I was wondering if I could get some feedback from you all. In reading through Keynes, I was struck by the following:

Keynes devalues ethics/morality as a structure for stabilizing the economy. However, his motivations for having an intellectual controlling force over the economy seems to stem from empathy, therefore the ethics/morality he is speaking against.

While I understand the contrast between Keynes and Ruskin:

Keynes proposes that there is a need for fluctuating principles and only calculated interference from a governing intellectual body in order to maintain a stable economy

Ruskin proposes that morality can be used as a trellis for the economy, providing structure/a guiding hand to stabilize the economy.

The question is, excluding a sense of human empathy and ethical obligation, why is it necessary to control the market at all?

A free market is certainly not stable, but it finds equilibrium through the natural balancing forces of supply and demand.

Take for example the housing market in Vancouver. If the government lets the market take its course, people who cannot afford to live in Vancouver will move to cheaper locations. Eventually, there will be a lack of labour–take baristas at Starbucks, for example. If Starbucks refuses to pay its employees enough so that they can live in Vancouver, they will have to shut down their businesses. As other businesses follow suit, the city will become a less desirable place to live. This will bring down the cost of housing, and people will be able to move back into the city. The cycle now starts over again.

The only thing preventing us from letting “the nature of the market” take its course is our humanity. We recognize that moving away and finding a new job could mean up-rooting people and their families. This ethical dilemma is what drives us to find systems (like Keynes’) that can foresee and prevent market situations like this.

So my question:

When Keynes denounces ethics as a form of market control, isn’t he undermining the very motivations for his theory to begin with?

I frequently listen to CBC podcasts, namely Ideas and The Current. This recent production titled “It’s The Economists, Stupid” sheds some light on the ironies of our current economic system.

I found one point particularly engaging: That economists, as our main source of information on the market, create instability through their projections. However, these predictions are based primarily on feelings, judgments and best guesses. Instead of being transparent about this, they state these predictions as fact. This can result in mass panic and economic instability, even economic crisis. However, we look to these same economists for solutions to economic crises as they occur. This questions is particularly pertinent in our discussion of credit.

It’s definitely worth a listen.

My question to you is:

Will transparency create stability (we won’t worry as much about the predictions of economists) or will it create mass panic (if economists don’t know for sure, can anyone guarantee anything)?

http://www.cbc.ca/radio/ideas/it-s-the-economists-stupid-1.3219471