Churchill used to quip that whenever you had two economists in the same room, you had two opinions, unless one of the economists was John Maynard Keynes, in which case you had three.
Anyone who has had the misfortune of having to study Keynesian theory can surely sympathize. As a student at one of the "Saltwater Schools" whose Economics departments produced the current Neoclassical-Keynesian brew in the mid-1970s, Churchill's words are dear to my heart. To date in my courses I've taken three macro-economic courses, each taught from either a fully or partly Keynesian perspective. With each course, it seems, I understand the theory significantly less, such that I am quite sure by graduation it will have become entirely incomprehensible to me.
Now this is not merely to say that I disagree with it. The parts I understand I disagree with. Much of it, however, I do not understand, and my bafflement increases, not decreases, the deeper I go into the theory. Each time I have been taught Keynesian economics, I've approached it in good faith, and each time I've come away more confused as to what the economics is saying. It's not a matter of ignorance; the more economics I learn, the less Keynes I understand. Moreover, it's noteworthy to me that between three professors and three textbooks on the subject, I've received six contradictory interpretations. Which of those six interpretations was actually Keynesian? I don't know. Keynes, like Freud or Marx or the Oracle of Delphi, is shielded from refutation by the very obscurantism of his ideas.
No one I've found has better addressed this issue than Henry Hazlitt in his The Failure of the New Economics. It's a line-by-line takedown of Keynes' General Theory of Employment written as lucidly as only Hazlitt can write economics. As reviewer John Chamberlain put it, "Mr. Hazlitt takes up the General Theory line by line and paragraph by
paragraph, discovering scores of errors on almost every page. Not only
does he kill Keynes; he cuts the corpse up into little pieces and stamps
each little piece into the earth. The performance is awe-inspiring,
masterly, irrefutable — and a little grisly. At times one almost feels
sorry for the victim. But, since Keynesian doctrines have created so
much misery in the world, any sympathy is misplaced. Hazlitt’s job had
to be done."
And yet, Keynesian assumptions, implicitly if not explicitly, continue to dominate economics departments today, especially in our most elite universities. The Neoclassical-Keynesian synthesis that addressed some of the Chicago's School's critiques of the 1970s still is largely, on a macro level, Keynesian.
Why the persistence of such a problematic doctrine? Well, in the first place, its appeal. Academics, like all of us, are drawn to ideologies that rationalize their prior beliefs & economics before Keynes was the science of putting "parameters on utopia," as Mises put it. A doctrine which transformed economics into a field that could please the sensibilities of the progressive class was therefore patently desirable.
At the end of the day, many on the Left are concerned about economics only insofar as they can sufficiently muddy the water in order to do what they feel to be right -"helping" the poor, unemployed, etc, through government action. The desired result is not clarity of thought, but sufficient confusion to disarm supporters of free markets of a claim to objective truth. As long as one has Keynesian ideas, one can always add, "Other economists, however..." to any public policy debate, creating a false intellectual equivalence which is more than enough for people to call it a wash intellectually and go with their gut feeling -which, in economics, is usually mistaken.
The second problem is jargon. As Hazlitt shows, much of Keynes' economic jargon is inherently misleading. This jargon, however, has now become the language by which economists communicate; to convince anyone in economics today, one must speak it. Like Orwell's Newspeak, however, the very character of the language precludes the communication of opposing ideas.
An example from "The Failure of the New Economics,":
"Equilibrium, in short, exists only when the conditions of equilibrium are fulfilled. One of those conditions is full employment. And full employment always exists when there is equilibrium. When Keynes speaks, therefore, as he does here and elsewhere,of "equilibrium" with underemployment, he is talking nonsense. This is a contradiction in terms, like talking of an orderly chaos or a triangular circle. When Keynes speaks, in short, of an "equilibrium" with unemployment, he is not really speaking of a position of equilibrium at all, but of something quite different. He is speaking of a frozen situation, a frozen disequilibrium, a situation in which some price, interest rate, or wage-rate, or many prices, interest rates, and wage-rates, are prevented, either by contract, labor- union resistance, or government intervention, from adjusting to an equilibrium level.
This flagrant misuse of terms is one of the central fallacies of the whole Keynesian system. When this misuse is recognized, his whole system collapses."
The problem, of course, is that it's not enough to merely point this out to Keynesian economists. By now, there has been established a whole literature that uses this language; to even begin to argue involves a tremendous effort just in clarifying and redefining terms. This, at the end of the day, is how bad thinkers, once enthroned, keep their throne; a whole lexicon swirls around them like a cloud of words so that, as the Bible put it, "Thou hast covered thyself with a cloud, and no prayer can pass through," (Lamentations 3:44).
