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New MR book club - Keynes's *General Theory*
Greg Mankiw wrote:
If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics. His insights go a long way toward explaining the challenges we now confront.
I will go through the book, chapter by chapter, with an eye toward a deeper understanding of what Keynes wrote and why it is, as Greg says, so important. I'm not yet sure what kind of pace I can maintain but order your copy here, now. The Kindle version is only $3.96. We'll do chapters 1 and 2 by next Monday, eight days from now.
Posted by Tyler Cowen on November 30, 2008 at 12:38 PM in Books | Permalink
Comments
Sweet!
Posted by: stanfo at Nov 30, 2008 12:44:48 PM
I'm all over this! Thanks!
Posted by: megsley at Nov 30, 2008 12:53:46 PM
Cool! Count me in.
Posted by: JSK at Nov 30, 2008 1:06:50 PM
I'm looking forward to your comments and insights. "General Theory" is the book I was reading as a young economics student in collage when I decided that economics, as a serious profession, was not for me, i.e., the mathematics in my classes was formidable (and I'm guessing it's even more so now). Economics is a wonderful profession and discipline, and it's too bad more people do not have any real exposure to it. Good luck with "General Theory," and please share what you've learned.
Posted by: The Charters Of Dreams at Nov 30, 2008 1:21:30 PM
Very nice. I'm going to head out to the bookstore soon and get my copy.
Posted by: Steve at Nov 30, 2008 1:31:13 PM
You can also download the book for free. I think there are a few sites that have it. Here is one link:
http://etext.library.adelaide.edu.au/k/keynes/john_maynard/
Posted by: Michael Stack at Nov 30, 2008 1:37:13 PM
Already reading !
Posted by: ortega at Nov 30, 2008 1:42:51 PM
About time we had a book forum!!
Posted by: at Nov 30, 2008 1:51:41 PM
Looking forward to it, thanks.
Posted by: Speedmaster at Nov 30, 2008 2:14:23 PM
Very good.
Here is an electronic online version, conveniently formatted, of the GT. Courtesy Goncalo L. Fonseca
Here is an Australisn blogger who attempted a reading. He stopped at Chapter 19. (Scroll down, "older entries" leads back to Chapter 1)
Posted by: bob mcmanus at Nov 30, 2008 2:16:10 PM
Oh frabjous day! Callooh! Callay!
Posted by: Jeff H. at Nov 30, 2008 2:23:31 PM
Chapter 12 is the most important one for understanding the current situation, more important than the rest of the book put together, and probably more important than any other single piece of writing for understanding the current situation, and, also, probably the most important thingn Keynes ever wrote.
Posted by: Barkley Rosser at Nov 30, 2008 2:23:49 PM
Don't forget to include Hazlitt's " The Failure of New Economics".
Posted by: Pearl at Nov 30, 2008 3:14:19 PM
Rosser, you've scared me.
I am currently viewing Keynes as in order, 1) an experienced and successful Value Investor
2) A popular op-ed writer on economic policy issues
3) an academic economist
4) a philosopher
5) a patron of the arts
But that is probably based on the last books I've read. I suppose most people read the Justyn Walsh for help in investing;I read it for help with the economics. Revisiting Chapter 12 reminded of many of the themes in the Walsh book.
"If you're so smart, why ain't you rich?" Keynes died wealthy, and having made other people wealthy.
Posted by: bob mcmanus at Nov 30, 2008 3:25:04 PM
"Ben Graham exhibited his own particular variant of the
“ man with a hammer ” syndrome. His valuation approach was essentially
a static one, concentrating mainly on the value of a company ’ s physical
assets." ...
Keynes, like Warren Buffett after him, practiced a more dynamic
valuation methodology — one focused on projected earnings accruing
to a particular fi rm. The notional tool used in this type of analysis is the
“ dividend discount model. ” This model states that the intrinsic value of
a given security is determined by the stream of its prospective dividend
payments over time, discounted back to a present value."...Justyn Walsh, op cit
I think this difference is in the GT. Tyler's Book Club can make you rich!
