Can you differentiate between a quote from Adam Smith and a quote from Karl Marx? Would you know a Keynes quote from a Friedman quote? Let's find out.
The competing schools of economics can be a confusing contradictory cacophony of misinformation, distortions, huge errors, outright lies sitting side by side with solid facts. I have found some Libertarians whom I know personally arguing for the top-down autocratic ability of the Federal Government to arbitrarily change the contract and raise the age in which I collect Social Security. I have found adherents of Deregulation honestly tell me that the 1999 repeal of the Glass-Steagall Act was not the cause of the Housing implosion. Banks (private institutions!) were issuing Collateralized Debt Obligations (CDOs) and buying them back in order to artificially prop up the prices caused by because of this deregulation, and I'm confronted with people who insist that it was "all the government's fault". We have people with such blind loyalty to their school of economics that they insist that we have more deregulation.
This has been an era of deregulation spawning scandal after crash after rewriting history (off the top of my head, Lincoln Savings and Loan, Enron, Tyco International, Adelphia, Peregrine Systems, WorldCom. Fannie-Mae, Freddie-Mac, AIG, Bear Stearns, British Petroleum, Xe-Blackwater, Halliburton are all modern stories of what people who implemented the those regulations were trying to prevent.) Isn't all of this a confirmation of Karl Marx's comments on Overproduction? ( I know, the modern financial press uses the word Bubble not Overproduction or Oversupply)
Regardless of your answer, I think you must agree that it is absolutely essential to know what you believe and why you believe it! It is very important to be able to sift disinformation, distortions and lies from facts. In that spirit, I've prepared a quiz of four great and very influential economists.
Your Choices are-
ADAM SMITH-Regarded as the father of Modern Capitalism for his work "Wealth of Nations". In his argument against the economic system of the day, mercantilism, he stressed a laissez-faire attitude which stated that the Crown or government should cease to limit imports and allow commerce to flourish. However, most modern free market advocates consistently ignore his criticism of permanent corporations, division of labor, imperialism, and business control of state policy in that same volume.
KARL MARX-Critic of 19th Century Capitalism. Held that Industrial Capitalism, unlike Market Capitalism, causes a great deal of harm because the worker is divorced from the profit of his labor. Warned against the Problem of Overproduction (or Bubbles) a century before Lincoln Savings and Loan, Enron, Tyco, Countrywide, AIG financial implosions.
JOHN MAYNARD KEYNES- Author of "General Theory of Employment, Interest and Money" and father of the Aggregate Demand Equation which, although he is personally vilified in many circles, is still used as the Macroeconomic standard to this day. An investor and British Lord whose Fund grew five-fold in a period of turmoil that included 2 World Wars and the Great Depression. Often regarded as a Communist or Socialist in some modern circles.
MILTON FRIEDMAN-Nobel Prize Winner and father of the Monetarist Economic School and the tax withholding system. Held that the Money Supply has a direct proportional relationship with the price level. Publicly advocated abolishing the Federal Reserve System, legalizing marijuana and prostitution, and a volunteer military.
1."Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
2. "Universities exist to transmit knowledge and understanding to students not to provide entertainment for spectators or employment for athletes."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
3."No society can be flourishing and happy, of which the far greater part of the members are poor and miserable"
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
4."Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
5."To feel much for others and little for ourselves, to restrain our selfishness and exercise our benevolent affection, constitute the perfection of human nature."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
6."For the bureaucrat, the world is a mere object to be manipulated by him"
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
7."The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelope our future."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
8."The black market was a way of getting around government controls. It was a way of enabling the free market to work. It was a way of opening up, enabling people."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
9. "Democracy is the road to socialism."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
10."The best way to destroy the capitalist system is to debauch the currency. By a continuing policy of inflation, governments can confiscate secretly and unobserved, an important part of the wealth of its citizens."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
11. "All money is a matter of belief."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
12."The difficulty lies not so much in developing new ideas as in escaping from old ones."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
13. "The production of too many useful things results in too many useless people."
____ A Adam Smith
____ B Karl Marx
____ C John Maynard Keynes
____ D Milton Friedman
We all should fearlessly ask ourselves what we believe and why we believe it. That goes double for the economic schools of thought we subscribe to. It was not that long ago that free market advocates were being quoted by predatory lenders and laying the groundwork for the malaise we see now. The large economic concepts do affect our lives, and we should be very skeptical of all claims made on authority. There were people, I mean supposedly responsible adults, like Kevin "Dow 36,000 by 2008" Hassett, who were claiming with complete authority that there was no housing bubble back when CDOs were being sold by banks to banks to prop up prices.
Mr. Hassett, by the way, was an economic advisor to the McCain campaign. He would have influenced policy if Obama had not been elected.That's right, we came that close to having a man who didn't see or care about the Housing Bubble when it was forming in 2003 and saw the Dow going to 36,000 by 2008 at the hieght of the dot bomb bust in 2000 influencing policy during the height of the Great Recession!
These concepts affect our lives and even if you don't agree with Keynes or Von Mises-it is important to know what you believe and why you believe it!
And here are the Answers
Adam Smith wrote #1, #3, #5, and #11
Karl Marx wrote #6, #9 and #13
John Maynard Keynes wrote #4, #7, #10, and # 12
Milton Friedman wrote #2, and #8
I am not a teacher of any sort. Any grade or scale I offered you on this quiz would be meaningless. If you felt the need to cheat and indulged you have admitted to yourself the unfamiliarity with these large economic concepts.
The worst thing we can do is allow the Noise Machine to rob words like "Socialist", "Fascist", "Capitalist" and "Bubble" of their meaning.
To allow this is to be at the mercy of charlatans and crackpots to look at one side of the Mixed Capitalist situation we find our selves in and see "Government bad-Private sector good".
So I'll close with one of my favorite quotes, not from an Economist but from George Clinton's P-Funk All Stars-
"My mind is mine and mine my mind will always stay! No way of life, no man no law's gonna take it away"
Parliament-"Fantasy is Reality"
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