Books Regarding Economic Theories

[jflare29]

While in college, I took a class in economics, one that I gather had much basis in the theories and ideas of John Maynard Keynes. Beings I was aiming for a major in natural sciences, not social ones, I didn’t search for errors in Keynes’ views.
In the time since though, I’ve seen various suggestions that Keynes’ ideas had serious flaws. In reading postings to these forums, I’ve seen Keynes, Friedman, and Milton mentioned, but no more specific than that.

Does anyone know of any good books that discuss Keynes’ ideas vs those of other economists or appropriate experts?
I’m contemplating pursuit of an MBA; I’d like to know what to look for…

 

[Bohm_Bawerk]

While in college, I took a class in economics, one that I gather had much basis in the theories and ideas of John Maynard Keynes. Beings I was aiming for a major in natural sciences, not social ones, I didn’t search for errors in Keynes’ views.
In the time since though, I’ve seen various suggestions that Keynes’ ideas had serious flaws. In reading postings to these forums, I’ve seen Keynes, Friedman, and Milton mentioned, but no more specific than that.

Does anyone know of any good books that discuss Keynes’ ideas vs those of other economists or appropriate experts?
I’m contemplating pursuit of an MBA; I’d like to know what to look for…

Keynes was wrong on several grounds. You might want to look to the Austrian School of Economics, and read about Ludwig von Mises, Friedrich Hayek, Murray Rothbard amongst others. The man in my profile display was a notable Austrian economist.

Check up the Ludwig von Mises’ website ( www.mises.org ). They distribute free ebooks of the works of important Austrian economists. Click on “Literature”.

Thank you,
Eugen von Böhm-Bawerk

 

[mcteague]

Keynes was wrong on several grounds. You might want to look to the Austrian School of Economics, and read about Ludwig von Mises, Friedrich Hayek, Murray Rothbard amongst others. The man in my profile display was a notable Austrian economist.

Check up the Ludwig von Mises’ website ( www.mises.org ). They distribute free ebooks of the works of important Austrian economists. Click on “Literature”.

Thank you,
Eugen von Böhm-Bawerk

I think there can be no question that Keynes was the most important and influential economist of the last 100 years. But no one is perfect or infallible. Even those who are in agreement with much of what he wrote recognize that. That is why they call themselves neo-Keynesianists. It is good to have exposure to a variety of theorists. Misters Keynes, Hayek, Friedman, and Marx all fit nicely on my bookshelf. Each has something useful and interesting say. The one thing I would say about Keynes that I do not feel is quite true of the others is that his economics does not appear to derive from ideology. Whereas the others seem sometimes to construct economic theory in support of already held beliefs. His approach is often more flexible. Despite common misrepresentations Keynes supports tax cuts in many circumstances. Keynesian economists just don’t believe it is the correct answer to every problem.
I would recommend looking at a lot of people, but try not to be an ideologue. It gets in the way of sound reasoning

 

[UnworthyApostle]

A classic of economics is “Wealth of Nations” by Adam Smith, and it has served for the base of modern capitalist thought. The book was penned in the late 18th century, but the principles contained therein are timeless and thus are applicable to our contemporary time. The basic premise of the work, as I have gathered on a limited start of the work, is that self interest and enterprise drives the economy and produces the most wealth and benefit for all.

 

[Abu]

jflare29
I’ve seen various suggestions that Keynes’ ideas had serious flaws…In reading postings to these forums…

As a Catholic very interested in economics, you should be aware of the development of free enterprise based on the work of the great Catholic Late Scholastics. As a start, this maybe of interest at:
catholicity.com/mccloskey/westernciv.html
A Book Review by Father John McCloskey of How the Catholic Church Built Western Civilization by Thomas E. Woods Jr. - published by Regnery Publishing, 2005

The following may be of economic interest;
drwilliamluckey.com/
mises.org/daily/4310
thomasewoods.com/articles/
mises.org/articles.aspx

The Keynes fantasy:
“The remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and keeping us permanently in a quasi-boom.”
[John Maynard Keynes, *The General Theory of employment, Interest, and Money, New York: Harcourt Trade, 1964 [1936], p 332].

You may find these comments as interesting as I do.
*Econoclasts: *A Book Review
By Dr. Mark W. Hendrickson
February 11, 2010
visandvals.org/Econoclasts_A_Book_Review.php

Excerpts:
“Econoclasts is a brilliantly clever title (compliments to the author or editor/publisher) but in fact, supply-side economics was not revolutionary or iconoclastic, but fundamentally conservative. Indubitably, the supply-side policy mix was superior to the stale Keynesian orthodoxy that preceded it, but supply-side economics retained the Keynesian/Washington-establishment flawed macroeconomic paradigm built around the modern democratic welfare state, political redistribution of wealth, and a monopolistic central bank.

