forth in the woods by the pragmatist-cynic stick insect Mokhov would be stipulated to meet some fitting technical-political death.)
And then it was, like … over. And the communists lost. The final pages of the book, which I had been counting on to relate the glorious futurity of Red Plenty, stretching perhaps even to the stars, turned out to be devoted to notes and acknowledgements. Man was I one confused kid.
But I don’t mind having been an idiot. I feel I have lived the dream, to an even fuller degree than the author himself can reasonably have hoped. So I suggest you give a copy of the book to a suitably sheltered and suggestible friend, and lie about what it’s about. Let them enjoy the fairy tale, for as long as it lasts. I did. (But I never believed in Lysenkoism! Not even for a page!)
The University of California Press is going to put out a new edition of Charles Kindleberger's World in Depression early next year.
J Bradford DeLong and Barry J. Eichengreen: New preface to Charles Kindleberger,* The World in Depression 1929-1939*:
The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. We see unemployment, youth unemployment especially, soaring to unprecedented heights. Financial instability and distress are widespread. There is growing political support for extremist parties of the far left and right.
Both the existence of these parallels and their tragic nature would not have escaped Charles Kindleberger, whose World in Depression, 1929-1939 was published exactly 40 years ago, in 1973. Where Kindleberger’s canvas was the world, his focus was Europe. While much of the earlier literature, often authored by Americans, focused on the Great Depression in the US, Kindleberger emphasised that the Depression had a prominent international and, in particular, European dimension. It was in Europe where many of the Depression’s worst effects, political as well as economic, played out. And it was in Europe where the absence of a public policy authority at the level of the continent and the inability of any individual national government or central bank to exercise adequate leadership had the most calamitous economic and financial effects.
These were ideas that Kindleberger impressed upon generations of students as well on his reading public. Indeed, anyone fortunate enough to live in New England in the early 1980s and possessed of even a limited interest in international financial and monetary history felt compelled to walk, drive or take the T (as metropolitan Boston’s subway is known to locals) down to MIT's Sloan Building in order to listen to Kindleberger’s lectures on the subject (including both the authors of this preface). We understood about half of what he said and recognised about a quarter of the historical references and allusions. The experience was intimidating: Paul Krugman, who was a member of this same group and went on to be awarded the Nobel Prize for his work in international economics, has written how Kindleberger's course nearly scared him away from international macroeconomics. Kindleberger's lectures were surely “full of wisdom", Krugman notes. But then, “who feels wise in their twenties?" (Krugman 2002).
There was indeed much wisdom in Kindleberger’s lectures, about how markets work, about how they are managed, and especially about how they can go wrong. It is no accident that when Martin Wolf, dean of the British financial journalists, challenged then former-US Treasury Secretary Lawrence Summers in 2011 to deny that economists had proven themselves useless in the 2008-9 financial crisis, Summers's response was that, to the contrary, there was a useful economics. But what was useful for understanding financial crises was to be found not in the academic mainstream of mathematical models festooned with Greek symbols and complex abstract relationships but in the work of the pioneering 19th century financial journalist Walter Bagehot, the 20th-century bubble theorist Hyman Minsky, and "perhaps more still in Kindleberger" (Wolf and Summers 2011).
Summers was right. We speak from personal experience: for a generation the two of us have been living – very well, thank you – off the rich dividends thrown off by the intellectual capital that we acquired from Charles Kindleberger, earning our pay cheques by teaching our students some small fraction of what Charlie taught us. Three lessons stand out, the first having to do with panic in financial markets, the second with the power of contagion, the third with the importance of hegemony.
First, panic. Kindleberger argued that panic, defined as sudden overwhelming fear giving rise to extreme behaviour on the part of the affected, is intrinsic in the operation of financial markets. In The World in Depression he gave the best ever “explain-and-illustrate-with-examples” answer to the question of how and why panic occurs and financial markets fall apart. Kindleberger was an early apostate from the efficient-markets school of thought that markets not just get it right but also that they are intrinsically stable. His rival in attempting to explain the Great Depression, Milton Friedman, had famously argued that speculation in financial markets can’t be destabilising because if destabilising speculators drive asset values away from justified, or equilibrium, levels, such speculators will lose money and eventually be driven out of the market.
Kindleberger pushed back by observing that markets can continue to get it wrong for a very, very long time. He girded his position by elaborating and applying the work of Minsky, who had argued that markets pass through cycles characterised first by self-reinforcing boom, next by crash, then by panic, and finally by revulsion and depression. Kindleberger documented the ability of what is now sometimes referred to as the Minsky-Kindleberger framework to explain the behaviour of markets in the late 1920s and early 1930s – behaviour about which economists otherwise might have arguably had little of relevance or value to say. The Minsky paradigm emphasising the possibility of self-reinforcing booms and busts is the organising framework of The World in Depression. It then comes to the fore in all its explicit glory in Kindleberger’s subsequent book and summary statement of the approach, Mania, Panics and Crashes.
