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Post Keynesian free banking

According to a recent blog post on 538, “post Keynesian” is the phrase in economic research most indicative of “left-leaning” political views and “free banking” is the phrase most indicative of “right-leaning” views. (See also the paper on which the blog post is built.) The authors apparently don’t know how to distinguish between conservatives and libertarians, because to my knowledge, most researchers on free banking are libertarians. Be that as it may, I do not view the correlation between research topics and ideology as inherently dangerous. Researchers in many disciplines have personal motivations for their research related to ideology, personal circumstances, etc. Over time, a wider body of scholars acts as judges of whether the facts and ideas advanced by the small group seem to be correct. The danger lies in the wider body being close-minded, accepting or rejecting without judging carefully. 

  • George Selgin

    I think you let the authors off too easily, Kurt. Here FWIW is my own comment, as published on their post:

    "As someone who frequently employs many of the phrases you characterize as "right-leaning," and who is among a very small number of persons who write about "free banking" (which tops your list) and the related topics of "bank notes" and "note redemption" (among others on your list), I'm inclined to suspect that the finding to which that list of phrases refers (1) depends heavily on a small number of papers by myself and Larry White, since not many others appearing in the publications to which you refer use these terms, and (2) misleads both is identifying those of us who write about free banking as "right leaning" ("libertarian" is closer) and in suggesting (and here is the big problem) that our work is driven by our ideology. In my own case, I've never been particularly "into" ideology. My early research in monetary economics, not my politics, made me a "free banker." As for my views on such things as, say, defense, abortion, drugs, and immigration, you may speculate all you like, but you'd be unwise to put money on those speculations! (And you will find no hint of my opinions in print.)

    As a general, and more important, matter it seems to me very crucial to allow that peoples "ideology"–that is, the policies they favor in connection with their field– may develop out of their research, and not just the other way around. It is unpleasant to imagine that my and others' hard work might be dismissed as the product of "ideological bias" on account of a demonstration that fails to allow for this more innocent (and no less plausible) possibility. Moreover, we all have an obligation to give our fellow researchers the benefit of the doubt, rather than impugn their efforts on the basis of a sort of "high tech" argumentum ad hominum."

    • nomorecranks

      speaking of ad hominum –

      nice snubbery at "the Rothbardians" in your cato video where you say they are too stupid to realize that everyone understands fractional reserve banking and "everyone knew what was going on." and how dumb Rothbard and/or everyone how is stupid enough to read a book written by him etc.. what was it the nov 6 talk maybe..i dont have time too look it up, you know what im talking about. At least you had nathen lewis next to you which could only make you look good no matter what you say because that guy knows less about P and W than I do!

      it is a very species argument in favor of FRB when your case rests on the declamation "everyone knew what was going on." Actually, virtually no one knows what is going, or has ever even heard of FRB or what it is.

      you think this lady at taco bell knew "what was going on" ?


      • damag0r

        It isn't ad hominem if you actually have an argument. Even an insult within a broader working argument does not constitute ad hom. The argument would have to rely on attacking the messenger, not the message for it to be fallacious.

        Focusing on a typo reeks a lot more of ad hom than what you're describing.

        Just because the average person doesn't understand the inner workings of some business they are patrons of does not mean they are being defrauded. Are the banks actively hiding the fact they loan out deposits? Will they deny it if you ask them?

        You have no point.

        • nomorecranks

          Banks do not lend out deposits. Banks create new loans, which creates a new balancing deposit. It creates this “from thin air”, not from existing money: banks do not “lend out” existing deposits.

          Seems you are more clueless than you claim I am.

          • damag0r

            And the banks in a truly free banking type system would be largely constrained in their ability to stretch notes and credit out all that much further than they have assets to support.

            Any "thin air" lending as you describe it would be a product of voluntary actors in the market. If you have a problem with this then I guess you should pass some laws to prevent this "fraud"?

            Your argument is basically a red herring.

            If you have a problem with how the free market operates, which would go completely contradictory to almost everything else Rothbard said, then just admit it. You don't believe in the free action of people to do as they wish without threat of violence. But this is one of the huge issues I take with Rothbard, he claims he believes in anarchy, but then what is the product of the free market he deems as "fraud".

          • damag0r

            I should also add that if a consumer does not want their deposits loaned out then the free market provides that for them too. It's called a safety deposit box.

      • George Selgin

        You are wrong, nomorecranks, for were your position correct, it would imply that "Rothbardians" like yourself, all of whom do in fact claim to "know what was going on," are smarter than "virtually" everyone else, which is clearly absurd. Q.E.D.

        • damag0r

          While I agree with you about Rothbardians, I must say I don't think this is a very compelling argument.

          Many times in history a minority has been right about something while a majority has been wrong.

          • George Selgin

            Sure, a minority may be right, damagOr. But this isn't like the heliocentric theory of the solar system ca. 1500 or other such hard to affirm discoveries. The "truth" to which this minority claims unique access is one that is both easily discovered and conventionally recognized! Every monetary economist knows it, and every undergraduate student of economics is taught it. In 30 years of teaching I never discovered a student who found it the least bit surprising.

        • SpontaneousOrder

          Dr. Selgin –

          Do you consider failed-sale repo fraudulent ? Do you consider that under the category of FRB?


  • Andrew_FL

    I took the greatest issue with their attempt to "reconstruct" an "unbiased" Economist: naturally, one hypothetically in the exact middle of opinion. The fallacy of the golden mean, refined to mathematical precision! An impressive feat, I suppose.