cf Keynes to Shaw about Marx, J Robinson : Keynes ignorant about Marx
nb Victoria Chick : Keynes was about overcoming “neutrality” of money. In letter to B Shaw Keynes refers to economics as production of money…
nb Victoria Chick : Keynes was about overcoming “neutrality” of money. In letter to B Shaw Keynes refers to economics as production of money…
investopedia.com Keynesian Economics
manchesterhive.com 2021 Keynesianism in practice? by Bill Dunn
This chapter focuses on the policy and practice of the remarkable post-WWII boom and its unravelling in the 1970s. According to many accounts, the period of managed capitalism and sustained growth and stability gives meaning to the term ‘Keynesianism’. Experience never matches theory exactly, but reconsidering whether or to what extent the long boom followed Keynes’s prescriptions can usefully inform an understanding of what happened in history and also how policy and practice might be changed today. The first section, concentrating on the experiences within leading rich-country economies, argues that much of economic history and policy is hard to square with Keynes’s ideas. The second section considers the international system in this period, identifying elements of which Keynes clearly would have approved, particularly in the implementation of controls on cross-border capital movements. But there were also strongly anti-Keynesian elements, particularly in the way the post-WWII Bretton Woods system disciplined trade-deficit but not trade-surplus countries. The third section considers the crisis of the 1970s and the abandonment of the Bretton Woods system. Policies that at least appeared to draw on Keynes were implemented without conspicuous success. Lacking the historical counterfactuals, it is hard to judge whether alternative policies – whether anti-Keynesian or more determinedly Keynesian – might have worked better. The crisis, however, was widely perceived as a crisis of Keynesianism, and the section considers its implications for Keynesian policy prescriptions and the meaning of Keynesianism.
A six-part series on how the 1919 Treaty of Versailles shaped our present age.
Read series editor Joanne Randa introduction here TABLE OF CONTENTS:
- Kent Puckett, “J. M. Keynes and the Visible Hands”
- Andrew Arsan, “Versailles: Arab Desires, Arab Futures”
- Eileen Kane, “Minorities and Myths: Antisemitism in Europe after 1919”
- Tomaž Mastnak, “Democracy’s Defeat Started at Versailles”
- Sherene Seikaly, “The Matter of Time”
- Julia Elyachar, “From Versailles to the War on Terror
bostonreview 2020 The Keynesian Revolution – A new biography reveals the full scope of John Maynard Keynes’s critique of unfettered capitalism, emphasizing the economist’s larger philosophical vision of the good life. by Jonathan Kirshner
…”…Carter also has a good eye for spotting key contributions from Keynes’s vast writings, calling attention to essential essays including, among others, “The End of Laissez-Faire,” “A Short View of Russia,” “Economic Possibilities for our Grandchildren,” “Can Lloyd George Do It?” (all of which are reprinted in Keynes’s Essays in Persuasion), and, less well known but not to be underestimated, “Art and the State” and the innovative “How to Pay for the War.” In “Economic Possibilities,” Keynes touched the core of his understanding for why economists mattered: by solving the “economic problem” (the imperative to provide for adequate physical comfort and satisfactory necessities), people would no longer need to organize their lives around the empty chase of money, and instead have the freedom to pursue their varied, idiosyncratic interests that would allow them “to live wisely, agreeably and well.”
Short of that utopia, “The End of Laissez-Faire” (1926) heralded Keynes’s dramatic break with economic orthodoxy, signaled by his (then) heretical declaration, “The world is not so governed from above that private and social interest always coincide.” This disenchantment would grow still more pointed in the depths of the Great Depression: laissez-faire capitalism, he declared, “is not intelligent, it is not beautiful, it is not just, it is not virtuous—and it doesn’t deliver the goods.” Along with “Am I a Liberal?” and “Poverty in Plenty: Is the Economic System Self Adjusting?” the essay “Laissez-Faire” marks the steps on the road to the Keynesian revolution that would culminate with the publication of his magnum opus, The General Theory of Employment, Interest and Money, in 1936. But that runs ahead of the story.
… Paul Samuelson would emerge as perhaps the most influential (and representative) of a new generation of postwar “Keynesian” economists; he developed mathematical models of economics that derived directly from Newtonian physics. Keynes would likely have been aghast. “The pseudo-analogy with the physical sciences leads directly counter to the habit of mind which is most important for an economist to acquire,” he wrote to Roy Harrod in 1938. The young Americans were building on John Hicks’s earlier attempt to simplify the Keynesian revolution, and reconcile it with elements of the old orthodoxy. As Carter observes, however, Keynes had in fact “presented a conceptual framework totally incompatible with Hicks’ project.” Keynes’s student Joan Robinson labeled such efforts “bastard Keynesianism.” But the bastards won.