Kindleberger’s second key lesson, closely related, is the power of contagion. At the centre of The World in Depression is the 1931 financial crisis, arguably the event that turned an already serious recession into the most severe downturn and economic catastrophe of the 20th century. The 1931 crisis began, as Kindleberger observes, in a relatively minor European financial centre, Vienna, but when left untreated leapfrogged first to Berlin and then, with even graver consequences, to London and New York. This is the 20th century’s most dramatic reminder of quickly how financial crises can metastasise almost instantaneously. In 1931 they spread through a number of different channels. German banks held deposits in Vienna. Merchant banks in London had extended credits to German banks and firms to help finance the country’s foreign trade. In addition to financial links, there were psychological links: as soon as a big bank went down in Vienna, investors, having no way to know for sure, began to fear that similar problems might be lurking in the banking systems of other European countries and the US.
In the same way that problems in a small country, Greece, could threaten the entire European System in 2012, problems in a small country, Austria, could constitute a lethal threat to the entire global financial system in 1931 in the absence of effective action to prevent them from spreading.
This brings us to Kindleberger’s third lesson, which has to do with the importance of hegemony, defined as a preponderance of influence and power over others, in this case over other nation states. Kindleberger argued that at the root of Europe’s and the world’s problems in the 1920s and 1930s was the absence of a benevolent hegemon: a dominant economic power able and willing to take the interests of smaller powers and the operation of the larger international system into account by stabilising the flow of spending through the global or at least the North Atlantic economy, and doing so by acting as a lender and consumer of last resort. Great Britain, now but a middle power in relative economic decline, no longer possessed the resources commensurate with the job. The rising power, the US, did not yet realise that the maintenance of economic stability required it to assume this role. In contrast to the period before 1914, when Britain acted as hegemon, or after 1945, when the US did so, there was no one to stabilise the unstable economy. Europe, the world economy’s chokepoint, was rendered rudderless, unstable, and crisis- and depression-prone.
That is Kindleberger’s World in Depression in a nutshell. As he put it in 1973:
The 1929 depression was so wide, so deep and so long because the international economic system was rendered unstable by British inability and United States unwillingness to assume responsibility for stabilising it in three particulars: (a) maintaining a relatively open market for distress goods; (b) providing counter-cyclical long-term lending; and (c) discounting in crisis…. The world economic system was unstable unless some country stabilised it, as Britain had done in the nineteenth century and up to 1913. In 1929, the British couldn't and the United States wouldn't. When every country turned to protect its national private interest, the world public interest went down the drain, and with it the private interests of all…
Subsequently these insights stimulated a considerable body of scholarship in economics, particularly models of international economic policy coordination with and without a dominant economic power, and in political science, where Kindleberger’s “theory of hegemonic stability” is perhaps the leading approach used by political scientists to understand how order can be maintained in an otherwise anarchic international system.
It might be hoped that something would have been learned from this considerable body of scholarship. Yet today, to our surprise, alarm and dismay, we find ourselves watching a rerun of Europe in 1931. Once more, panic and financial distress are widespread. And, once more, Europe lacks a hegemon – a dominant economic power capable of taking the interests of smaller powers and the operation of the larger international system into account by stabilising flows of finance and spending through the European economy.
The ECB does not believe it has the authority: its mandate, the argument goes, requires it to mechanically pursue an inflation target – which it defines in practice as an inflation ceiling. It is not empowered, it argues, to act as a lender of the last resort to distressed financial markets, the indispensability of a lender of last resort in times of crisis being another powerful message of The World in Depression. The EU, a diverse collection of more than two dozen states, has found it difficult to reach a consensus on how to react. And even on those rare occasions where it does achieve something approaching a consensus, the wheels turn slowly, too slowly compared to the crisis, which turns very fast.
The German federal government, the political incarnation of the single most consequential economic power in Europe, is one potential hegemon. It has room for countercyclical fiscal policy. It could encourage the European Central Bank to make more active use of monetary policy. It could fund a Marshall Plan for Greece and signal a willingness to assume joint responsibility, along with its EU partners, for some fraction of their collective debt. But Germany still thinks of itself as the steward is a small open economy. It repeats at every turn that it is beyond its capacity to stabilise the European system: “German taxpayers can only bear so much after all”. Unilaterally taking action to stabilise the European economy is not, in any case, its responsibility, as the matter is perceived. The EU is not a union where big countries lead and smaller countries follow docilely but, at least ostensibly, a collection of equals. Germany’s own difficult history in any case makes it difficult for the country to assert its influence and authority and equally difficult for its EU partners, even those who most desperately require it, to accept such an assertion. Europe, everyone agrees, needs to strengthen its collective will and ability to take collective action. But in the absence of a hegemon at the European level, this is easier said than done.
The International Monetary Fund, meanwhile, is not sufficiently well capitalised to do the job even were its non-European members to permit it to do so, which remains doubtful. Viewed from Asia or, for that matter, from Capitol Hill, Europe’s problems are properly solved in Europe. More concretely, the view is that the money needed to resolve Europe’s economic and financial crisis should come from Europe. The US government and Federal Reserve System, for their part, have no choice but to view Europe’s problems from the sidelines. A cash-strapped US government lacks the resources to intervene big-time in Europe’s affairs in 1948; there will be no 21st century analogue of the Marshall Plan, when the US through the Economic Recovery Programme, of which the young Charles Kindleberger was a major architect, extended a generous package of foreign aid to help stabilise an unstable continent. Today, in contrast, the Congress is not about to permit Greece, Ireland, Portugal, Italy, and Spain to incorporate in Delaware as bank holding companies and join the Federal Reserve System.
