History is rich in bright intellectual battles. In science, they tend to end with a strong victory for the "right" of science and shameful exile "incorrect." Today, followers ptolemeevoy astronomy or phlogiston theory of combustion can be safely already extinct species. However, in the social sciences, the case somewhat differently. Of course, there have enough battles, but with strong victories things are more complicated. Perhaps the ongoing debate - is an integral feature of the social sciences: for the temporary injury to the regrouping of the forces and the new attack. Of course, the economy has nothing to do with natural sciences, and the endless debates throughout our history - too much proof. One hundred years ago in the minds of economists undividedly reigned classical theory. She stated that free markets are automatically adjusted to ensure full employment. They are either constantly present in the state of full employment, or quickly return to it in case of external shocks. The only force that could lay siege to an invisible hand of the market, has seen the hand of government. Then in the 1929-1932 biennium. there was the Great Depression and John Maynard Keynes "proved" that the markets can not be automatically adjusted to the conditions of full employment. Thus, the "invisible hand" was the shame and overthrow, and the government received the right to intervene in markets to ensure full employment.
Nearly 30 years of economic science and policy has been subordinated to the ideas keynsianstva. Harvard Law School proudly sat on the throne, and Chicago has been expelled from shame on the periphery, where it is, however, successfully lick his wounds. In 1960, chikagtsy caused counterfire. At this time of the attack led Milton Friedman, it followed the train of the new disciplines. They are, in fact, restored the classical theory. Their "evidence" that the market immediately or almost immediately adjusted to the conditions of full employment seemed especially impressive because it matched mathematics. Adaptive expectations, rational expectations, theory of real business cycles, the theory of efficient free markets - all of this comes from the Chicago School. And their ideology won the Nobel Prize. None of the politicians have not been reviewed thoroughly in mathematics, but all understand the basic idea: markets are good, the government - it is bad. Keynesians were forced to retreat. In the era of Ronald Reagan and Margaret Thatcher from the policy of full employment declined, and market regulation has been repealed. But a new Great Depression and the struggle was resumed with renewed force.
The inhabitants of the blogosphere know that the main reason for this battle were the effects of incentives. In particular, Professor Niall Ferguson and Paul Krugman, an economist at New York Times, literally came to close quarters at the symposium. held in New York on April 30. The historian claimed that the huge fiscal deficits lead to an increase in long-term interest rates. Thus, the incentive effect will be zero: the public expenditure simply "zadushat" private. This is a furious Mr. Krugman said in his blog that such a "stranglehold" is possible only on condition of full employment: if there are unemployed, fiscal deficits will not lead to an increase in interest rates without the stimulation of economic growth. And the ignorant comments of Mr. Ferguson, only confirm that "we live in an age of macroeconomic obscurantism, when hardly obtained knowledge easily forgotten."
Nevertheless, this is not a dispute of historians and economists. The debate comes in the economic profession - between neoclassical school and the neo-keynesian. But what really impresses is its similarity to the dispute between Keynes and the Ministry of Finance in Britain 1929-1930 biennium. According to the Ministry of Finance, government spending, financed through bonds, will inevitably lead to a reduction in private spending on the equivalent amount. This is Keynes argued that if this were so, then such a concept would work on any new instrument of private spending. "In short, the fatalistic belief that employment could not be higher than current levels, there is no reason." Then the Ministry retreated to defensive positions. The risk increases in public spending is not a physical replacement of resources, and psychologically - said the Minister. If you have any doubts about the solvency of the government - these risks are recognized Paul Krugman - begin outflows, leading to an increase in the cost of government borrowing.
Are we doomed yet again to hear the same arguments? In the current situation, I am on the side of Krugman, but I do not agree with the fact that the position of Professor Ferguson is a rollback of the economy by the time of phlogiston. Say this - is to put the economy into a science, it means there has never been because of her study of much more prone to change over time. Keynes saw. that at different points in time we need a different economic model. All the charm of the "General Theory of Employment, interest and money" is that it was fairly generalized, and included a variety of models applicable to different situations. Markets can behave in accordance with the tenets of classical and neoclassical theory, but it is not necessarily. Main prevent bad behavior. Ultimately, the Keynesian revolution was the triumph of good judgments, rather than science.
Robert Skidelski
Nearly 30 years of economic science and policy has been subordinated to the ideas keynsianstva. Harvard Law School proudly sat on the throne, and Chicago has been expelled from shame on the periphery, where it is, however, successfully lick his wounds. In 1960, chikagtsy caused counterfire. At this time of the attack led Milton Friedman, it followed the train of the new disciplines. They are, in fact, restored the classical theory. Their "evidence" that the market immediately or almost immediately adjusted to the conditions of full employment seemed especially impressive because it matched mathematics. Adaptive expectations, rational expectations, theory of real business cycles, the theory of efficient free markets - all of this comes from the Chicago School. And their ideology won the Nobel Prize. None of the politicians have not been reviewed thoroughly in mathematics, but all understand the basic idea: markets are good, the government - it is bad. Keynesians were forced to retreat. In the era of Ronald Reagan and Margaret Thatcher from the policy of full employment declined, and market regulation has been repealed. But a new Great Depression and the struggle was resumed with renewed force.
The inhabitants of the blogosphere know that the main reason for this battle were the effects of incentives. In particular, Professor Niall Ferguson and Paul Krugman, an economist at New York Times, literally came to close quarters at the symposium. held in New York on April 30. The historian claimed that the huge fiscal deficits lead to an increase in long-term interest rates. Thus, the incentive effect will be zero: the public expenditure simply "zadushat" private. This is a furious Mr. Krugman said in his blog that such a "stranglehold" is possible only on condition of full employment: if there are unemployed, fiscal deficits will not lead to an increase in interest rates without the stimulation of economic growth. And the ignorant comments of Mr. Ferguson, only confirm that "we live in an age of macroeconomic obscurantism, when hardly obtained knowledge easily forgotten."
Nevertheless, this is not a dispute of historians and economists. The debate comes in the economic profession - between neoclassical school and the neo-keynesian. But what really impresses is its similarity to the dispute between Keynes and the Ministry of Finance in Britain 1929-1930 biennium. According to the Ministry of Finance, government spending, financed through bonds, will inevitably lead to a reduction in private spending on the equivalent amount. This is Keynes argued that if this were so, then such a concept would work on any new instrument of private spending. "In short, the fatalistic belief that employment could not be higher than current levels, there is no reason." Then the Ministry retreated to defensive positions. The risk increases in public spending is not a physical replacement of resources, and psychologically - said the Minister. If you have any doubts about the solvency of the government - these risks are recognized Paul Krugman - begin outflows, leading to an increase in the cost of government borrowing.
Are we doomed yet again to hear the same arguments? In the current situation, I am on the side of Krugman, but I do not agree with the fact that the position of Professor Ferguson is a rollback of the economy by the time of phlogiston. Say this - is to put the economy into a science, it means there has never been because of her study of much more prone to change over time. Keynes saw. that at different points in time we need a different economic model. All the charm of the "General Theory of Employment, interest and money" is that it was fairly generalized, and included a variety of models applicable to different situations. Markets can behave in accordance with the tenets of classical and neoclassical theory, but it is not necessarily. Main prevent bad behavior. Ultimately, the Keynesian revolution was the triumph of good judgments, rather than science.
Robert Skidelski
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