“Granted, such radical reforms were not politically possible during the supply-siders’ time in the sun. But now, after a generation of unchecked growth of government, we are approaching a dangerous denouement: national bankruptcy. Like the supply-siders themselves, Domitrovic, an able chronicler of their history, doesn’t seem to challenge the ethical legitimacy or economic viability of Big Government. Indeed, one of his five recommendations to President Obama at the end of Econoclasts appears to be to spend on his pet programs as long as he offsets some of the cost by canceling Republican earmarks. The truly iconoclastic position would be to cancel all the earmarks and pet programs of both parties, and to start shrinking the federal leviathan.

“Now is the time for true , ‘econoclasts.’ ”

Dan Denning, Daily Reckoning Australia
November 5, 2009
chuckbraman.com/Writing/WritingFilesPhilosophy/keynes.htm
The Theories of John Maynard Keynes,1996 by Chuck Braman
Again, spending, not saving, benefits an economy, according to Keynes – in fact, Keynes went so far as to denigrate savings itself as a destructive “leakage” of spending from the economy. And this spending itself, according to Keynes, creates an additionally stimulating “multiplier effect” – that is, a fraction of each dollar that is spent is in turn re-spent, so that each act of spending creates waves of benefits throughout the economic system.

econlib.org/library/Enc/bios/Keynes.html
John Maynard Keynes (1883-1946)
Contrary to some of his critics’ assertions, Keynes was a relatively strong advocate of free markets. It was Keynes, not Adam Smith, who said, “There is no objection to be raised against the classical analysis of the manner in which private self-interest will determine what in particular is produced, in what proportions the factors of production will be combined to produce it, and how the value of the final product will be distributed between them.”1 Keynes believed that once full employment had been achieved by fiscal policy measures, the market mechanism could then operate freely. “Thus,” continued Keynes, “apart from the necessity of central controls to bring about an adjustment between the propensity to consume and the inducement to invest, there is no more reason to socialise economic life than there was before” (p. 379).

dailyreckoning.com/vindicating-the-austrian-school-of-economics/
08/16/10 Tampa – Florida – Finally the Austrian school of economics, sometimes referred to as the Austrian Business Cycle Theory (SBCT), is getting some respect, as we learn from DailyBell.com, that quoted an editorial from Ron Smith at The Baltimore Sun saying “The few economists that warned that the credit explosion of recent years would hasten and deepen financial disaster were mainly from the so-called Austrian school and were derided by their Keynesian counterparts as kooks. Who looks kooky now?”

 

[Bohm_Bawerk]

A classic of economics is “Wealth of Nations” by Adam Smith, and it has served for the base of modern capitalist thought. The book was penned in the late 18th century, but the principles contained therein are timeless and thus are applicable to our contemporary time. The basic premise of the work, as I have gathered on a limited start of the work, is that self interest and enterprise drives the economy and produces the most wealth and benefit for all.

The Wealth of Nations is a good book, but it is not generally read today by people with an interest in economics because of its sheer length and the style it’s English is written in. Of course, my advice to the OP is that if he is going to read the Wealth of Nations, read “Book I” which talks about self-interest, the division of labour, the labour-theory of value and other important contributions that Adam Smith made to economics. “Book II” and “Book III” are incredibly difficult to read; I would not recommend it.

Thank you,
Eugen von Böhm-Bawerk

 

[jflare29]

Hmm. Yes, when I took economics years ago, I seem to remember hearing something about Keynes’ view that spending would be helpful to an economy, while saving would hinder it. If I recall correctly, his point was to suggest that, by saving money in a bank, people were not spending that same money on various consumer goods, therefore the economy would be slowed somewhat. Not sure if I agree wholly with that idea really, because if someone saves money in a bank, the bank pays them a (minscule admittedly) bit of interest, but also uses that money to offer loans to others who may buy homes, start business, or spend money in another manner. I don’t know who’s right on that really.

Mr. Bohm-Bawerk, Unworthy Apostle, I remember hearing about Adam Smith’s book clear back in high school. It came up in history class because his ideas helped to bring about England’s efforts, thereby obliquely helping America to have cause to exist (as the United States). Not sure I’m ready to tackle a large book though, I already have quite a collection of books in various subjects.
And, I once tried reading the Canterbury Tales (?) in the original English. NOT a good idea!