In a sense, Kindleberger predicted all this in 1973. He saw the power and willingness of the US to bear the responsibility and burden of sacrifice required of benevolent hegemony as likely to falter in subsequent generations. He saw three positive and three negative branches on the then-future's probability tree. The positive outcomes were: "[i] revived United States leadership… [ii] an assertion of leadership and assumption of responsibility... by Europe…” [sitting here, in 2013, one might be tempted to add emerging markets like China as potentially stepping into the leadership breach, although in practice the Chinese authorities have been reluctant to go there, and] [iii] cession of economic sovereignty to international institutions….” Here, in a sense, Kindleberger had both global and regional – meaning European – institutions in mind. “The last”, meaning a global solution, “is the most attractive”, he concluded,” but perhaps, because difficult, the least likely…" The negative outcomes were: "(a) the United States and the [EU] vying for leadership… (b) one unable to lead and the other unwilling, as in 1929 to 1933… (c) each retaining a veto… without seeking to secure positive programmes…"
As we write, the North Atlantic world appears to have fallen foul to his bad outcome (c), with extraordinary political dysfunction in the US preventing its government from acting as a benevolent hegemon, and the ruling mandarins of Europe, in Germany in particular, unwilling to step up and convince their voters that they must assume the task.
It was fear of this future that led Kindleberger to end The World in Depression with the observation: “In these circumstances, the third positive alternative of international institutions with real authority and sovereignty is pressing.”
Indeed it is, more so now than ever.
Eichengreen, Barry (1987), “Hegemonic Stability Theories of the International Monetary System”, in Richard Cooper, Barry Eichengreen, Gerald Holtham, Robert Putnam and Randall Henning (eds.), Can Nations Agree? Issues in International Economic Cooperation, The Brookings Institution, 255-298.
Friedman, Milton (1953), “The Case for Flexible Exchange Rates”, in Essays in Positive Economics, University of Chicago Press.
Friedman, Milton and Anna J Schwartz (1963), A Monetary History of the United States, 1857-1960, Princeton University Press.
Gilpin, Robert (1987), The Political Economy of International Relations, Princeton University Press.
Keohane, Robert (1984), After Hegemony, Princeton University Press.
Kindleberger, Charles (1978), Manias, Panics and Crashes, Norton.
Krugman, Paul (2003), “Remembering Rudi Dornbusch”, unpublished manuscript, http://www.pkarchive.org, 28 July.
Lake, David (1993), “Leadership, Hegemony and the International Economy: Naked Emperor or Tattered Monarch with Potential?”, International Studies Quarterly, 37: 459-489.
Wolf, Martin and Lawrence Summers (2011), “Larry Summers and Martin Wolf: Keynote at INET’s Bretton Woods Conference 2011”, http://www.youtube.com, 9 April.
 Kindleberger passed away in 2003. A second modestly revised and expanded edition of The World in Depression was published, also by the University of California Press, in 1986. The second edition differed mainly by responding to the author’s critics and commenting to some subsequent literature. We have chosen to reproduce the ‘unvarnished’ 1973 Kindleberger, where the key points are made in unadorned fashion.
 The book was commissioned originally for a series on the economic history of Europe, with each author writing on a different decade. This points to the question of why the title was not, instead, “Europe in Depression.” The answer, presumably, is that the author – and his publisher wished to acknowledge that the Depression was not exclusively a European phenomenon and that the linkages between Europe and the US were also critically important.
 Friedman’s great work on the Depression, coauthored with Anna Jacobson Schwartz (1963), was in Kindleberger’s view too monocausal, focusing on the role of monetary policy, and too U.S. centric. See also Friedman (1953)
 Kindleberger (1978). Kindleberger amply acknowledged his intellectual debt to Minsky. But we are not alone if we suggest that Kindleberger’s admirably clear presentation of the framework, and the success with which he documented its power by applying it to historical experience, rendered it more impactful in the academy and generally.
 A sampling of work in economics on international policy coordination inspired by Kindleberger includes Eichengreen (1987) and Hughes Hallet, Mooslechner and Scheurz (2001). Three important statements of the relevant work in international relations are Keohane (1984), Gilpin (1987) and Lake (1993).
 The European Union was created, in a sense, precisely in order to prevent the reassertion of German hegemony.
 The point being that the US, in contrast, does possess a central bank willing, under certain circumstances, to acknowledge its responsibility for acting as a lender of last resort. Nothing in fact prevents the Federal Reserve, under current institutional arrangements from, say, purchasing the bonds of distressed Southern European sovereigns. But this would be viewed as peculiar and inappropriate in many quarters. The Fed has a full plate of other problems. And intervening in European bond markets, the argument would go, is properly the responsibility of the leading European monetary authority.
Eric Schickler: Welcome everybody to the Institute of Governmental Studies. I will say, as my first point, that a couple of weeks ago when we were scheduling this for several days after graduation, some people commented:
Do you think a lot of people will come? You know it might be a little problem.
Well, this is clearly the biggest crowd I have ever seen at IGS. We have had some great events in the past, but this one promises to be really special. I want to note there are some extra seats in the side room where you will be able to hear, for Tom and Norman will have microphones. You should be able to hear them in there. You might be more comfortable in there than standing in the back.