Following this line more purposefully could have disciplined the closing arguments of The Price of Peace, as there is a straight line to be drawn from the blunders of American “Keynesianism” in the 1960s to the rise of more conservatively oriented economic theories in the 1980s and subsequently a broad consensus in macroeconomic theory that was permissive of the catastrophic anti-Keynesian liberation of finance that followed. Instead, Carter reveals a preference for picking partisan fights that often obscure important subtleties, as seen in the strawmanning of Paul Volcker, and the conflating of New Classical Macroeconomics with Milton Friedman’s monetarism (though political bedfellows, their economic theories were miles apart). And the notion that “Vietnam underscored just how little Keynes had achieved at Bretton Woods” is simply not coherent.
Finally, The Price of Peace stumbles with its treatment of the crucial Clinton years, burying the Keynesian lede by focusing extensively on trade—the North American Free Trade Agreement and the World Trade Organization—before finally turning to the great sin against Keynes: financial deregulation. It is unlikely that Keynes would have been much moved by U.S. trade deals of the 1990s; his life’s work was that of a monetary economist and a macroeconomist, and he did not generally dissent from what we now call microeconomic theory (the allocation of goods through the price mechanism).
The trade deals of the 1990s were not the final, tragic destination of anti-Keynesianism. Keynes would have likely seen opportunities in the WTO and shrugged at NAFTA. (Though he surely would have sharply criticized the abject failure of U.S. public policy to compensate those who would inevitably lose from such agreements.) But he would have been apoplectic at the great American financial deregulation project. For Keynes, in The Treatise, The General Theory, and at Bretton Woods, the mortal threat to his economic vision came from finance, not trade. In 1941, looking back at the ruins of the depression and towards an imagined future, he wrote, “Nothing is more certain than that the movement of capital . . . must be regulated.” Unregulated finance was inefficient, and prone to crisis; additionally, the notion that the financial sector would metastasize into something other than a simple facilitator of real economic activity was, for Keynes, a caricature of the ugly, rapacious capitalism that would lead to its own ruin, as it nearly did in the 1930s. And perhaps will again.
Robert Skidelsky’s magisterial three-volume biography thus remains essential, as are Keynes’s own writings (and here again Skidelsky is a welcome guide, with this invaluable collection). But set aside what amounts to a lengthy, eccentric coda, and The Price of Peace offers the finest single volume on Keynes that most readers will ever have the pleasure of encountering.”
mises.org/wire/ 05/01/2020 Keynesian Fallacies Are Not Just Wrong, but Dangerous
As an Austrian economist, I’ve known for years that Keynesian economics rests on crude fallacies—indeed, Tom Woods and I have an entire podcast dedicated to the (usually wrong) columns of Paul Krugman. But in the arguments over the coronavirus, we see that the Keynesian commentary isn’t just wrong, but dangerous.
Specifically, Neil Irwin, the senior economics correspondent for the New York Times, recently tweeted a link to what he described as, “The most important thread you will read today, or ever, to understand macroeconomics.” Naturally, I was anxious to experience this life-changing event. But the link was to a series of tweets from a former New York Fed researcher who was arguing that it was literally impossible for state governments to have saved more in preparation for the current crisis. This “insight” was attributed to Keynes’s paradox of thrift, and the analyst further argued that only federal budget deficits—fueled by Federal Reserve monetary inflation—would make it even possible for state governments or private households to collectively save more. …
J M Keynes updates
simplykeynes.simplycharly.com 4-2022 Simply Keynes by Roger Backhouse
simplycharly.com 4-2022 New Book on John Maynard Keynes Offers an Accessible and Engaging Introduction to the Famed Economist’s Life and Work
“Roger Backhouse’s Simply Keynes is simply the best brief account of Keynes’s thought and influence. Keynes was a man of parts and Backhouse draws those parts together to form a lucid and compelling portrait of the most influential economist of the 20th century.” —Kevin Hoover, Professor of Economics and Philosophy, Duke University
John Maynard Keynes was an English economist whose radical ideas about the nature of free markets and the role of government in managing money fundamentally changed economic thinking and helped shape the modern world. In Simply Keynes, Professor Roger Backhouse examines Keynes’s paradoxical role as both a member of the establishment and a rebel against the orthodoxies of his day, and clearly explains how Keynes’s ideas developed, why they became so controversial, and, perhaps most importantly, how we should think about them today.
First, Keynes understood that a government can create as much cash is it needs, at its own will.
Second, the discussion of foreign reserves was in a de-facto gold standard era: we are no longer on the gold standard.
Third, Keynes understood sectoral balances and that it is government spending that creates private saving.
Fourth, inflation is distortionary of relative value and so distribution within the economy, but not necessarily of physical production, and this issue has to be addressed (the answer was a universal basic income; the family allowance).
