The Demoralizing Trap of Keynesianism

Abstract

Classical economists since the days of the Scottish Enlightenment thinkers held that one of the primary arguments for capitalism, in addition to its superior economic efficiency and its grounding in robust political economy, was its civilizing role. They recognized that commerce channels self-interest into voluntary, mutually beneficial pursuits. The cooperative pursuit of profit thus encourages the development of tolerance, honesty, and manners even among diverse people. Keynesianism, however, undermines the civilizing role of commerce by promoting wide-spread government control and direction of the economy. Because big government undermines the market and fosters cronyism, commercial virtues are dampened, and they are often replaced with dishonesty, distrust, and intolerance.

Keywords: Keynes, Keynesian economics, cronyism, rent-seeking, doux commerce thesis

JEL Classification: E12; B00