Re: Re: Brad DeLong's column

[Ted Winslow <winslow@xxxxxxxx>]

Mat Forstater asked:

> why would
> Brad contribute to perpetuating such theoretically, empirically,
> historically, unsupportable views, when he surely knows better?

I don't know about Brad, but the general problem of the continuing dominance
of pre-Keynesian ideas in the thinking of economists (including the thinking
of most of those who consider themselves Keynes's followers) may have
something to do with a psychological inability to stand cognitive
dissonance. ;-)

This blinds economists to the fact that Keynes is not a rational choice
theorist.

That he isn't is made obvious (to those with eyes to see) by passsages such
as the following (I quoted others when I first came back on this list):

In "The End of Laissez-Faire", he claims that the "essential characteristic"
of capitalism is "the dependence upon an intense appeal to the money making
and money-loving instincts of individuals as the main motive force of the
economic machine" (IX, p. 293).

In "Economic Possibilities for Our Grandchildren", he says of this "main
motive force" that "the love of money as a possession ...  [is] a somewhat
disgusting morbidity, one of those semi-criminal, semi-pathological
propensities which one hands over with a shudder to the specialists in
mental disease." (IX, p. 329)

He grounds his theory of financial markets on the premise that:

"The vast majority of those who are concerned with the buying and selling of
securities know almost nothing whatever about what they are doing.  They do
not possess even the rudiments of what is required for a valid judgment, and
are the prey of hopes and fears easily aroused by transient events and as
easily dispelled.  This is one of the odd characteristics of the capitalist
system under which we live, which, when we are dealing with the real world,
is not to be overlooked."  (VI, p. 323)

As the Ross Emmett review Michael recently posted shows, the "culture" of
economics blinds economists to this aspect of Keynes's economics (and of
Marx's).  This, I assume, is what enables Robert Solow to speak as if there
were no alternative to "the only game in town" - rational choice theory.

It's the only game in town because almost no one in economics can think (or
is allowed to think) about the subject matter in any other way.

Ted Winslow
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