Does anyone know of any modern translations that I could get? Translations that propose the ideas, but don’t make me fight through 400-year-old English?

 

[mcteague]

Instead of collecting a pile of books that you probably are not going to read try the following.

Read the wikipedia article on economics. Pay attention to the history section. When something interests you, investigate further. Look at the external links. Search for economic think tanks and blogs. Read them on a regular basis.

Later after you are more familiar with the subject matter, you can go back and read some of the primary sources that interest you. There really isn’t any reason for someone who simply wants to increase knowledge in an area to start with a mountain of dense theoretical material. Maybe later, but not yet

 

[Bohm_Bawerk]

Instead of collecting a pile of books that you probably are not going to read try the following.

Read the wikipedia article on economics. Pay attention to the history section. When something interests you, investigate further. Look at the external links. Search for economic think tanks and blogs. Read them on a regular basis.

Later after you are more familiar with the subject matter, you can go back and read some of the primary sources that interest you. There really isn’t any reason for someone who simply wants to increase knowledge in an area to start with a mountain of dense theoretical material. Maybe later, but not yet

I read most of Book I of The Wealth of Nations when I was about 14 years old. If I could do it, so can anyone else. Adam Smith, although quite obscure in later parts of his magnum opus, is quite easy to read in the first parts of the book, mainly due to his analogies. By “easy”, I mean that it can be grasped, although it is no walk in the park, I’ll give you that.

Thank you,
Eugen von Böhm-Bawerk

 

[Monte_RCMS]

Henry Hazlitt did great writing on economics.

Thomas Sowell is still around and also has excellent books on economics www.tsowell.com

And also visit the Foundation for Economic Education:

fee.org/

In addition, Dr. Walter E. Williams is a prolific writer on economics:

econfaculty.gmu.edu/wew/

The American Institute for Economic Research is also a very useful source:

aier.org/

 

[didymus]

Well, let’s keep in mind that no economic theory is really compatible with Christianity. Laissez-faire views such as those represented by the von Mises Institute are just as Godless as Marxism.

 

[Abu]

didymus
Well, let’s keep in mind that no economic theory is really compatible with Christianity. Laissez-faire views such as those represented by the von Mises Institute are just as Godless as Marxism.

How strange!
Recall Pope John Paul II’s incisive analysis of Communism in his 1991 encyclical letter, Centesimus Annus: that its “fundamental error” was “anthropological in nature.” How more forceful can you get?

Recall Pope John Paul II’s affirmation of free enterprise in Centesimus Annus, 1991:
“CA 42. Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?
“The answer is obviously complex. If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’.
“CA 43. The Church has no models to present;”

Free enterprise economic development started in the great Catholic monastic estates of the ninth century, and a solid basis of economic Catholic thought developed from the fourteenth century. In the fifteenth century the Late Scholastics who were Thomists (followers of St Thomas) “writing and teaching at the University of Salamanca in Spain, sought to explain the full range of human action and social; organization.” They “observed the existence of economic law, inexorable forces of cause and effect that operate very much as other natural laws. Over the course of several generations, they discovered and explained the laws of supply and demand, the cause of inflation, the operation of foreign exchange rates, and the subjective nature of economic value…” For these reasons Joseph Schumpeter applauded them as the first real economists. (Thomas E Woods Jr, The Church And The Market, Lexington Books, 2005, p 8).

Dr Alejandro Chafuen clarifies that economics “is the study of the formal implications that can be deduced from the fact that human beings act purposively…economic science is value-free. It analyses cause and effect relationships that, if true, are scientific….(but) only human acts can be judged morally.
“Every scientific law that is a true statement is a natural law, something that human beings can understand but cannot alter. It is always useful for human beings to understand cause-and-effect relationships.” (Christians For Freedom, Dr Alejandro Chafuen, Ignatius 1986, p 33-38).

In today’s world it is vital to explain what free enterprise is about. No wonder Pope Benedict XVI felt it necessary to teach that “Society does not have to protect itself from the market, as if the development of the latter were ipso facto to entail the death of authentically human relations…Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (Caritas et Veritate, Benedict XVI, 2009, #36)

The Church supports free enterprise, and these economic laws were discovered and developed by our Catholic Late Scholastics. Economics “is the study of the formal applications that can be deduced from the fact that human beings act purposefully. It does not consider whether these actions are good or bad (an ethical question). Economic science is value free. It analyses cause and effect relationships that, if true, are scientific….only human acts can be judged morally.” (Dr Alejandro Chafuen, Christians For Freedom, Ignatius, 1986, p 33).

