It seems to be what he's saying. "Austrian economics was fine for the past, but doesn't apply now".

What about Hayek vs Keynes videos, johnyj?

Have you seen these?

http://www.youtube.com/watch?v=d0nERTFo-Sk

http://www.youtube.com/watch?v=GTQnarzmTOc

What do you think about them? They're talking about the present.

Thanks for sharing the video, really fun to watch

Another one include Friedman

http://youtu.be/BwuJzo9eX9k

I read <<The General Theory of Employment, Interest and Money>> and agreed with "effective demand" concept, because my island model also reached such a conclusion without knowing his theory. It has nothing to do with politics etc...

Keynes wasn't the first one to use the concept of "effective demand". That phrase dates back to Ricardo, and actually, even all the way back to Adam Smith. However, Keynes took it and attempted to apply it to a precise mathematical function. Let us examine his functions and see if it bears up under scrutiny.

From page 25 of

*The General Theory*:

Let Z be the aggregate supply price of the output from employing N men, the relationship between Z and N being written Z = φ(N), which can be called the

*Aggregate Supply Function.*Similarly, let D be the proceeds which entrepreneurs expect to receive from the employment of N men, the relationship between D and N being D = f(N), which can be called the

*Aggregate Demand Function*.

The definition of a function is that it is a specific and constant relationship between an input and an output. Keynes' equations cannot fulfill this requirement and therefore shouldn't be written as functions. There is no precise, mathematical relationship between the number of men employed and his costs or revenue. It changes depending on individual workers' qualities, efficiency and available of equipment for the workers to use, etc. They simply are not functions of each other in the mathematical definition of a function.

Also, why is the first equation the supply price of employing a given quantity of men, while the second one is the

*expected*proceeds to be garnered from employing a specific quantity of men? Z and N are real sums while D is the expectation of real sum further invalidating the formulation of these relationships through mathematical equations.

Now, you may argue that Keynes did not intend for his mathematical equations to be taken as literal mathematical equations, but they often are by mainstream economists. Furthermore, formulating these relationships as mathematical functions lends itself to a lack of clarity and allows for false assumptions and inferences to made that can lead to gross errors further on in the economic thought process.