Brad DeLong: But no closed-circuit TV.
Eric Schickler: We did not arrange CCTV unfortunately.
Unfortunately, we can’t bring any more chairs into the room. There are fire code concerns that we have been warned about.
I have been telegraphing this question to Norm for a while. It is something I genuinely don’t understand: The Democratic barons of the center—the Lincolns and the Nelsons now, in an earlier day the Sassers, even the Moynihans. People who seemed to think that their proper political and policy strategy was to say “we restrained the Hick from Arkansas or the Hick from Honolulu from doing more liberal things”. That’s a complete disaster as a strategy for your own reelection. You are likely to lose your job. You are likely to lose your majority status. You are likely to lose your chairmanship—which Moynihan felt extremely bitterly—if the president of your party is not perceived to be a big success in his first two years. And yet while someone like Olympia Snow or Susan Collins or even Voinovich, will when the chips are down be a Republican partisan first and a patriot second, this doesn’t seem to hold for the Nelsons, the Lincolns, the Sassers, the Moynihans, the Borens, the Kerreys from Nebraska and a whole bunch of others. What’s going on with them?
It was the Heritage Foundation’s healthcare bill. Romney’s healthcare plan. Something that’s significantly to the right of Olympia Snowe's policy priorities, as demonstrated by her life up to 2008. Why is getting 60 Democratic senators to vote for a Republican health care bill an accomplishment? Wouldn’t an accomplishment have been getting 50 Democratic senators to vote for a Democratic health care bill via reconciliation?
Shouldn’t the Democrats have been organized enough to pass a carbon tax through reconciliation in February of 2009 and then bargain back in the Senate to cap-and-trade?
So is the problem that Daily Kos is not strong enough?
And this ideological small-government dynamic is why all the Republicans voted for unfunded Medicare Part D?
So why aren’t you advocating the rapid destruction of the Republican Party as fast as possible? Why aren’t you telling everyone: “go out and vote Democrat now, for this is your last chance”?
A point of view that has not been well-represented here today is that of Markos Moulitsas Zuniga--of Daily Kos. So let me try to channel what Kos would say:
Look. You two are expecting normal politics to rein in a Republican Party gone bonkers extreme. But it will not work. The press corps will continue to say "he said, she said, yadda yadda yadda" either because they are gutless cowards or because they are bought. In a world of low-information voters, the bonkers extremism and sheer total meanness of the Republican Party will not get through. The only way it could get through would be if moderate Republican barons were to announce that they had had enough and were crossing t'he aisle, and if they did so in a way that they brought their affinities with them. But I don't see Brent Scowcroft doing that, I don't see Colin Powell doing that, I don't see Greg Mankiw doing that, I don't see Marty Feldstein doing that, I don't see Gail Wilensky doing that, I don't see Bob Dole doing that, I don't see Jack Danforth doing that, I don't see Richard Lugar doing that--and I don't see you doing that, Mr. Ornstein. I don't see you calling for the defeat of every single Republican candidate this fall and every fall until the party comes back to reality.
And since all of you moderate Republicans are unwilling to take the only step that might fix the situation on your side, we have to take the only step open to us: We have to stop bringing a set of policy proposals and briefing papers to what the Republican Party has made a thermonuclear exchange. We have to oppose their noise, slime, and lie machine with a noise, disinfectant, and truth machine of our own--and at the same intensity.
That means you moderates need to pick a side and fasten your seat belts, rather than wringing your hands about how the Republicans are being so mean, and you wish they would be less so.”
Mr. Mann and Mr. Ornstein, please give me an alternative strategy I can follow to help the non-insane Republicans recapture their party. Please give me an alternative to signing up with Kos. And if you cannot give me an alternative, why are you two not signing up with Kos right now?
The stakes, after all, are high...
Maurice Sendak: No backstory required: In “Where the Wild Things Are”… the word that first summons magic is a simple “his”: “The night Max wore his wolf suit and made mischief of one kind / and another,” the opening pages read. Not “a wolf suit”; certainly not “the wolf suit his grandmother gave him for his birthday.” The wolf suit is a given. It already exists, and the story is already underway….
Library shelves groan under the weight of Quality Children’s Books with explicitly described scenarios of poverty, orphanhood, or divorce—instead of that already-occupied wolf suit, the characters are carefully vested in sackcloth. Sendak’s power was not that his work addressed children’s fear or anger or loneliness, but that it didn’t. He simply took up those things as givens, along with everything else. That’s the source of his books’ intensity. Sendak’s worlds are conjured whole, without introduction or explanation or motive. Mickey hears a noise and plunges into the Night Kitchen. Pierre arrives at breakfast and will say nothing but “I don’t care.” Johnny lived by himself…. This alarming suddenness, the inseparable union of the character and the situation—this is the way the real world presents itself to a child. Childhood, like a dream, begins in mid-story. The personalities and the rules are already in place…
Preface: 1956: ALTHOUGH THIS BOOK might in some respects have been different if I had written it in the first instance with American readers primarily in mind, it has by now made for itself too definite if unexpected a place in this country to make any rewriting advisable. Its republication in a new form, however, more than ten years after its first appearance, is perhaps an appropriate occasion for explaining its original aim and for a few comments on the altogether unforeseen and in many ways curious success it has had in this country.
