Please find below my letter to Quadrant, which Keith Windschuttle chose not to publish. I am publishing it here because I was so outraged at the utterly unwarranted calumnies spoken against both Smith and Keynes, and believe that they need to be countered. I think it is terribly shameful for Quadrant, that it is prepared to publish these unwarranted calumnies, but not to publish a factually-based rejoinder to them.
Dear Quadrant,
I was tremendously disappointed with the quality of the
essays on Adam Smith and John Maynard Keynes, which appeared in the June
edition of Quadrant.
Both Smith and Keynes are giants in the field of economic
thought. And rightly so: their contributions to advancing our knowledge of
economic phenomena is immense. Even their errors can be considered important
and valuable: correcting these errors caused the people who came after them,
such as David Ricardo for Smith, and Milton Friedman for Keynes, to make valuable
discoveries in the fields of economic science and public policy. If Smith and
Keynes failed, then they failed magnificently.
It’s no accident that the economics honours students at
Sydney University are currently offered the choice of studying both the Wealth of Nations and the General Theory under Tony Aspromourgos.
So I was alarmed at the querulous, fault-finding and
slanderous tone and direction of the two essays, which not only questioned the
value of these economists’ contributions, but also their integrity and good
faith.
Ray Evans’ essay focuses almost exclusively on what Smith
got wrong, such as his acceptance of the labour theory of value, without giving
space to the many things that Smith got right, and his many original
contributions. Evans praises only Smith’s ‘writing skills’, and mentions his
contribution to popularising free trade as almost an afterthought, rather than
an important part of the essay.
One could line the walls, from floor to ceiling, with books
and essays assessing the contribution of Smith to economic science and public
policy – but you wouldn’t know it from Evans’ essay.
Worse, Evans makes unwarranted personal attacks on Smith. He
quotes approvingly Murray Rothbard’s criticism of Adam Smith’s contribution as
being unoriginal and, worse, plagiarised. But we hear nothing of Smith’s unanswerable
arguments against the error of mercantilism, or correcting the Physiocrats’
fundamental error on the nature of surplus value – both original and immensely
valuable contributions! Perhaps this is because Evans is ignorant of them.
Also, Evans uses the findings of 20th century
science to dismiss one of Smith’s thoughts as ‘bordering on the lunatic’, which
is a disproportionate and deeply unfair attack. Lastly, he attacks Smith’s work
in the Customs office, as if that work were unworthy of any person.
Evans might wish to reflect on the fact that, in the days
before income tax, revenue from customs was an important source of government
finance, used to pay for useful things like the Royal Navy. What might the
world would be like today had the United Kingdom not had the revenue to finance
the Royal Navy? Think also of the good work that our own customs officers do in
keeping undesirable people and goods out of the country. With these considerations
in mind, can we honestly condemn Smith for having worked at Customs?
Geoffrey Luck continues with the querulous, fault-finding
and unreasonably critical tone, but delves deeper into the muck. His essay is
complete and utter rubbish, riddled with factual errors, ignorant and misinformed
opinions, and disgraceful, unwarranted slanders which cannot go unanswered.
The aim of Luck’s essay is to examine whether the expectations
contained in Keynes’ essay Economic Possibilities
for our Grandchildren were correct. Very briefly, we can say that Keynes
was half-right. He correctly foresaw that continuous capital deepening and
improvements in productivity, and the consequent increases in the economic
surplus, would very soon give people more opportunities for working less and
enjoying more of their lives. What he didn’t foresee was that some costs – such
as the cost of land – would continue to rise, and would be so significant as to
eat into those possibilities. But the net effect of technological progress has
been to increase leisure time and give people more choices as to how to spend
that time.
Luck doesn’t get any of this, and as a result his criticisms
strike wide. First, he confuses the points of the essay with the points of the General Theory, when the two have
nothing whatsoever to do with one another.
Secondly, he criticises Keynes for not foreseeing that
people would use their extra wealth, not to work less and enjoy the good life,
but to continue working and to spend the income on new products and
‘conspicuous consumption’. But Keynes only ever said that a more purposeful use
of greater leisure time was a possibility,
not an inevitability.
Luck goes on to dismiss the value of increased leisure time,
and writes that economic mismanagement is causing a reversal of the trend
towards increased leisure – both of which points are debatable. He then
concludes his analysis by saying that the essay was Keynes’ only foray into the
world of behavioural economics, and that the attempt was beyond him – a bizarre
thing to say about the man who is credited with successfully introducing the
idea of ‘animal spirits’ into investment theory six years later.
Having concluded a weak and unserious assessment of Keynes’
essay, Luck plays the man. He again confuses the Economic Possibilities essay with the General Theory, but while he dismisses the Skidelsky brothers’
conclusions as to why Keynes wrote the General
Theory, he puts forward no explanation of his own. Instead, Murray Rothbard
gets wheeled out again to deliver vicious, untrue and utterly unwarranted
slanders against Keynes.
Ultimately, Luck gives us nothing of value. The only part of
his essay which might be useful is the summary of Keynes’ essay. But Quadrant’s readers don’t buy the
magazine for summaries of essays written 80 years ago.
If I may ask for indulgence, in this overly-long letter, to
address specific errors and slanders in Luck’s miserable rant:
· IS/LM analysis was created by John R. Hicks in 1936.
Keynes couldn’t have been using it in 1930.
· Far from having fallen shamelessly under Keynes’
spell, Lionel Robbins was one of the many who was able to see through Keynes’
rhetoric and, when Keynes produced interesting but half-baked ideas, amicably
but sharply correct him.
· The unsubstantiated accusation that Keynes made
his money through insider trading is appalling. Who says that he made his money
in this way? In all my reading I have never seen the accusation made. Since
when did Quadrant begin publishing slanderous
hearsay like this – and against the silent dead, no less?
· Keynes’ undergraduate degree was in mathematics,
not philosophy.
· Regarding the slogan that ‘supply creates
demand’, perhaps Luck could set up a little store dedicated to selling
compendia of his contributions to Quadrant,
as well as reprints of the writings of Jim Cairns and Malcolm Fraser – I would
be interested to see if his supply of these goods creates any demand.
· Far from being a Fascist and anti-Semite, Keynes
loathed Nazism, counted the Jews Sraffa and Wittgenstein among his close
friends, was an open supporter of Zionism, and literally worked his heart out helping
to defend civilisation against fascism. Rothbard’s – and by implication Luck’s
– slanders of Keynes are absolutely disgraceful, untrue and completely
unwarranted. I am appalled that they would appear in Quadrant.
· Lastly, anyone who thinks, as Luck does, that
the questions of the efficiency and morality of the free market are still open
to debate, has not been paying attention over the last 25 years.
The fact that these two abysmal essays could be published in
Quadrant, in the wake of the pathetic
attempt at a hoax four-and-a-half years ago, makes me think that there is
something amiss in the magazine’s editorial processes. I suggest that any
essays concerning economics be screened by a professional economist prior to
publication. John Stone, a magnificent, sharp-minded economist and friend of
the magazine, would be an ideal candidate. So might Henry Ergas. Should no
eligible candidates appear, I am happy to offer my services, as a working
economist with 20 years’ experience in the field.
As it happens, my reading of the two essays coincided with
my receipt in the mail of a request from the editor for a donation to support
the magazine. Although I am well-disposed to Quadrant and its mission, I intend to postpone making a donation
until I see an improvement in quality.
I would like to end on a happy note, so I suggest that readers
find a copy of Keynes’ Essays in
Biography and read his amusing reflections on Henry Higgs.
