My Weekly Reader 8 November 2022.

            In the Nineteenth Century, the German philosopher Hegel popularized (among intellectuals) the concept of the “dialectic”: an idea (thesis) generates opposition (antithesis); their struggle produces a new idea (synthesis); and then the cycle begins all over again.  On the surface at least, the idea seems to hold up for the history of Economics.  Economic Liberalism met disaster in the Great Depression.  This led to the creation of Neo-Liberalism (sometimes referred to as “Keynesianism”) which met disaster in the 1970s.  This led to an experiment with “Monetarism,” which met disaster in the financial crisis of 2008.  Now we are living in a period of angry, messy uncertainty.[1] 

            Such an account may serve as a bare-bones or thumbnail sketch of ideas interacting with policy in a key area of public life.  Inevitably, it leaves much of importance in the shadows.  To take one example, where do the ideas come from?  Ideas don’t emerge fully developed from the forehead of some deity.  They are formulated, expounded, and revised by human beings.  They take time and effort on the part of someone to triumph (or fail) in society at large.  So, who produces them in what context of personal experiences and public events?  This, in turn, raises the problem of whether ideas inspire action that would not otherwise have happened OR merely provide the rationale for the impulses of certain individuals or groups.[2] 

            Paul Krugman[3] uses a book review to address, if not to resolve, this problem.[4]  He begins my limning the position of Paul Samuelson.[5]  In a nutshell, “markets can work, but only with government-created guardrails” and “changes in government spending and taxes can be used to manage the economy.”  However, Samuelson was “an economists’ economist” for whom “politics was never more than a peripheral concern.” 

            Krugman devotes much of the review to a critique of Milton Friedman,[6] the University of Chicago economist who provided key arguments for what Krugman labels the “pushback” against Keynesianism since the 1980s.  He writes that “it’s hard to avoid the sense that Friedman viewed his professional research,.., [as] a way to establish his academic bona fides and hence add credibility to his free-market crusade.”[7]  In Krugman’s view, the crusade for Monetarism and de-regulation ended in failure.  That failure came at a high cost to millions of ordinary people. 

            Krugman concludes by asking of the “pushback”: “Was all of this just a grand, ideologically driven detour away from sensible economic theory and policy.  And why did that happen?”  Perhaps the high tax-high regulation economy that was acceptable to the trust fund heirs of the great industrialists proved unacceptable to a later generation that aspired to build a new economy.  Perhaps they sought a rationale to help free them of unions, taxes, and regulation. 

[1] See: Keynesianism and Monetarism | waroftheworldblog 

[2] Thomas Paine, Common Sense (1776) provides an interesting way of getting at these issues. 

[3] See: Does Paul Krugman eat lunch alone? | waroftheworldblog 

[4] Paul Krugman, “Market Watch,” NYTBR, 22 August 2021, a review of Nicholas Wapshott, Samuelson Friedman: The Battle Over the Free Market (2021). 

[5] On Samuelson, see: Paul Samuelson – Wikipedia  His textbook on Economics is still on my bookshelf, heavily underlined and annotated in places. 

[6] On Friedman, see: Milton Friedman – Wikipedia 

[7] This is a little rich coming from someone who has been an Opinion Columnist for the New York Times for twenty years. 


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s