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John Maynard Keynes (Photo by Oronoz/Newscom)

No safe havens

Back to School | Economics and finance have not escaped the onslaught of anti-Christian thought

Issue: "Back to School," Aug. 27, 2011

Christian students, warned about anti-Christian thought in areas like sociology or psychology, suffer from the illusion that majoring in economics or finance is "safe." Not so, and the work of one of the giants of economics, John Maynard Keynes (1883-1946), is a case in point.

Keynes' milieu was that of the "Cambridge Apostles," a once-Christian debate society that changed under Keynes' leadership: "We were, in the strict sense of the term," he wrote, "immoralists." Richard Deacon's history, The Cambridge Apostles, shows how the fruit of this immorality was what "apostles" called "the higher sodomy": Homosexuality was, in their view, a higher way of life than traditional heterosexual pairings, because it added sexual affection to the already allegedly superior intellectual friendship of men.

Keynes endorsed the atheistic views of fellow "apostle" G.E. Moore, who, having presented the con argument when the society debated whether to allow God as a member, led the chant "God, out! God, out!" Keynes said that the chief benefit of Moore's atheism was that "we entirely repudiated a personal liability on us to obey general rules. We claimed the right to judge every individual case on its merits, and the wisdom to do so successfully. This was a very important part of our faith, violently and aggressively held, and for the outer world it was our most obvious and dangerous characteristic. We repudiated entirely customary morals, conventions and traditional wisdom."

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Part of the traditional wisdom that the Keynes circle repudiated was classical economics, which emphasized work and savings in an environment of economic freedom and sound money. Labeling classical economics "Puritanism," Keynes argued that people saved too much and that government through inflationary policies could push consumption, which would create more jobs. Thrifty people would therefore see their purchasing power reduced, and a powerful government could directly increase the amount of spending through public works.

We shouldn't make too much of this, since the economic flaws of Keynesianism are not directly related to the sexual interests of his "apostles," but his sense of wanting to do away with the ethics of the real apostles was.

If economics is not a safe haven, what about finance?

Harry Markowitz (1927-) is the father of Modern Portfolio Theory, for which he won the 1990 Nobel Prize in economics. The autobiography that he submitted to the Nobel Committee mentioned only two philosophical influences-Charles Darwin and David Hume: "In high school I . . . was particularly struck by David Hume's argument that, though we release a ball a thousand times, and each time, it falls to the floor, we do not have a necessary proof that it will fall the thousand-and-first time. I also read The Origin of Species and was moved by Darwin's marshaling of facts and careful consideration of possible objections."

According to Peter Bernstein's Capital Ideas, which is largely the story of how Markowitz's ideas came to dominate the academic world and much of the financial industry, Darwin's argumentation and research "really moved" the 14-year-old. Just as Darwin built a biological theory on a doctrine of random, unpredictable genetic variations, Markowitz eventually built a financial theory on random, unpredictable price variations.

Professors told Markowitz to read the works of free-market, Austrian-school-trained John Burr Williams, who learned economics in order to be a better investor. Markowitz, though, rejected the classical view and replaced it with one befitting the philosophical skepticism he learned from Hume. He explained to his Nobel Prize audience that his theory is "concerned with investors rather than manufacturing firms or consumers": Forget underlying economic factors when valuing investments, but evaluate random variations in prices away from the long-term average.

Again, it's not wrong for financial planners to read Hume, but the intellectual connections are worth contemplating. Bottom line: No discipline escapes the overall intellectual trends of our time.

-Jerry Bowyer is an economist and journalist

Listen to Marvin Olasky discuss WORLD's Back to School issue on The World and Everything in It.

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