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Quotation of the Day…

Posted By Don Boudreaux On December 7, 2011 @ 7:54 am In Hubris and humility,State of Macro | Comments Disabled

… is from page 241 of Elizabeth S. Johnson’s and Harry G. Johnson’s 1978 book The Shadow of Keynes [1]:

Keynesian ideas on economic policy appear increasingly with the passage of history to be severely and dangerously limited in relevance by the presuppositions about the economic and social world implicit in Keynes’s position as a successful member of the Cambridge academic community and the British establishment.  Keynes’s theory of liquidity preference was as ‘a College Bursar’s theory of interest’; more broadly, it was a stock-market speculator’s theory of asset prices and price movements.  But, in addition, Keynes’s theory of wages and employment was a college resident’s theory of labour and industrial work, summarizable in the view that to keep porters happy one should not pay them more than the competitive wage, but should provide playing fields, pensions, and security of employment.  And his theory of entrepreneurship was that of an English academic, used to seeing the worthy, games-loving souls but inferior minds among his pupils going off year by year to staff British industry, where their success would depend on ‘animal spirits’ or British grit but in any case deserved only a modest recompense in hard cash and social prestige.

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[1] The Shadow of Keynes: http://www.amazon.com/Shadow-Keynes-Understanding-Cambridge-Keynesian/dp/0226401499/ref=sr_1_1?s=books&ie=UTF8&qid=1323262389&sr=1-1

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