The Australian School in London | Blogotariat

I gave my presentation to the Institute of Economic Affairs yesterday and a great pleasure it was for me since for a change it was to an audience who understood what I said and also why it mattered. It combined a tour of the history of economic theory leading up to the Keynesian Revolution with a discussion of the contrast between economics today and economics a hundred years ago. With the transformation of theory from seeing the dynamic as a supply driven economy to one that is supposedly demand driven, the differences could not be more fundamental. It is hard going to convince people that 98% of the macroeconomics of the past 75 years is incoherent nonsense, but between the failure of the stimulus and the incredible penetration of the classical model as outlined by John Stuart Mill 160 years ago, there was at least a willingness to entertain the idea that Mill may have been right and Keynesian theory completely wrong.

What is not, however, in doubt is that Mill was attempting in 1848 to refute the arguments of the Keynesians of his own time. That he understood them perfectly, and would have found it unbelievable to see that the arguments he found so inane had become the mainstream, is also clear as well. I suppose I am used to the idea that macro is complete nonsense. What I still cannot fathom is why it is not now clear to everyone else.

I was also making the first presentation of the Australian School of Economics in London, but had to apologise for my Canadian accent. And then Peter Smith is British born and the third in the economic triumvirate of the moment is Sinclair who was born in South Africa. Still, it is a brand of economics found for the moment almost entirely on the Australian continent as are the three of us, although both myself and Sinclair will be physically in Prague next week for the Mt Pelerin Society.

Source: http://www.blogotariat.com/node/550344

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