The book was written in England during the war years and was designed almost exclusively for English readers. Indeed, it was addressed mainly to a very special class of readers in England. It was in no spirit of mockery that I dedicated it "To the Socialists of All Parties." It had its origin in many discussions which, during the preceding ten years, I had with friends and colleagues whose sympathies had been inclined toward the left, and it was in continuation of those arguments that I wrote The Road to Serfdom.
When Hitler came into power in Germany, I had already been teaching at the University of London for several years, but I kept in close touch with affairs on the Continent and was able to do so until the outbreak of war. What I had thus seen of the origins and evolution of the various totalitarian movements made me feel that English public opinion, particularly among my friends who held "advanced" views on social matters, completely misconceived the nature of those movements. Even before the war I was led by this to state in a brief essay what became the central argument of this book. But after war broke out I felt that this widespread misunderstanding of the political systems of our enemies, and soon also of our new ally, Russia, constituted a serious danger which had to be met by a more systematic effort. Also, it was already fairly obvious that England herself was likely to experiment after the war with the same kind of policies which I was convinced had contributed so much to destroy liberty elsewhere.
Thus this book gradually took shape as a warning to the socialist intelligentsia of England; with the inevitable delays of wartime production, it finally appeared there early in the spring of 1944. This date will, incidentally, also explain why I felt that in order to get a hearing I had somewhat to restrain myself in my comments on the regime of our wartime ally and to choose my illustrations mainly from developments in Germany.
It seems that the book appeared at a propitious moment, and I can feel only gratification at the success it had in England, which, though very different in kind, was quantitatively no smaller than it was to be in the United States. On the whole, the book was taken in the spirit in which it was written, and its argument was seriously examined by those to whom it was mainly addressed. Excepting only certain of the leading politicians of the Labour party--who, as if to provide an illustration for my remarks on the nationalist tendencies of socialism, attacked the book on the ground that it was written by a foreigner--the thoughtful and receptive manner in which it was generally examined by persons who must have found its conclusions running counter to their strongest convictions was deeply impressive. The same applies also to the other European countries where the book eventually appeared; and its particularly cordial reception by the post-Nazi generation of Germany, when copies of a translation published in Switzerland at last reached that country, was one of the unforeseen pleasures I derived from the publication.
Rather different was the reception the book had in the United States when it was published here a few months after its appearance in England. I had given little thought to its possible appeal to American readers when writing it. It was then twenty years since I had last been in America as a research student, and during that time I had somewhat lost touch with the development of American ideas. I could not be sure how far my argument had direct relevance to the American scene, and I was not in the least surprised when the book was in fact rejected by the first three publishing houses approached. It was certainly most unexpected when, after the book was brought out by its present publishers, it soon began to sell at a rate almost unprecedented for a book of this kind, not intended for popular consumption.
And I was even more surprised by the violence of the reaction from both political wings, by the lavish praise the book received from some quarters no less than by the passionate hatred it appeared to arouse in others.
Contrary to my experience in England, in America the kind of people to whom this book was mainly addressed seem to have rejected it out of hand as a malicious and disingenuous attack on their finest ideals; they appear never to have paused to examine its argument.
The language used and the emotion shown in some of the more adverse criticism the book received were indeed rather extraordinary. But scarcely less surprising to me was the enthusiastic welcome accorded to the book by many whom I never expected to read a volume of this type--and from many more of whom I still doubt whether in fact they ever read it.
And I must add that occasionally the manner in which it was used vividly brought home to me the truth of Lord Acton's observation that "at all times sincere friends of freedom have been rare, and its triumphs have been due to minorities, that have prevailed by associating themselves with auxiliaries whose objects often differed from their own; and this association, which is always dangerous, has sometimes been disastrous."
It seems hardly likely that this extraordinary difference in the reception of the book on the two sides of the Atlantic is due entirely to a difference in national temperament. I have since become increasingly convinced that the explanation must lie in a difference of intellectual situation at the time when it arrived. In England, and in Europe generally, the problems with which I dealt had long ceased to be abstract questions. The ideals which I examined had long before come down to earth, and even their most enthusiastic adherents had already seen concretely some of the difficulties and unlooked-for results which their application produced. I was thus writing about phenomena of which almost all my European readers had some more or less close experience, and I was merely arguing systematically and consistently what many had already intuitively felt. There was already a disillusionment about these ideals under way, which their critical examination merely made more vocal or explicit.
In the United States, on the other hand, these ideals were still fresh and more virulent. It was only ten or fifteen years earlier--not forty or fifty, as in England--that a large part of the intelligentsia had caught the infection. And, in spite of the experimentation of the New Deal, their enthusiasm for the new kind of rationally constructed society was still largely unsoiled by practical experience. What to most Europeans had in some measure become vieux jeux was to the American radicals still the glittering hope of a better world which they had embraced and nourished during the recent years of the Great Depression.
Opinion moves fast in the United States, and even now it is difficult to remember how comparatively short a time it was before The Road to Serfdom appeared that the most extreme kind of economic planning had been seriously advocated and the model of Russia held up for imitation by men who were soon to play an important role in public affairs. It would be easy enough to give chapter and verse for this, but it would be invidious now to single out individuals. Be it enough to mention that in 1934 the newly established National Planning Board devoted a good deal of attention to the example of planning provided by these four countries: Germany, Italy, Russia, and Japan.
