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Editorial See other Editorial Articles Title: An Old Master, Back in Fashion [Brown-nosing Keynes] BY the time he died in 1946, the economist John Maynard Keynes had become that rarest of creatures in his profession: a celebrity. The most powerful leaders in the free world subscribed to his theory that markets were driven by emotions and that in moments of crisis, governments could calm investors by doling out stimulus money. When Keynes and his wife, Lydia, arrived in New York aboard the Queen Mary in 1943, they were mobbed by photographers. Even the paparazzi seemed to understand that his prescription had helped countries on both sides of the Atlantic recover from the Depression. [LOL] Three decades later, though, the same ideas were consigned to the dustbin when world leaders swooned over Milton Friedman and his disciples at the University of Chicago. They preached that markets were inherently self-regulating and that government intervention would only muck things up. Their laissez-faire views were more suitable for the rise of Ronald Reagan and Margaret Thatcher. Now the old master is once again in vogue. After the financial markets blew up last year, governments around the world swiftly enacted Keynesian stimulus packages. Almost as rapidly, three longtime Keynes chroniclers have produced books that try to explain who he was and what he believed. The British historian Peter Clarke has written the liveliest of the three, called “Keynes: The Rise, Fall, and Return of the 20th Century’s Most Influential Economist” (Bloomsbury Press, 211 pages). Mr. Clarke, a former history professor at Cambridge and the author of two previous books about his subject, serves up a gossipy account of Keynes’s personal life. There is rich material here. Even if Keynes had not altered the course of economic thinking with his path-breaking “General Theory of Employment, Interest and Money” in 1936, he would still be remembered for the company he kept. He belonged to the Bloomsbury group, the London literary set whose members included Virginia Woolf and E. M. Forster. Keynes shared their passion for dazzling prose and their predilection for sexual experimentation. Mr. Clarke writes that Keynes had numerous dalliances with other men and kept a list of his many conquests. Later, however, he married the glamorous Russian ballerina Lydia Lopokova. Mr. Clarke says their union was happy. “Its manifest success owed much to Lydia’s uninhibited sensuality, not least in removing Maynard’s feelings of sexual insecurity,” Mr. Clarke explains. “Their failure of have children was not for want of trying.” The historian’s prose sparkles, and his book is the place to begin if you want to understand the economist’s personality and charisma. But Mr. Clarke’s focus on Keynes the man means that his account of Keynes the economist suffers. You finish this slim volume without knowing what he stood for and why he remains so significant. Paul Davidson, an economics professor at the University of Tennessee and editor of the Journal of Post Keynesian Economics, does a better job of this in “The Keynes Solution: The Path to Global Economic Prosperity” (Palgrave Macmillan, 196 pages). A true believer, Mr. Davidson lays out Keynesianism in easy-to-understand language and makes a strong case that it is just as relevant today. There are some doubters who fear that Keynesian spending is dangerous because it produces unbalanced budgets. Mr. Davidson responds that deficits in times of crisis lead to prosperity when the economy recovers. “As a child of the Depression and a young teenager during World War II, I have never felt burdened by huge government deficits,” he writes. “The great generation who were adults during those years left their children a legacy of abundance and prosperity.” Mr. Davidson argues that the Chicago gang’s belief that investors can calculate future risk by using prophetic mathematic models is more frightening. Who can argue with that after last year’s debacle? The most tantalizing part of the “The Keynes Solution,” however, is the appendix, entitled “Why Keynes’s Ideas Were Never Taught in American Universities.” Mr. Davidson writes about how the work of one of his fellow Keynesians was attacked by William F. Buckley Jr. in the 1950s and how other peers watered down Keynes’s teachings to avoid similar controversy. Robert Skidelsky, Keynes’s pre-eminent biographer, has produced the most satisfying post-crash analysis of the economist in “Keynes: The Return of the Master” (PublicAffairs, 220 pages). An emeritus professor of political economics at the University of Warwick in England, Mr. Skidelsky is scornful of economists who, he believes, practice a “fundamentally regressive discipline.” He argues that Keynes was different because he was a moralist who believed the field could be used to improved people lives. What’s more, the biographer says Keynes was hardly the quasi-socialist that right-wing critics would have us believe even today. The author says that Keynes would have been troubled by the United States’ longstanding policy of running deficits even in prosperous times and that he opposed tax rates higher than 25 percent. The book adds that Keynes shared the Friedman view that governments could stabilize prices by limiting the money supply. Mr. Skidelsky is pessimistic about the financial industry reforms that are taking shape in the United States and England. He fears that regulators and banks will continue to use “mathematical financial models for measuring and continue risk which promise more than they can deliver.” If that’s true, the recent wave of Keynesian stimulus spending could be for naught. But then, it’s too much to expect Keynes to save us now. What the world really needs are more farsighted economists who can capture the public’s attention as he did in his day. Where is the next John Maynard Keynes?
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#1. To: DeaconBenjamin (#0)
Yeah, that was a totally laissez-faire debacle. /s Gawd, what numbskulls.
Thanks for nuthin', Jr.
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