On the 8th of August I received this very intriguing email. Who it was from does not matter. But it was a kind email from someone with the right kind of attitude but who is irritated about my Keynesian views. He therefore thought that they ought to be tested in an open forum. This was the email:
As someone who finds myself in consistent disagreement with your opinion writing on economics, I was wondering if you’d be interested in a public debate on some of the issues you’ve advanced in recent times, for instance concerning the effects of Keynesian stimulus.
I think it might be quite a fun event and I’m sure we could ensure a good attendance from interested parties from both the left and right of the political spectrum.
If you’re interested, let me know and I’ll investigate what venues are available.
Interested I most certainly was. So on the next day, I wrote back to say that such a prospect has a very great appeal to me but that I would only be willing to debate with someone with a training in economics. There are too many matters that are common ground even for those of us on opposite sides of the Keynesian fence that we would not have to dispute. It is just too hard to have to deal with first principles since, if I were to debate someone with no background in the subject, we would have no common ground. I therefore wrote back as follows:
It is an intriguing idea and it could be fun, but to be honest I don’t see just exactly what we would debate. The world is filled with people who think we in Australia have been saved from who knows what by the $43 billion waste program and these frequently find the notion of someone producing for profit anathema. For many, governments spending is a good in itself. But if the aim is growth, productiveness, higher living standards, full employment, less poverty and stable prices then the stimulus has taken us backwards as we are finding out more and more each day. So do we debate the facts, the theory or some counterfactual which we can each invent to our heart’s content. Or is the question whether Keynesian economics is the fraud that I think it is? The international experience has now answered that question with almost not a word in reply, other than that the stimulus was either too small or of the wrong sort. (Along the lines of there’s nothing wrong with communism – it just hasn’t been tried.) Or is the question, what’s so special about Australia – why did wasteful public spending appear to work here and nowhere else?
So my question to you is what would you have in mind as the resolution to be put to the floor? Because I cannot actually see what standing you have on any economic issue since that seems to be very far from your own expertise. And if you wish to debate some other aspect of the stimulus, what would that be? Economic policy as performance art could be interesting but not really my kind of thing. Economics in a post-modern world? Economics in the age of plenty? In the long run is Keynes himself dead? The future of the history of economic theory? Economics and culture? Is all true art a commercial activity? Are artists entrepreneurs? If Shakespeare wrote for money, does that make his plays bad literature? Just musing along.
Or perhaps I have misunderstood and that it would not be you personally I would debate but someone from within the economics community. That would, of course, be a different matter and I would be much more interested in something along those lines. Then we could manoeuver our tanks and guns into position but in a way that would, hopefully, make the issues clear, or at the very least show where the lines of division are.
Let me just say that I don’t rule such a debate out and am far more positive about it than negative. If you are still interested after receiving this, please spell out in more detail what exactly you have in mind and I will discuss with my seconds how to respond. But it is good to know that I have at least brought the various problems I raise to the attention of someone who would like to discuss these things further.
After a longish pause, I did receive a further reply.
sorry not to get back to you sooner.
While I am saddened at your estimation of my economics prowess, and a little nonplussed (are not these issues of public policy about which any informed citizen should be able to engage in debate about?) I am keen to move the idea forward. So – would you be interested in a debate with some “capital-E” economists, such as Ian McAuley or John Quiggin? …
Let me know and I will go ahead an approach John, Ian or another economist or public policy scholar you might wish to nominate.
Well, I was in. Sounded like a lot of fun. All I asked is that some other economist be found who would at this late date stand up for Keynes and Keynesian theory. So back I wrote:
Well, I could not turn down an offer such as this if you can find us a “capital-E” economist who would like to take this on. The theory is of course all one way while the facts of the world are all the other way so I wonder if anyone would like to try their hand at defending the indefensible. But it should be quite instructive all round.
I will let you think through who might be on the other side. John Quiggin would be perfect since we both have recently published books to flog that offer contrasting visions of economic theory that are both critical of the mainstream but are also totally at odds with each other. There are others but it would be important that whoever it is has standing within the profession.
The only constraint, if it is a constraint, is that I will be presenting a paper at Oxford in September so whatever you arrange will need to be after I return on 12 September. But really, the wheres and the whens and the hows I will leave to you to work out as a proposal although almost anything at all in a neutral venue would probably suit me very well.
So I’m in. And very serious topic though it is, it should be fun. Thank you for even thinking about this as a possibility.
And there it has been left. I have heard nothing further which actually doesn’t surprise me. Reading about how Lord Skidelsky was blown to bits trying to defend Keynes must make it harder to find someone to step forward. Keynesian economics is now, as I wrote above, indefensible. It is still the mainstream theory, of course, taught as valid in every standard economics text (except my own) but it is now dead in every possible policy way. But if the debate is still of interest, and someone really does wish to take it on, I would try my hand at a defence of what every other textbook describes as the indefensible.
I would go even farther than this. I would not only argue that Keynes is wrong – what could be easier than that? – but would argue that Say’s Law is right. As every economist has been instructed for three quarters of a century, this ancient nineteenth century principle is utterly and irredeemably wrong. So what danger could there be for anyone to take on such an obviously one-sided debate, with one lonely academic taking on the entire might of the world of economic theory. Really, what possible danger could there be?