Ten years later we had of course learned to refer to these same countries as "totalitarian," had fought a long war with three of them, and were soon to start a "cold war" with the fourth. Yet the contention of this book that the political development in those countries had something to do with their economic policies was then still indignantly rejected by the advocates of planning in this country.
It suddenly became the fashion to deny that the inspiration of planning had come from Russia and to contend, as one of my eminent critics put it, that it was "a plain fact that Italy, Russia, Japan, and Germany all reached totalitarianism by very different roads."
The whole intellectual climate in the United States at the time The Road to Serfdom appeared was thus one in which it was bound either profoundly to shock or greatly to delight the members of sharply divided groups. In consequence, in spite of its apparent success, the book has not had here the kind of effect I should have wished or which it has had elsewhere. It is true that its main conclusions are today widely accepted. If twelve years ago it seemed to many almost sacrilege to suggest that fascism and communism are merely variants of the same totalitarianism which central control of all economic activity tends to produce, this has become almost a commonplace. It is now even widely recognized that democratic socialism is a very precarious and unstable affair, ridden with internal contradictions and everywhere producing results most distasteful to many of its advocates.
For this sobered mood the lessons of events and more popular discussions of the problem (The most effective of these was undoubtedly George Orwell's 1984. The author had earlier kindly reviewed this book.) are certainly more responsible than this book. Nor was my general thesis as such original when it was published. Although similar but earlier warnings may have been largely forgotten, the dangers inherent in the policies which I criticized had been pointed out again and again. Whatever merits this book possesses consist not in the reiteration of this thesis but in the patient and detailed examination of the reasons why economics planning will produce such unlooked-for results and of the process by which they come about.
It is for this reason that I rather hope that the time may now be more favorable in America for a serious consideration of the true argument of the book than it was when it first appeared. I believe that what is important in it still has to render its service, although I recognize that the hot socialism against which it was mainly directed-that organized movement toward a deliberate organization of economic life by the state as the chief owner of the means of production-is nearly dead in the Western world.
The century of socialism in this sense probably came to an end around 1948. Many of its illusions have been discarded even by its leaders, and elsewhere as well as in the United States the very name has lost much of its attraction. Attempts will no doubt be made to rescue the name for movements which are less dogmatic, less doctrinaire, and less systematic. But an argument applicable solely against those clear-cut conceptions of social reform which characterized the socialist movements of the past might today well appear as tilting against windmills.
Yet though hot socialism is probably a thing of the past, some of its conceptions have penetrated far too deeply into the whole structure of current thought to justify complacency. If few people in the Western world now want to remake society from the bottom according to some ideal blueprint, a great many still believe in measures which, though not designed completely to remodel the economy, in their aggregate effect may well unintentionally produce this result. And, even more than at the time when I wrote this book, the advocacy of policies which in the long run cannot be reconciled with the preservation of a free society is no longer a party matter.
That hodgepodge of ill-assembled and often inconsistent ideals which under the name of the Welfare State has largely replaced socialism as the goal of the reformers needs very careful sorting-out if its results are not to be very similar to those of full-fledged socialism. This is not to say that some of its aims are not both practicable and laudable. But there are many ways in which we can work toward the same goal, and in the present state of opinion there is some danger that our impatience for quick results may lead us to choose instruments which, though perhaps more efficient for achieving the particular ends, are not compatible with the preservation of a free society.
The increasing tendency to rely on administrative coercion and discrimination where a modification of the general rules of law might, perhaps more slowly, achieve the same object, and to resort to direct state controls or to the creation of monopolistic institutions where judicious use of financial inducements might evoke spontaneous efforts is still a powerful legacy of the socialist period which is likely to influence policy for a long time to come.
Just because in the years ahead of us political ideology is not likely to aim at a clearly defined goal but toward piece-meal change, a full understanding of the process through which certain kinds of measures can destroy the bases of an economy based on the market and gradually smother the creative powers of a free civilization seems now of the greatest importance.
Only if we understand why and how certain kinds of economic controls tend to paralyze the driving forces of a free society, and which kinds of measures are particularly dangerous in this respect, can we hope that social experimentation will not lead us into situations none of us want.
It is as a contribution to this task that this book is intended. I hope that at least in the quieter atmosphere of the present it will be received as what it was meant to be, not as an exhortation to resistance against any improvement or experimentation, but as a warning that we should insist that any modification in our arrangements should pass certain tests (described in the central chapter on the Rule of Law) before we commit ourselves to courses from which withdrawal may be difficult.
The fact that this book was originally written with only the British public in mind does not appear to have seriously affected its intelligibility for the American reader. But there is one point of phraseology which I ought to explain here to forestall any misunderstanding.
I use throughout the term "liberal" in the original, nineteenth-century sense in which it is still current in Britain. In current American usage it often means very nearly the opposite of this.
It has been part of the camouflage of leftist movements in this country, helped by the muddleheadedness of many who really believe in liberty, that "liberal" has come to mean the advocacy of almost every kind of government control. I am still puzzled why those in the United States who truly believe in liberty should not only have allowed the left to appropriate this almost indispensable term but should even have assisted by beginning to use it themselves as a term of opprobrium.
This seems to be particularly regrettable because of the consequent tendency of many true liberals to describe themselves as conservatives.
