Economic lintel

Author: Lin Xingzhi
Publisher:
Publish Date: 2002-02-01
Features: There are two major newspaper critics in Hong Kong. One is Jin Yong, famous for political commentary, and the other is Lin Xingzhi, the former editor-in-chief of the Financial Times and Business Monthly, renowned for his expertise in economic commentary and economic essays. He is known as "the most successful cultural merchant in the Chinese world today in commercializing knowledge and ideology." His economic essays are broad in perspective, meticulous in thought, fresh in writing, and profound in meaning, making them highly favored by readers. His columns are a must-read for top executives in the domestic financial industry, earning him the nickname "the sharp pen of Xiangjiang!" This collection not only introduces the various schools of major American economic thought but also, with his "divine pen," concisely outlines the origins and developments of over a dozen important economic theories and the outstanding contributions and exemplary qualities of twenty-nine great economists—Nobel laureates—to the world. It also offers guidance and enlightenment for young students and scholars aspiring to or already engaged in economic research.
Author Bio: Lin Xingzhi, originally named Lin Shanmu, was the founder of the Financial Times in Hong Kong. He graduated from the London School of Economics. From 1973 to the present, almost all the daily commentaries in the Financial Times have been penned by him. He is erudite, composed in writing, and possesses the demeanor of a master. His works are frequently compiled and published, with a total of 72 books to his name. "In an article titled 'The Sharp Pen of Xiangjiang' in the Weekly One, Zhang Wucai wrote that while traveling on a plane, he noticed a passenger holding a newspaper with a large advertisement: 'The Sharp Pen of Xiangjiang Leads the Way!' He said, 'I told myself, I haven’t placed this ad—could it be Ah Kang has gone mad? Unable to resist, I asked the passenger to borrow the paper to read it. It turned out the subject was Lin Xingzhi. I thought to myself, well, that makes sense—Shanmu is indeed the Sharp Pen of Xiangjiang!' How could he say, 'I haven’t placed this ad'! Professor Zhang has always been proud of himself, treating his articles as his own wife—neither a discarded broom nor something to be cherished, even boasting about it, which has long been a celebrated anecdote. This time, even he acknowledges that Lin Shanmu is the Sharp Pen of Xiangjiang, proving that the claim of being the leader of the pack is well-deserved." —Dong Qiao, Apple Daily
"In one of my small writing retreats where I pen in Chinese, Shanmu (Lin Xingzhi) and I have been rare and exceptional partners. We all hold beliefs but no prejudices; we are all willing to take risks and try new things; we are not tied to materialism, regardless of what others say; we all believe that the art of writing should be concise and sincere, and that arrogance is unacceptable." —Zhang Wucai
"Lin Shanmu (Lin Xingzhi) and Qian Liangyong (Jin Yong) can both be considered special products of Hong Kong’s cultural scene. If Qian Liangyong is the master of the 'free intellectual' generation in the 1960s, then Lin Shanmu, who hails from the 'Ming' school and is a disciple of Qian Liangyong, can be said to be the standout of the 1980s." —Fang Kam-miu
Read Excerpt: The Similarities and Differences Between Marx and Keynes
With the advent of the so-called "Double Revolutions" in Western society at the end of the 18th century—capitalism and industrialization—economic activities became increasingly complex, the cycles of economic boom and bust became more apparent, and inflation and deflation alternated. Unemployment, in particular, caused great distress to policymakers. In this context, theories attempting to address these issues with a single framework or perspective emerged one after another, among the most famous being Karl Marx (K. Marx, 1818–1883). In his Communist Bible, The Capital, he argued that to stabilize economic development, capitalism must be restrained, and to reduce poverty, the private ownership of capital must be dismantled. Marx advocated that the working class—wealth creators—should collectively own and manage these capital assets.
It is evident that Marx’s theory lacks persuasion for those who believe in Smith’s doctrines, but it holds undeniable appeal for the general public, especially for those without fixed assets. However, now that former Soviet bloc countries have directly or indirectly "gone capitalist," this shift in circumstances powerfully demonstrates that governance methods are destructive rather than constructive—they are the enemy of economic development and wealth creation!
Nevertheless, as the author pointed out a few days ago, it would be unobjective to dismiss Marx’s theories entirely because they are profound and extensive. While Marx’s theories are not popular in Western countries, they did make Western economists begin to doubt whether the "laissez-faire" and the "invisible hand" could withstand the test of history during the Great Depression of the 1930s. Against this backdrop, a "knowledge revolution" gradually took shape, with John Maynard Keynes at its helm.
The Great Depression once seemed to make Marx’s prophecy that "capitalism would inevitably perish" a reality, but Keynes believed this claim to be absurd. He argued that through limited government intervention, capitalism could thrive and endure. The idea of "one good leading to one bad" is simple: Keynes’s prescription was to boost demand for goods and services through public sector investment, which would alleviate unemployment and resolve economic crises. Keynes’s prescription worked, and this was the fundamental reason why Western economies enjoyed three decades of prosperity after the war.
In fact, both Marx and Keynes advocated government intervention, though the former advocated public ownership of property, while the latter fiercely defended private property. The outcome of this debate is now clear!
Of course, we now know that Keynes’s fiscal policies were the breeding ground for inflation. When governments discovered that inflation had worsened beyond control, they adopted the opposite approach—tightening the money supply and reducing spending—which pushed the economy into a deeper and more painful deflationary recession.
Unbiased Criticism, Unchanged Functionality
Does economics help economies develop smoothly? This question is denied by scholars from most other disciplines, and the reasons are obvious. However, economics is particularly popular among the social sciences (such as being eligible for the Nobel Prize, a privilege unmatched by other social sciences). It confers status (such as being appointed as an advisor to rulers) and lucrative opportunities (economic research reports are expensive, and consultants’ fees for economists are particularly high), making it enviable. As a result, when economies collapse into chaos—unemployment, inflation, and recession—proposing that economics is useless is easily accepted by the general public.
However, since economics is "the study of everyday life" (as the later classical economist Alfred Marshall put it), Ludwig von Mises, the master of the Austrian School, argues that economics is "the study of human behavior." Almost all human activities—whether making love or suffering from mental illness—can be encompassed within the realm of economics. Therefore, economics remains an indispensable tool for exploring economic issues and social phenomena. (Excerpted from The Pinnacle of Economics)