Posted by: bob mcmanus at Nov 30, 2008 3:53:37 PM
I'm taking a class on the General Theory next semester but I might as well get started now. I just read Economic Consequences of the Peace and it was masterful.
Posted by: Nicholas at Nov 30, 2008 4:37:33 PM
Count me in!!
I started it and couldn't make heads or tails of it alone.
Posted by: Ylight at Nov 30, 2008 5:39:46 PM
It seems to me that Keynes "contribution" was to create a new type of economics that appealed to governments -- not a new type of economics that solved or predicted anything. He was first, and foremost, an advocate of central planning.
So is Greg Mankiw, which is what makes reading his blog so painful.
The enthusiasm I'm seeing for Keynesian economics is scary.
Posted by: SheetWise at Nov 30, 2008 5:41:29 PM
THANK YOU SHEETWISE.
I'm with you. Keynesian economics is just what the government thinks is great because it begins and ends with them in control of the wealth.
Posted by: desirae at Nov 30, 2008 6:20:34 PM
I'd recommend that folks also pick up a copy of Henry Hazlitt's _The Failure of the "New Economics"_ to read as they read Keynes.
These two omight also help:
David Laidler _Fabricating the Keynesian Revolution_ and Roger Garrison _Time and Money_.
Posted by: Greg Ransom at Nov 30, 2008 6:21:02 PM
I totally agree, SheetWise.
It seems to me Keynes believed inflation created economic growth.
Not true, in my opinion. Inflation simply steals growth from the future. At some point, you pay the price. Some point is now, it seems.
And its not good growth. The investments made feasible by lower than normal rates are investments that wouldn't otherwise make sense.
So wasted capital is the result, especially when things finally turn and those investments sour. Gee, does that ever really happen??
And wasted capital isn't even the worst of it. The instability and deflation that can result are also quite a problem, not to mention the total destruction of the middle class when inflation runs wild.
Of course, its never too late to return to an honest dollar.
If you want to read someone that understands the evils of inflation, read Jude Wanniski's The Way The World Works.
Posted by: Alan Brown at Nov 30, 2008 6:24:19 PM
Hazlitt's chapter by chapter, page by page dissection of Keynes's "General Theory" published as _The Failure of the "New Economics"_ is available for download free here:
http://www.mises.org/books/failureofneweconomics.pdf
Posted by: Greg Ransom at Nov 30, 2008 6:25:55 PM
I have this book and let me tell you: DENSE. It is full of equations and old-fashioned talk.
But it is clearly the work of a genius.
In my view, an out-of-date genius. I'd prefer Galbraith's seminal work on the Crash of 1929.
NS
http://sciencedefeated.wordpress.com/
Posted by: notedscholar at Nov 30, 2008 6:25:57 PM
Hazlitt's chapter by chapter, page by page dissection of Keynes's "General Theory" published as _The Failure of the "New Economics"_ is available for download free here:
http://www.mises.org/books/failureofneweconomics.pdf
Posted by: Greg Ransom at Nov 30, 2008 6:26:29 PM
Don't miss this line from the preface to the German edition:
Nevertheless the theory of output as a whole, which is what the following book purports to provide, is
much more easily adapted to the conditions of a totalitarian state, than is the theory of the production
and distribution of a given output produced under conditions of free competition and a large measure of
laissez-faire.
____
That's why Keynesians are whooping up the alleged return of depression economics, so they can pretend for a moment that they have all the answers, that the market doesn't work and indeed was the cause of the problem, and that they can go on to mold the economy (as opposed to the catallaxy) in whatever way their hearts' desire determines. If and when inflation heats up, courtesy of a massive increase in the monetary base, don't look for the latest Nobel winner to remind his readers that he had predicted deflation.
Posted by: Bill Stepp at Nov 30, 2008 6:29:07 PM
