On this episode of the Authors Corner, Ethan sits down with AIER Visiting Fellow, Dr. Victor Claar to speak about his recent research and publications on the ideas of John Maynard Keynes and their long-term impact on how we view economics from a moral perspective. Dr. Claar is the BB&T Distinguished Professor in Free Enterprise at Florida Gulf Coast University and is the author of a book titled The Keynesian Revolution and Our Empty Economy: We’re All Dead. The unique insights he provided during this interview outlined how the technical aspects of Keynesian economics moved the discipline to a much more hollow and limited way of looking at economic life.
Love him or hate him, Keynes’s ideas have had a permanent and substantial impact on the way we view contemporary economics. As Milton Friedman and Richard Nixon famously said, we are all Keynesians now. The phrase referred to the embrace of Keynesian economics during times of financial strife and can certainly apply to the way many still think about economics. In many respects, the way economics is taught at a basic level, such as with introductory textbooks and historical recounts of events such as the Great Depression, are from a Keynesian perspective.
Dr. Claar first explains the title and substance of his latest book on Keynes, which explores how the Keynesian Revolution eschewed many of the old moral foundations in society. Keynes and his followers subscribed to a different view of morality and felt that many of the existing institutions held humanity back. Claar explains how throughout history, humans developed a shared understanding of purpose and what a good life was. Keynes and his contemporaries took a more decadent and subjective view of purpose and morality, eschewing established guidelines for a more nihilistic view. They believed many of these shared ideas held us back from becoming who we wanted to be.
For example, it is a common principle that saving money is a good thing; as the saying goes, a penny saved is a penny earned. Keynes and subsequently Keynesianism believed the opposite. He very much viewed consumption as one of the most important economic activities, which is reflected in the high degree of importance his ideology places on consumer demand. The more demand in the economy, the better. In the long run, we are all dead as Keynes used to say. Claar and many other competing schools of economics assert that consumption is of course not the most important economic activity. Saving money has clear benefits, increasing supply has clear benefits, and so on. However, there is no doubt that the Keynesian emphasis on demand, as well as its philosophical underpinnings, has permanently influenced the way we look at economics.
Another example would be the way we look at work and wages. Keynes, and even Marxist thinkers, posit that there is not much value in work except the monetary benefit one receives. GDP is simply just a number that must be maximized while the demand curves and supply curves simply must slope a certain way. All this misses one extremely important part about work and that is purpose and meaning. Although working at a fast-food restaurant may pay 15 dollars an hour, there are also a plethora of non-monetary benefits, be it a sense of purpose, career skills, a social circle, and so on. Doing volunteer work for a charity pays nothing but clearly has benefits not just for those being served but for the volunteer on a social as well as a spiritual level. All these important considerations are left out of the Keynesian analysis which has subsequently made macroeconomic thinking devoid of understanding meaning and purpose. Such an approach to economic thinking may encourage the creation of a system that is devoid of fulfilling social activity in favor of simply maximizing metric numbers.
During the interview, Dr. Claar also gives his thoughts about Fair Trade-certified products and their limitations, which is a topic he has written about as well. He also discusses the role of the Consumption Paradigm in economics before and after the Keynesian Revolution, as well as his thoughts on how we should reform economic thinking. His ultimate desire is to create a system that can not only maximize economic growth but also allows people to realize lives that are meaningful and fulfilling. The contemporary way we look at the discipline post-Keynes is one that fails to provide the necessary lens of analysis to accomplish that objective.