It is true, of course, that in the struggle against the believers in the all-powerful state the true liberal must sometimes make common cause with the conservative, and in some circumstances, as in contemporary Britain, he has hardly any other way of actively working for his ideals.
But true liberalism is still distinct from conservatism, and there is danger in the two being confused.
Conservatism, though a necessary element in any stable society, is not a social program; in its paternalistic, nationalistic, and power-adoring tendencies it is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place.
A conservative movement, by its very nature, is bound to be a defender of established privilege and to lean on the power of government for the protection of privilege. The essence of the liberal position, however, is the denial of all privilege, if privilege is understood in its proper and original meaning of the state granting and protecting rights to some which are not available on equal terms to others.
Perhaps a further word of apology is required for my allowing this book to reappear in entirely unchanged form after the lapse of almost twelve years. I have many times tried to revise it, and there are numerous points I should like to explain at greater length or to state more cautiously or to fortify by more illustration and proof. But all attempts at rewriting only proved that I could never again produce as short a book covering as much of the field; and it seems to me that, whatever other merits it may have, its relative brevity is its greatest. I have thus been forced to the conclusion that whatever I want to add to the argument I must attempt in separate studies. I have begun to do so in various essays, some of which provide a more searching discussion of certain philosophical and economic issues on which the present book only touches.
On the special question of the roots of the ideas here criticized and of their connection with some of the most powerful and impressive intellectual movements of this age, I have commented in another volume. And before long I hope to supplement the all-too brief central chapter of this book by a more extensive treatment of the relation between equality and justice.
There is one particular topic, however, on which the reader will with justice expect me to comment on this occasion, yet which I could even less treat adequately without writing a new book. Little more than a year after The Road to Serfdom first appeared, Great Britain had a socialist government which remained in power for six years. And the question of how far this experience has confirmed or refuted my apprehensions is one which I must try to answer at least briefly. If anything, this experience has strengthened my concern and, I believe I may add, has taught the reality of the difficulties I pointed out to many for whom an abstract argument would never have carried conviction. Indeed, it was not long after the Labour government came into power that some of' the issues which my critics in America dismissed as bogeys became in Great Britain main topics of political discussion. Soon even official documents were gravely discussing the danger of totalitarianism raised by the policy of economic planning.
There is no better illustration of the manner in which the inherent logic of their policies drove an unwilling socialist government into the kind of coercion it disliked than the following passage in the Economic Survey for 1947 (which the Prime Minister presented to Parliament in February of that year) and its sequel:
There is an essential difference between totalitarian and democratic planning. The former subordinates all individual desires and preferences to the demand of the State. For this purpose, it uses various methods of compulsion upon the individual which deprive him of his freedom of choice. Such methods may be necessary even in a democratic country during the extreme emergency of a great war. Thus the British people gave their war time Government the power to direct labour. But in normal times the people of a democratic country will not give up their freedom of choice to their Government. A democratic Government must therefore conduct its economic planning in a manner which preserves the maximum possible freedom of choice to the individual citizen.
The interesting point about this profession of laudable intentions is that six months later the same government found itself in peacetime forced to put the conscription of labor back on the statute book. It hardly diminishes the significance of this when it is pointed out that the power was in fact never used because, if it is known that the authorities have power to coerce, few will wait for actual coercion.
But it is rather difficult to see how the government could have persisted in its illusions when in the same document it claims that it was now for "the Government to say what is the best use for the resources in the national interest" and to "lay down the economic task for the nation: it must say which things are the most important and what the objectives of policy ought to be."
Of course, six years of socialist government in England have not produced anything resembling a totalitarian state. But those who argue that this has disproved the thesis of The Road to Serfdom have really missed one of its main points: that the most important change which extensive government control produces is a psychological change, an alteration in the character of the people.
This is necessarily a slow affair, a process which extends not over a few years but perhaps over one or two generations.
The important point is that the political ideals of a people and its attitude toward authority are as much the effect as the cause of the political institutions under which it lives.
This means, among other things, that even a strong tradition of political liberty is no safeguard if the danger is precisely that new institutions and policies will gradually undermine and destroy that spirit.
The consequences can of course be averted if that spirit reasserts itself in time and the people not only throw out the party which has been leading them further and further in the dangerous direction but also recognize the nature of the danger and resolutely change their course. There is not yet much ground to believe that the latter has happened in England.
Yet the change undergone by the character of the British people, not merely under its Labour government but in the course of the much longer period during which it has been enjoying the blessings of a paternalistic welfare state, can hardly be mistaken. These changes are not easily demonstrated but are clearly felt if one lives in the country.
