Thread by @delong

@paulkrugman But, as you note, Bernanke in 2002 and Mankiw in 2006 still saw Friedman as "the economist of the century" <gregmankiw.blogspot.com/2006/11/milton…> <federalreserve.gov/BOARDDOCS/SPEE…>. They were fine with the "government should not interfere with the economy" and "whatever is the monetary policy that 1/

@paulkrugman ...happens to stabilize aggregate demand is the true non-interfering 'neutral' monetary policy". It was a con, yes, but it was a successful con. And it is not clear that it was wrong as a practical policy position. It was, after all, Keynes's as well: "the result of... 2/

@paulkrugman ... filling in the gaps in the classical theory is not to dispose of the ‘Manchester System’, but to indicate the nature of the environment which the free play of economic forces requires..." <marxists.org/reference/subj…>. Friedman's insistence that you could do it with... 3/

@paulkrugman ...automatic monetary policy alone was wrong: "the influence of banking policy on the rate of interest will [not] be sufficient by itself... a somewhat comprehensive socialisation of investment will be required". But JM Keynes (macro)-Henry Simons (antitrust)-AC Pigou... 4/

@paulkrugman ...(externalities) is not that far from what you or I believe, or what Milton Friedman believed—or, at least, would graciously concede in his old age in outdoor lunch in North Beach if I could get him off of his hobbyhorses of 'k% rule' & 'government failure is almost... 5/

@paulkrugman ...always certain to be worse than market failure.

The way you put it in your 2013 piece is like this: "If markets can go so wrong that they cause Great Depressions, how can you be a free-market true believer on everything except macro? And as American conservatism moved... 6/

@paulkrugman ...ever further right, it had no room for any kind of interventionism, not even the sterilized, clean-room interventionism of Friedman’s monetarism". I think that is (a) right, (b) much too compressed, but (c) ignores the problem of "where do you stop?" Having the... 7/

@paulkrugman ...establish & maintain a property-rights order & enforce contracts is, after all, a form of "interference" to the anarcho-capitalists. And while there are some ACs who want a contract dispute between you and me resolved by me "hiring" my police force and you "hiring"... 8/

@paulkrugman ...yours and the two settling the dispute by the Final Argument of Kings—thus going all the way back to full feudalism as society's organizing principle—most do not. Most stop being happy with police & courts. So why is police & courts acceptable, while police & courts &... 9/

@paulkrugman ...demand management is not?

I think it has something to do with Schumpeter, von Hayek, and von Mises and the context of early-20th center Vienna, with the idea that humans are individuals for whom private property and one-shot exchange are "natural" (as opposed to... 10/

@paulkrugman ...creatures that establish and cement societal bonds via ongoing reciprocal gift-exchange relationships), with the philosophical position that all is for the best in this the best of all possible worlds, and the resulting theological belief that "the market giveth; the... 11/

@paulkrugman ...market taketh away; blessed be the name of the market".

In short, I think you are right, but I do not understand why you are right.

And here I know I am out of my depth, and I want to call for Emma Rothschild @HistoryEcon, for I think she might be able to teacheth me... 12/

@paulkrugman @HistoryEcon ...the lesson here. (Or possibly my former student @miss_glory)... 13/END