Monday, May 9, 2011

Blame Skidelsky For The Keynes "Central Plan" Fiasco

I have now had a chance to view the Econ Stories pieces done by John Papola with Lord Robert Skidelsky, including the one that supposedly provides the basis for the now-controversial Round Two of Keynes vs. Hayek, particularly the remark by "Hayek" accusing "Keynes" of having a "central plan." It is unclear what preceded the remarks by Skidelsky, but in the video showing him discussing the matter, with his comments interspersed with pieces from the Keynes vs Hayek video, there is no question that he asserts that Hayek was most motivated to criticize Keynes by his own fear of Soviet central planning (and his participation in the socialist planning controversy), even as he (Skidelsky) admits that Hayek never accused Keynes of being a central planner. Rather the issue was that he saw Keynes as a "thin wedge" for others who might be "let loose" to support such central planning: .

What is really curious about this is that, as I commented before on an earlier thread on this, in his 2006 article, "Hayek vs Keynes: The Road to Reconciliation," which appeared in the Cambridge Companion to Hayek, 2006, Skidelsky never mentions this at all. He identifies Hayek as differing with Keynes on "where to draw the line" in government activities and also on his criticism of the "money motive." Skidelsky is clear that Hayek never thought Keynes supported central planning.

The discussion in the video is rather strange. Skidelsky is clear that Hayek never commented directly on Keynes's General Theory in print. He states that if Hayek did comment, particularly in bringing up this recently developed central planning critique, he did so "privately." In effect, he reconfirms that Hayek never made such an argument in print, although there is no question that Hayek was much involved with the socialist planning controversy beginning in the 1930s.

One item that Skidelsky seems to have missed is that during much of the 30s Hayek was working on his Pure Theory of Capital, published in the early 1940s, and reportedly viewed this as his fundamental critique of Keynes's ideas. The book did not get much attention, and it was after it was published that Hayek pretty much gave up arguing about Keynes's macroeconomics, although he would return to make comments about it later, more on grounds of its inflationary potential, again, not anything about some tendency to central planning.

Recently reported letters from the early 1930s by people on both sides of the debate also show no signs of any focus on central planning as an issue. The letter by four London economists, including Hayek, criticizing Keynesian views, focused on the role of hoarding, arguing for stimulating investment over consumption, criticizing public investment ("not a time for new municipal swimming baths"), and argued for a return to free trade from the trade war triggered by the Smoot-Hawley tariff. Not a word about central planning, even as a distant possible threat.

Bottom line here appears to have two points. One is that Papola and Roberts must be let off the hook on having put this claim by Hayek that Keynes supported a "central plan" into their video (and I apologize to them for blaming them). Of course, they did it, but it is also clear that Robert Skidelsky made such claims to them that supported what they did. What then is the final point of contention is when and where did Skidelsky come up with this view of what really bothered Hayek, given that he never said (or wrote) any such thing before, indeed appeared to specifically deny that Hayek made such an argument, and there remains no published evidence of Hayek ever making such a claim or argument about Keynes. So, let us blame Skidelsky for this fiasco of a misrepresentation of what Hayek thought about Keynes.


Eric Nilsson said...


I'm a bit confused by your posting.

Unless I'm misunderstanding something we have:
(1) In the video Skidelsky said Hayek did NOT believe Keynes supported central planning.
(2) "Hayek" in the video asserts "Keynes" has a central plan. This is contrary to what Skidelsky said.
(3) But Skidelsky is to somehow blame for the "Hayek" assertion that Keynes has a central plan.

Is the above what you're saying?

Daniel said...

I agree - don't blame Skidelsky. Russ is a professor of economics. He should know better.

Barkley Rosser said...

The linked to video opens with Skidelsky making these remarks about what he thought was really motivating Hayek, his dislike of central planning. There is no questioning or framing shown by those who made the video. Skidelsky simply leaps right in with these assertions fully at variance with what he wrote and said in the past and failing to provide a shred of evidence beyond his own opinion.

I do not know the degree to which this statement was somehow solicited out of him by those who might have wanted him to make it or not. Much is missing here, but he said it, and Papola and Roberts have publicly used these statements to justify what was put into the video.

John V said...

Much-ado-about-nothing continues.

I think it's been pretty clear, Barkley, that your notion of central planning and the gravity it carries, is the same as the notion employed in the video.

It's an innocuous point made by "Hayek" in a comparative contrast to how he views the issue.

As has been said, the persistence and pedantic paranoia of Keynesians on this point says far more about Keynesians than it does about Hayek, Russ, John or any Austrian-minded person.

John V said...


"is NOT the same as the notion employed in the video."

Barkley Rosser said...

John V.,

Nice try, but in his Forbes piece on all this John Papola says the following, while denying later that they wanted to indict Keynes of supporting "socialist central planning" (with John then going on to declare aggregate demand management to still be a form of "central planning"): The line [about "central plan"] is as much an attempt to cue the viewers to the role Hayek played in debunking socialist central planning as it is a dig at the implications of Keynesianism in practice."

Hmmm. So, they were aware that they were making some sort of link, even as they deny doing so.

BTW, I consider Skidelsky (whom I have met) to be the greatest living scholar of Keynes. However, that does not make him a scholar of Hayek, particularly when he gives an interview in which he makes statements wildly at variance with his one paper on Hayek and Keynes.

I also think that John Papola is the more innocent here, although he is open about having strong views. He is a filmaker, not an economist, although getting into various economics debates. I ultimately blame Roberts more than Papola for the fiasco involved here.

John V said...

Sorry, Barkley,

But it's not "a nice try". It's the truth.

Even the quote that you show is not accusing Keynes of being a "Socialist Central Planner". What the video is doing is exactly what John P: Showing Hayek's distaste for central planning....whether the Socialist style or the more generic, "lower case", "top down" flavors that having nothing to do with socialism.

To my knowledge, nobody in this prolonged discussion has accused Keynes of being a Socialist Central Planner. The central planning aspects of some of his ideas (which NOBODY has denied) is still a fair point. It is what it is.

Barkley Rosser said...

John V.,

Sorry, but Hayek never addressed the distinctions between command and indicative planning. Do you know about these? Hayek's critique was of the full-blown Soviet model: command socialist central planning. This does not equal the sub-categories of that: socialist central planning, command central planning, and just good old "central planning," or just ""central plan" as used in the video, with these guys noting that they did not mind using "central plan" to point out to people Hayek's criticism of command socialist central planning.

Do you know the difference between all of these? The differences between them are significant, just in case you did not know. Sorry.

John V said...

I see my response was unable to be completed. Now it's lost. Oh well.

Anonymous said...

IF there was some strategy to drown the message of the video by following a point of debate that makes the whole question less illuminating and interesting, then it worked.

[John, you have to preview the comment first, otherwise blogger eats it.]