In Illustration, I will cite a few significant passages from a sociological survey dealing with the impact of the surfeit of regulation on the mental attitudes of the young. It is concerned with the situation before the Labour government came into power, in fact, about the time this book was first published, and deals mainly with the effects of those war regulations which the Labour government made permanent:
It is above all in the city that the province of the optional felt as dwindling away to nothing. At school, in the place of irk, on the journey to and fro, even in the very equipment A provisioning of the home, many of the activities normally possible to human beings are either forbidden or enjoined. special agencies, called Citizen's Advice Bureaus, are set up to steer the bewildered through the forest of rules, and to indicate to the persistent the rare clearings where a private person may still make a choice .... [The town lad] is conditioned not lift a finger without refering mentally to the book of words first. A time-budget of an ordinary city youth for an ordinary working day would show the he spends great stretches of his eking hour going through motions that have been predetermined for him by directives in whose framing he has had no part, whose precise intention he seldom understands, and of lose appropriateness he cannot judge . . . . The inference at what the city lad needs is more discipline and tighter control is too hasty. It would be nearer the mark to say that he is suffering from an overdose of control already . . . . Surveying parents and his older brothers or sisters he finds them as regulation-bound as himself. He sees them so acclimatised to that state that they seldom plan and carry out under their own any new social excursion or enterprise. He thus looks forward to no future period at which a sinewy faculty of responsibility is likely to be of service to himself or others .... the young people] are obliged to stomach so much external d, as it seems to them meaningless control that they seek ;ape and recuperation in an absence of discipline as complete as they can make it.
Is it too pessimistic to fear that a generation grown up under these conditions is unlikely to throw off the fetters to which it has grown used? Or does this description not rather fully bear out De Tocqueville's prediction of the "new kind of servitude" when
after having thus successively taken each member of the community in its powerful grasp, and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate to rise above the crowd. The will of man is not shattered but softened, bent and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrial animals, of which government is the shepherd. I have always thought that servitude of the regular, quiet, and gentle kind which I have just described might be combined more easily than is commonly believed with some of the outward forms of freedom and that it might even establish itself under the wing of the sovereignty of the people.
What De Tocqueville did not consider was how long such a government would remain in the hands of benevolent despots when it would be so much more easy for any group of ruffians to keep itself indefinitely in power by disregarding all the traditional decencies of political life.
Perhaps I should also remind the reader that I have never accused the socialist parties of deliberately aiming at a totalitarian regime or even suspected that the leaders of the old socialist movements might ever show such inclinations.
What I have argued in this book, and what the British experience convinces me even more to be true, is that the unforeseen but inevitable consequences of socialist planning create a state of affairs in which, if the policy is to be pursued, totalitarian forces will get the upper hand.
I explicitly stress that "socialism can be put into practice only by methods of which most socialists disapprove" and even add that in this "the old socialist parties were inhibited by their democratic ideals" and that "they did not possess the ruthlessness required for the performance of their chosen task."
I am afraid the impression one gained under the Labour government was that these inhibitions were if anything weaker among the British socialists than they had been among their German fellow-socialists twenty-five years earlier. Certainly German Social Democrats, in the comparable period of the 1920's, under equally or more difficult economic conditions, never approached as closely to totalitarian planning as the British Labour government has done.
Since I cannot here examine the effect of these policies in detail, I will rather quote the summary judgments of other servers who may be less suspect of preconceived opinions.
Some of the most damning, in fact, come from men who not long before had themselves been members of the Labour Party.
Thus Mr. Ivor Thomas, in a book apparently intended to explain why he left that party, comes to the conclusion that
from the point of view of fundamental human liberties there is little to choose between communism, socials, and national socialism. They all are examples of the collectivist or totalitarian state . . . in its essentials not only is completed socialism the same as communism but it hardly differs from fascism.
The most serious development is the growth of a measure of arbitrary administrative coercion and the progressive destruction of the cherished foundation of British liberty, the Rule of Law, for exactly the reasons here discussed in chapter 6.
This process had of course started long before the last Labour government came into power and had been accentuated by the war. But the attempts at economic planning under the Labour government carried it to a point which makes it doubtful whether it can be said that the Rule of Law still prevails in Britain.
The "New Despotism" of which a Lord Chief justice had warned Britain as long as twenty-five years ago is, as The Economist recently observed, no longer a mere danger but an established fact.
It is a despotism exercised by a thoroughly conscientious and honest bureaucracy for what they sincerely believe is the good of the country.
But it is nevertheless an arbitrary government, in practice free from effective parliamentary control; and its machinery would be as effective for any other than the beneficent purposes for which it is now used.
I doubt whether it was much exaggerated when recently an eminent British jurist, in a careful analysis of these trends, came to the conclusions that
in Britain to-day, we live on the edge of dictatorship. Transition would be easy, swift, and it could be accomplished with complete legality.
Already so many steps have been taken in this direction, due to the completeness of power possessed by the Government of the day, and the absence of any real check such as the terms of a written constitution or the existence of an effective second chamber, that those still to be taken are small in comparison.
For a more detailed analysis of the economic policies of the British Labour government and its consequences I cannot do better than refer the reader to Professor John Jewkes's Ordeal by Planning (London: Macmillan & Co. , 1948). It is the best discussion known to me of a concrete instance of the phenomena discussed in general terms in this book. It supplements it better than anything I could add here and spells out a lesson which is of significance far beyond Great Britain.
It seems now unlikely that, even when another Labour government should come into power in Great Britain, it would resume the experiments in large-scale nationalization and planning. But in Britain, as elsewhere in the world, the defeat of the onslaught of systematic socialism has merely given those who are anxious to preserve freedom a breathing space in which to re-examine our ambitions and to discard all those parts of the socialist inheritance which are a danger to a free society.
Without such a revised conception of our social aims, we are likely to continue to drift in the same direction in which outright socialism would merely have carried us a little faster.
F. A. HAYEK
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