Virginia Postrel Is a Saint
Bryan Caplan Believes in the Equity Premium Puzzle

We Leave Saving to the Private Investor...

As part of an attack on Paul Krugman, Michael Stastny approvingly cites George Reisman who approvingly quotes Ludwig von Mises:

Mahalanobis: George Reisman writes: "Paul Krugman is very upset. In his Monday New York Times Op-Ed column this week, he complains that while the real incomes of the great majority of Americans have essentially stagnated or declined over the last thirty-five years.... The essential thing to understand here about Krugman is that he is a Keynesian. And as Mises observed, 'The essence of Keynesianism is its complete failure to conceive the role that saving and capital accumulation play in the improvement of economic conditions'."

Well, let's pull out John Maynard Keynes from behind the curtain:

John Maynard Keynes : We leave Saving to the private investor, and we encourage him to place his savings mainly in titles to money. We leave the responsibility for setting Production in motion to the business man, who is mainly influenced by the profits he expected to accrue to himself in terms of money. Those who are not in favor of drastic changes in the existing organization of society believe that these arrangements, being in accord with human nature, have great advantages. But they cannot work properly if the money, which they assume as a stable measuring-rod, is undependable. Unemployment, the precarious life of the worker, the disappointment of expectation, the sudden loss of savings, the excessive windfalls to individuals, the speculator, the profiteer--all proceed, in large measure, from the instability of the standard of value.

Keynes was neither a Fascist nor a Communist--i.e., he was not one of those "in favor of drastic changes in the existing organization of society." Does it sound like Keynes failed to conceive the role that saving plays in the improvement of economic conditions?

I've often thought that von Mises must never have read Keynes very carefully.