Fr James Sadowsky, S.J., professor emeritus of philosophy at Fordham University, expressed it well when he said that ethics is prescriptive while economics is descriptive. “Economics,” he says, “indicates the probable effects of certain policies, while ethics determines what one should do.” These are two very different things. [Dr Thomas E Woods, Jr., *The Church and the Market, Lexington Books, 2005, p 31].

 

[fakename]

I think there can be no question that Keynes was the most important and influential economist of the last 100 years. But no one is perfect or infallible. Even those who are in agreement with much of what he wrote recognize that. That is why they call themselves neo-Keynesianists. It is good to have exposure to a variety of theorists. Misters Keynes, Hayek, Friedman, and Marx all fit nicely on my bookshelf. Each has something useful and interesting say. The one thing I would say about Keynes that I do not feel is quite true of the others is that his economics does not appear to derive from ideology. Whereas the others seem sometimes to construct economic theory in support of already held beliefs. His approach is often more flexible. Despite common misrepresentations Keynes supports tax cuts in many circumstances. Keynesian economists just don’t believe it is the correct answer to every problem.
I would recommend looking at a lot of people, but try not to be an ideologue. It gets in the way of sound reasoning

Keynes beliefs don’t derive from an ideology as far as I know but it definitely became one. Not sure this contributes to the discussion per se but I figure it would be interesting by itself if I gave some background on Keynes that I recently read.

Keynes’s General Theory was guided by his belief that morality consisted in immediate mental enjoyment. That’s what inspired him to develop a distaste for saving and profit making -it was an instance of worrying about the future when true happiness consisted in immediate experience. It eventually led Keynes to believe that saving was financed from spending and that the state could create an environment of zero interest and consequently infinite capital. By eliminating capital scarcity, the gov’s investment planning could create a post-scarcity world.

 

[tafan]

Well, let’s keep in mind that no economic theory is really compatible with Christianity. Laissez-faire views such as those represented by the von Mises Institute are just as Godless as Marxism.

Apples and oranges. Marxism is an economic theory, laissez-faire is a political policy - not an economic theory at all. It impacts the economy, but it is not an economic theory. Three schools of thought right now are common: Keynsians, Chicago, and Austrians. All of them have their strengths and weaknesses. None of them, per se, has any direct moral conncection. Policies driven based on any of them, may or may not have a moral implication.

From the table of contents, this book looks rather complete:

amazon.com/Competing-Schools-Economic-Lefteris-Tsoulfidis/dp/3540926925/ref=sr_1_1?ie=UTF8&qid=1301444343&sr=1-1-spell#reader_3540926925

 

[gnjsdad]

How strange!
Recall Pope John Paul II’s incisive analysis of Communism in his 1991 encyclical letter, Centesimus Annus: that its “fundamental error” was “anthropological in nature.” How more forceful can you get?

Recall Pope John Paul II’s affirmation of free enterprise in Centesimus Annus, 1991:
“CA 42. Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?
“The answer is obviously complex. If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’.
“CA 43. The Church has no models to present;”

I’m wondering why you didn’t cite CA 42 in its entirety. The sentence immediately following the one you posted states…

But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

Pope John Paul II did not make an unqualified endorsement of capitalism. Whether the capitalist system is one which developing countries could adopt is very much an open question according to Pope John Paul II.

 

[Abu]

gnjsdad
Pope John Paul II did not make an unqualified endorsement of capitalism. Whether the capitalist system is one which developing countries could adopt is very much an open question according to Pope John Paul II.

Far from open! Wealth has to be created before it can be shared. Nothing can create wealth like the free enterprise based on economic laws developed by Catholics. Multitudes have been freed from poverty by the application of these truths.

Pius XI declared emphatically in Quadragesimo Anno, 1931, #120:
“We have also summoned Communism and Socialism again to judgment and have found all their forms, even the most modified, to wander far from the precepts of the Gospel.” (#128).

So what is left? As Fr James V Schall, S.J., explains in Does Catholicism Still Exist?, Alba House 1994, p 184-185:
“Since the Catholic Church wants poverty confronted, since She wants this confrontation to be done justly and with the interest and cooperation of the workers and the poor, She has had to acknowledge, as did the socialist systems themselves, that there are certain ways that must be employed if mankind is to meet its economic problems. These ways can be known and imitated, but they must include a juridical system, profit, enterprise, knowledge, exchange, a market, voluntary organisations, a relatively independent economy, private property, and respect for work and excellence.”