Fifth, tax controls inflation.
https://mises.org/wire/keynes-called-himself-socialist-he-was-right Keynes Called Himself a Socialist. He Was Right. | Edward W. Fuller
project-syndicate.org 03/2020 What Would Keynes Say Now? | by Robert Skidelsky
What Would Keynes Say Now? – One hopes that governments will not have to choose between higher prices and increased taxes to finance efforts to combat the COVID-19 pandemic. But it’s not too early for policymakers to start thinking about how to pay for this particular war.
theguardian.com 2/2020 The Guardian view on a comeback for Keynes: revolutionary road – The British economist’s ideas remain as important today as they ever were
What is interesting from a historical perspective is how such a dominant ideology can be toppled. By the late 1960s and early 1970s, a series of events sent shockwaves around western democracies – student revolts, Vietnam, oil shocks, stagflation and the end of the Keynes-inspired Bretton Woods system. Conservatives mobilised an argument that generous welfare spending did not just undermine capitalism, but had inflationary, destabilising consequences and hence was a threat to democratic governance. By 1975, it became an influential report titled The Crisis of Democracy. In 1976 it was a British Labour prime minister, James Callaghan, who pronounced Keynesianism dead.
Monetarism, the economic theory that took over, has failed. Growth in UK GDP per head since 2008 has been almost zero. The economist James Crotty writes in his book Keynes Against Capitalism that this flatlining takes place when “social democracy is in retreat, authoritarian oligarchies are on the rise” in a global system that punishes any country that does not play by the “rules of the game”.
Tracing the evolution of Keynes’s views on policy from WWI until his death in 1946, Crotty argues that virtually all post-WWII “Keynesian” economists misinterpreted crucial parts of Keynes’s economic theory, misunderstood many of his policy views, and failed to realize that his overarching political objective was not to save British capitalism, but rather to replace it with Liberal Socialism. This book shows how Keynes’s Liberal Socialism began to take shape in his mind in the mid-1920s, evolved into a more concrete institutional form over the next decade or so, and was laid out in detail in his work on postwar economic planning at Britain’s Treasury during WWII. Finally, it explains how The General Theory provided the rigorous economic theoretical foundation needed to support his case against capitalism in support of Liberal Socialism.
bostonreview.net/ 2019 Selling Keynesianism ROBERT MANDUCA In the 1940s and ’50s, the general public understood and agreed upon Keynesian economic principles. Today, we can learn a lot from the popularizing efforts that led to that consensus and long-lasting economic success.
link.springer.com J M Keynes 2007 Paul Davidson
The Before and After of Keynes’s General Theory p19,
The General Theory of Employment, Interest and Money … induced innovative Keynes-like thinking in economic policy discussions. Unfortunately, mainstream economists failed to adopt the logically consistent innovative theoretical analysis laid down by Keynes as the basis of the nontraditional postwar policies prescriptions. Instead, what was called Keynesianism” in most postwar professional writings and popular economics textbooks was a modernized version of the preKeynesian 19th-century classical system larded over with some verbal Keynesian terminology.
Keynes’s biographer, Lord Robert Skidelsky, recognized this reversion of mainstream postwar Keynesianism to more orthodox classical theory when he wrote (Skidelsky, 1992, p. 512) that “the validity of Keynes’s ‘general theory’ rests on his assertion that the classical theory … is, as he put it in his lectures, ‘nonsense’. If it [the classical theory] were true, the classical ‘special case’ would in fact, be the ‘general theory’, and Keynes’s aggregative analysis not formally wrong, but empty, redundant. It is worth noting … that mainstream economists after World War II treated Keynes’s theory as a ‘special case’ of the classical theory, applicable to conditions where money wages … were ‘sticky’. Thus his theory was robbed of its theoretical bite, while allowed to retain its relevance for policy”. The best known of these post–World War II Keynesians who treated Keynes’s theory as a special case where wages are sticky was Professor Paul Samuelson of MIT, who, partly in response to the anti-communism witch hunt (McCarthyism) that prevailed in the United States after World War II, implicitly boasted of the classical theoretical foundations of his interpretation of Keynes’s theory by calling his version “Neoclassical Synthesis Keynesianism”. (In chapter 12 infra we will provide the evidence to explain why Keynes’s revolutionary theory was never understood or adopted by those economists who called themselves “Keynesians” – including several Nobel Prize winners – who laid claimed to Keynes’s mantle after World War II.) In the first three decades following World War II, the resulting Neoclassical Synthesis Keynesianism1 (or what is sometimes referred to as Old Keynesianism or American Keynesianism) conquered mainstream academic discussions as completely as the Holy Inquisition conquered Spain (to paraphrase one of Keynes’s more colorful expressions relating to Ricardo’s influence on economic theory). By the 1970s, however, the logical incompatibilities of this “Keynesian” synthesis of classical theory and Keynes’s policy prescriptions were becoming evident …