Comparing Mises to Keynes.

[raiha]

I lent my Manifesto to someone and am trying to write a letter to the Editor disputing the charge that this is a failure of capitalism. So please someone, can you, in a nutshell, make the main distinctions between the Keynesian and Austrian, I guess, Ludwig von Misian approaches. First with Keynes you have centralized govt. With Mises therefore you have limited govt. I guess thats the linchpin.


what else????

 

[Truth Warrior]

http://mises.org/books/quotablemises.pdf​

 

[TastyWheat]

Keynes believed that deficits don't matter. As long as new capital is injected (at an optimal rate) the economic growth will offset inflation. I'm not sure if Keynes believed in economic bubbles though (booms and busts), that seems to be the Achilles heel in his theory.

 

[raiha]

Thanks

 

[swirling_vortex]

Keynesian economics states that spending at the microlevel cannot boost the economy. Instead, spending at the state will help move an economy by increasing the level of aggregate demand. (since if you are unemployed, you aren't going to be buying a brand new car or gizmo)

Of course, does it work? Only in very large amounts of spending. FDR's policies didn't do squat except spread the pain around and it took a war where pretty much every manufacturing facility and resource was used to go towards the war effort. The we got stuck with a deficit and the government now seems to use this tactic for every economic situation that occurs.

I'm not sure if Keynes believed in economic bubbles though (booms and busts), that seems to be the Achilles heel in his theory.

He never mentions it (from what I've read), but his theory sure implies that fault. Hence why it is incorrect: http://www.mises.org/story/2781

 

[Truth Warrior]

The Keynesians were all just standing around scratching their butts trying to understand how the stagflation of the 70's could happen or what to do about it, as I seem to recall.

 

[Conza88]

It's like comparing Liberty to Tyranny...

 

[literatim]

Keynesian economic theory is socialist in nature.