For free markets to succeed, they require a framework built on the rule of law, contracts and secure property rights. That’s why we have laws to seek and punish those who steal, cheat, swindle, against monopolies. That’s why we have the Catholic Church to guide us – She who invented charity in the West. It’s time to face reality.

The freedom of the individual is the freedom so forcefully declared in the Encyclical Letter Sollicitudo Rei Socialis (On Social Concerns), 1987, #42, by Pope John Paul II: “Likewise, in this concern for the poor, one must not overlook that special form of poverty which consists in being deprived of fundamental human rights, in particular the right to religious freedom and also the right to freedom of economic initiative.”

We need to accept what Pope Benedict XVI emphasises:
“Society does not have to protect itself from the market, as if the development of the latter were ipso facto to entail the death of authentically human relations…Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (Caritas et Veritate, Benedict XVI, 2009, #36)

 

[Captain_America]

Well, let’s keep in mind that no economic theory is really compatible with Christianity. Laissez-faire views such as those represented by the von Mises Institute are just as Godless as Marxism.

This is true. Laissez-faire really means “no control” and we know from Sept. 2008 to present, just how well this works out. . . and even the old defenders of laissez-faire have conceded there is no grand, public-minded invisible hand born out of our stew of contending individual desires.

 

[Captain_America]

It’s worth noting that Keynes work and its popularity derived from the horrible, global consequences of 1920s laissez-faire. Keynes was viewed as providing an alternative to failed capitalism.

While capitalism works reasonably well, it’s unable to provide a number of important goods to citizens. Keep in mind that politics and government are important to have: all too many L-Fers mischaracterize and demonize government as wholly illegitimate. They praise the power of the dollar alone. So, of course, the movement gains a LOT of financial support from rich people. . . see E.J. Dionne’s book Why Americans Hate Politics.

 

[Abu]

Captain America
It’s worth noting that Keynes work and its popularity derived from the horrible, global consequences of 1920s laissez-faire. Keynes was viewed as providing an alternative to failed capitalism.

A wonderful example of William James’ truism – those who think they are thinking are merely rearranging their prejudices. Free enterprise (Pope John Paul’s ‘free economy’ cannot “fail” because the laws of economics discovered by the Catholic Late Scholastics belong to the natural law of cause and effect. Governments may finagle, and usually do, and thus create the problems which they cannot solve by more intervention.

Facing Reality in the 1920’s in the U,S.A.
For free markets to succeed, they require a framework built on rule of law, contracts and secure property rights. And free enterprise, largely unhindered by government manipulation, allowed restoration of worthwhile conditions in the U.S.A. in the 1920’s.

What happened When No Stimuli Were Applied in the 1920 Crash In The U.S.A.?
After inflating the money supply during and after World War I, the U.S. Federal Reserve began raising the discount rate (to the banks) and the economy slowed. By the middle of 1920 production had slumped, falling by 21% over the following 12 months – conditions were worse than after the first year in the yet to come Great Depression of 1930. The federal government and federal Reserve refrained from using any Keynesian macroeconomic tools – public works spending, government deficits, inflationary monetary policy – resulting in a drastic cleaning up of credit weakness, a drastic reduction in the costs of production and the free play of private enterprise, through keeping spending and taxation low and reducing the public debt.

Thus was the rally in business production and employment that started in August 1921 soundly based, there was a quick rebound, and quite vigorous growth.[Dr Thomas E Woods Jr.,* Meltdown, Regnery 2009, p 94-5].

“Harding’s handling of the Depression of 1920-21 is the primary reason why he is universally denigrated by devotees of Big Government. Upon taking office, Harding inherited an economy that was reeling from dislocations caused by World War I. In a few months, wholesale prices collapsed by more than 40 percent. Production plunged over 20 percent. Unemployment zoomed from under 3 percent to over 11 percent. 1920-21 saw the most rapid, severe economic downturn our country has ever experienced.” In We Could Use a Man Like Warren Harding Again, adjunct faculty member, economist, and contributing scholar with The Center for Vision & Values at Grove City College – Dr. Mark W. Hendrickson – points out that President Harding’s “response was to restrain government and let the free market make the necessary adjustments. He didn’t ‘do nothing,’ as President Obama implied when touting his ‘stimulus’ plan; rather, he cut taxes and slashed federal spending 10-20 percent per year. Prices were allowed to fall, supply and demand readjusted, and by 1922 the depression was over. During the next few years, unemployment dove while production soared 60 percent. Harding presided over one of the greatest economic success stories in American history.”
[By Dr. Mark W. Hendrickson, August 12, 2009]We Could Use a Man Like Warren Harding Again