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JOHN STUART MILL
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JOHN MAYNARD KEYNES
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OF ECONOMIC THOUGHT
concepts such as 8-hour work days, and
Social Security. But his idea of power
to workers has obviously failed. Due
to the same culprit - human nature
- workers have often become "robber
barons" in their own right by demand–
ing more than they produce. Marxist,
Socialist, and Communist economies
obviously
don't work!
"Classical" economics reached its
peak in John Stuart Mill, gifted
(200 IQ) son of British economist
James Mili. He called for "calculated
intervention to spread the benefits of
progress," or a
slightly visible
hand.
Mill died in 1873, the year of
perhaps the worst depression of the
century - the Panic of 1873. Due to
the influence of Marx and Mili,
workers' wages and benefits grew,
BUT
during the half-century 1879 to
1928, unemployment
ave1•aged
an
estimated 10.2% for al! workers in
the manufacturing, mining, and trans–
portation fields. Even in "prosperous"
years, unemployment stood at what is
considered now a recession - 6%.
Such panics and massive unemploy–
ment were considered "acts of God,"
in the
laissez faire
tradition. To
interfere was considered near blasphe–
mous.
Professor Alfred Marshall continued
to teach Mill's classical theories for
50 years, until Marshall's death in
1924. Throughout the period unem–
ployment and panics reigned, and the
biggest of all hit in 1929.
Parallel with Mili and Marshall was
the belief in
monetarism,
the regulated
supply of money based on gold and
silver backing. But irregular "gold
rushes" caused inflationary siege, yet
didn't prevent panics.
Keynesian Economics
The stage was set for round three
- the modero era of Keynesianism.
The Great Depression severely
weakened classical economics and
monetarism (our worst depressions
struck while under the gold standard).
But, nevertbeless, "most of the respect–
able economists stuck to their Ricar–
dian guns," wrote Leonard Silk,
Brookings Institute economist. "They
called for workers to accept lower and
lower wages until they were all
re-employed ... the Depression was a
temporary state of unbalance, and
prosperity was just around the cornee,
they said."
But such ivory-tower pronounce–
ments didn't convince the 13 million
American unemployed, starving and
broke transients.
The economic world was ripe for
a change - and dassically trained
Britisher John Maynard Keynes (pro–
nounced
canes)
filled the need of the
day, with his 1935 treatise,
General
Theory of Employment, Interest, and
Money.
He turned classic theory
upside down, by advocating govern–
mental
planned deficits
to "prime the
pump" ( or planned surpluses to cool
down a boom),
planned inflation
to
prevent unemployment, and national
accounting systems (GNP and its com–
ponents) to
be
the basis of such
planning.
The debate between Keynesians and
monetarists has raged for 35 years,
but since U. S. President Nixon
became the first Republican Keynesian,
such planned deficit theories can now
be
callcd "establishment," the classi–
cism of the 1970's.
But Keynesianism too is
failing,
due to human nature in the
govern–
ment
sector (as well as business and
labor). Keynes called for half deficits,
half surpluses, but political expediency
has given us about
six
deficits to
each
surplus since 1931.
All
economic systems have failed or
are failing. What is the root cause of
such universal failure? Men of genius
IQ have failed to give mankind a
workable
economy, because no genius
can
change hr1man nature.