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"unwilling or unable"

I vote unwilling. This is a deliberate rhetorical ploy of men who feel no ethical responsibility to concern themselves with the categories of true or false, honest or dishonest. I an important sense, they don't even lie and can't be called liars -- as long as they achieved their rhetorical purposes they couldn't care less whether what they say is actually true or false, accurate or inaccurate -- as explained in philosopher Harry Frankfurt's important book _On Bullshit_.

All of this is, as you point out, completely absurd, as a response to the Austrian explanation of the general pattern and sequence of the business cycle.

The devise can be turned against anyone.

If not for the misguided "sin" of savings, men would be "virtuousness" enough to spend, and give their fellow citizens the jobs they "deserve" as human beings to be "fully employed."

The "need" for pateralistic monetary and fiscal policy by our wise political fathers is to correct for our childish "animal spirits" and immature (money) "illusions" that show what happens when left to manage our own unregulated economic affairs.

Keynesian Economics, therefore, is a "morality play" that teaches us that when we leave men free with no thought to their "macro" effects on others, there is no alternative to wise, far-seeing fiscal and monetary "big bothers" to help us do what we clearly cannot do when left to our own devices.

There is little basis of a serious discussion when either side plays these rhetorical games.

Richard Ebeling

The description of Keynesianism as morality play at least sounds like it has some credibility to it. Even the Sophists would have been horrified by the way "morality play" was stretched to its breaking point in its use in describing ABCT.

Good article.

For sure ABCT is not about morality but the working of the economy.
Anyway, we can say that the whole corpus of Austrian theories, I think of Hayek, implies that morality itself evolves within the society along the institutions consequently created, and morality is itself a result of the spontaneous order and an institution.

Responsability is a personal value, but it can be considered as an institution when embedded in private contracts, making people respond for their mistakes.

whatever its origin, the cycle is a sequence and sum of mistakes and recoveries, and in a sense its mirrored by ethical characters of the society: responsibility (you pay for your mistakes).

ABCT is absolutely not about morality, but as Austrian Economics is a science of society and not solely of production and markets, a certain sense of morality is brought forth. It's simply natural in its basic.

Nevertheless, the problem Horwitz has face is that moral rethoric is really à la page in these times, be it related to economics or not.

No Troy, it doesn't.

The most recent time the NY Times columnist in question referenced "morality plays" was when people accused him of embracing and approving of war as fiscal policy.

All of these sorts of accusations are beneath good economics for precisely the reasons that Steve cites. And what's more - they prevent people from actually evaluating competing claims.

Or, they turn potentially complementary claims into competing claims simply out of the human propensity to bicker.

At some point I think we have to recognize that many people are simply dishonest. Employing the techniques of the sophists to win an argument at any cost is simply dishonest.

"Or, they turn potentially complementary claims into competing claims simply out of the human propensity to bicker."

Ah, that old human propensity to truck, barter, and bicker!

Gene - bickering is often an important part of bartering, but at least there you can hope to get something out of it!


I said it would be easier, not that it's right to do so. With Keynes the people at fault are the average people who are irrationally saving; with ABCT, the people at fault are those creating easy money. If one is making moral claims of the kind that were made against ABCT, it makes more sense to "blame" the average person for their situation in the Keynesian model than in the ABCT. ABCT "blames" the government, while the average person is acting rationally with the information they have; Keynesianism "blames" the average person, and the government has to act to rescue the people from what they have done to themselves. Now which model sounds more like a morality play in regards to the average person?

A similar objection is that it is deterministic. I just answer to that any theory suggests a causal relation. If we call this determinism, every theory is deterministic, especially in economics. What rhetorical tool do you guys use to defuse this one?

Troy - Keynes says that liquidity preference drives up interest rates and reduces demand because people are uncertain about the future. That sounds like sympathy, not blame to me. Conditions are locked in by a multiplier effect which again is not blamed on anyone - it's a function of aggregated activity.

I don't know why I'm even arguing with you on this - none of it is a morality play. Nobody is talking about "blame" - it's a matter of objectively describing the processes at hand.

Stiglitz writes in "Freefall," p.25, on a proposed solution of a new bubble to replace the housing bubble, just as the housing bubble repalced the tech bubble: "But such a 'solution' would only postpone the day of reckoning."

An uncharitable reading of this would, as an uncharitable reading of some 'Austrian' quotes, lead to the belief that Keynesians, too, see the boom-bust cycle as a morality play. But, of course, neither does, nor do accusations that either hold such positions advance understanding between the "camps." There is plenty of evidence, however, that neither "camp" wishes to charitably treat the other. Would perhaps some progress be made, if an attempt was made to do so?

I think there is a theory of the business cycle that comes pretty close to the morality play. And that theory is rife with error. Usually, fallacy of composition errors.

For the typical individual firm, demand is the most relevant contraint on economic activity. They can buy more resources or have them produced if they can sell the product. And so, "obviously," demand is the key constraint on overall economic activity. (Not very Austrian, of course.) But this is a key to the false theory, because it credit causes spending causes output. The problem is that the credit is somehow unsustainable. And so, the spending is unsustainable. And so the boom in business and output is unsustainable. And we must pay for all of the good times with bad times, because spending must fall when the unsusttainable credit goes away. And that means production must fall.

The Austrian theory does parellel the false theory to some degree. To add to the confusion, amateur Austrians regularly ball up the false theory and Austrian theory.

But Austrian theory is based on sound economic theory-- scarcity, for example. And sound monetary theory--which includes that nominal spending can be maintained at any level by a suitable quantity of money.

All of us who are skeptical of the Austrian theory, including Keynesians, I think, accept that missallocations of resources are possible. It is must that we all doubt whether shifts in resource allocations are an important element of real world recessions.

It is like "recession" caused by the competition of Japanese cars. Of course, with the Austrian Business Cycle theory, it has to do with the wrong type of capital goods having been produced, rather than adjusting to improved Japanese cars. Most of us think that sort of thing is not an important element of what is happening.

And then, when we have those "Austrians" who think that the drop in nominal expenditures in the recession is unavoidable, or desirable, or something, then it is easy to see this as being related to the confused and theory that says we have to suffer the reduced production in the recession due to the lower money expenditures as a pay back for the enhanced spending and sales due to the excessively high money and credit creation during the expansion.


You're the one who is arguing. I've already agreed that it's not a morality play. The problem with Keynes isn't that it's a morality play (or not), but that it's simply not true.

When someone criticizes the alcohol analogy as a morality play, its more indicative of their thoughts on alcohol than anything else.

Regardless of what people believe concerning the morality of drinking alcohol, if you sufficiently overindulge - you will have the hangover.

This will happen regardless of whether it is a proud drunk or a prohibitionist that is consuming the alcohol. It is such a bizarre line of reasoning that the Krugman acolytes follow.

Deprogramming myself from aggregate-focused macro was easier than I anticipated for two reasons: 1) As a person who usually teaches micro, aggregate focused macro never made much sense to me; and 2)Roger Garrison's book and web-posted class materials are so useful. My experience may apply generally; if so it suggests, probably not surprisingly to Austrians, that economists with micro fields (who were force fed aggregated macro as grad students) will find the deprogramming less costly than economists whose expertise is in aggregated macro.

What are some of life's most beautiful, struggle for the happy life infinite.

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