Re: Debunking Holy Writ

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Fri, 30 Nov 2001 12:20:30 -0500, Gunnar Tómasson
<gunnar.tomasson@xxxxxxxxxxx> wrote:

[Quoth I]:
>> I have trouble following this, since the Washington Consensus
>> is *based* on the process that knocked the General Theory out
>> of economics education in the US, starting with Samuelson,
>> and accelerating in the eighties and nineties.

>As long-time IMF staff member (1966-1989), I identify key aspects
>of The Washington Consensus with the IMF's monetary approach to
>the balance of payments whereby pressure on an economy's balance
>of payments is causally related to (a) excess domestic credit
>creation, and (b) deficient supply of domestic savings.

Well, yes, that's the same sense I understood the phrase.
This is why I found it shocking to have arguments such
as these confused with Keynes' work in the General Theory.

...
>In the 'Analysis of the Keynesian System' section of Ch. IX
>('The Stability of Equilibrium: Comparative Statics and
>Dynamics') of his 'Foundations of Economic Analysis', Samuelson
>summarizes his analysis of the interaction therein between money
>and the rate of interest as follows:



>I do not recall seeing Samuelson challenged on this point.

There at least *were* more working on Samuelsonian theory
than on theory based on the General Theory, so why treat
"not seeing Samuelson challenged on this point" as tacit
agreement rather than as a human incapability for so few
to disagree with every statement of so many!  Certainly
in the Cambridge controversies there were a group that
would be included as post-Keynensians who were busy
challenging Samuelson on some of his points, and Robinson
characterised Samuelsonian theory as "bastard Keynesian
economics", which perhaps you could apply as a generic
response that would fit this point.


>And, while I personally have long viewed his 'stability'
>assumption as nonsense, the IMF's 'stabilization' policy
>prescriptions would seem to accord with Samuelson's summary
>representation of the relationship between money and the rate
>of interest within the General Theory model.

Yes, but Samuelson's reading of the General Theory and the
General Theory itself are two completely different things.
You certainly cannot expect to do anything but tie yourself
in pointless contradictions and conceptual knots if you
try to find Samuelsonian economics in the General Theory.
I'd suggest reading through "The Second Edition of _The
General Theory_", or at least big chunks of it, to get
a more representative view of what Keynes said from people
who are not pushing their own theoretical agendas that are
as much at odds with General Theory reasoning as Samueson's
work has been.  And if you want a debate amongst a variety
of positions each of which are more closely connected to
General Theory reasoning than Samuelson, read Keynes, Money
and the Open Economy, edited by Philip Arestis, first of
two volumes in honour of Davidson's four decades of work as
of the mid 1990's.


Virtually,

Bruce McFarling, Shortland, NSW
ecbm@xxxxxxxxxxxxxxxxxxx